Policy The Impact of Collaborative and Risk-Sharing Innovation Approaches on Clinical and Regulatory Cycle Times Joseph A. DiMasi, PhD 1 , Jennifer Kim, BA 1 , and Kenneth A. Getz, MBA 1 Abstract During the past decade, high risk, cost, and inefficiency have driven pharmaceutical and biotechnology companies to enter into collaborative and shared innovation approaches, including mergers and acquisitions, joint development, and in-licensing. These approaches can interrupt the drug development process and affect program-level clinical and regulatory cycle times. To examine these potential impacts, detailed development histories were obtained for 289 new molecular and biologics entities that received FDA approval between 2000 and 2011. Approximately half the drugs analyzed had their clinical development activity interrupted by a collaborative or shared innovation approach, with in-licensing as the most common. The total duration (clinical plus approval phases) for interrupted development programs was 20% longer—an additional 14.8 months (median)—than that of uninterrupted development programs (P < .05). Approval phase length differences between uninterrupted and interrupted programs were not statistically significant. The results of this study provide important benchmarks and new insights for portfolio planning, forecasting, and management. Keywords mergers, acquisitions, in-licensing, co-development, joint ventures, development cycle time, regulatory cycle time, development pipeline forecasting Introduction The high and rising risk profile of pharmaceutical development has stimulated a variety of collaborative and shared innovation approaches. 1 The declining commercial potential of drug can- didates, exacerbated by a high proportion losing their patent protection 2 and combined with low new molecular entity and new biological entity success rates and high development costs, has compelled pharmaceutical companies to pursue collabora- tions to share risk and return. Joint development arrangements, in-licensing deals, and mergers and acquisitions (M&A) are examples of the most prevalent and pervasive collaborative and shared innovative approaches utilized. The volume and scale of M&A activity between 2008 and 2012 highlights the keen interest among research sponsors to expand their portfolios and capabilities to compete in today’s operating environment. M&A are defined as transactions involving the purchase and integration of operating assets to create a single organization. Five of the top 10 largest pharma- ceutical companies—as defined by 2012 global prescription drug sales—have acquired and absorbed at least one major company during the years 2008 to 2012 (Table 1). Collaborative innovation strategies can be viewed along a continuum from the transfer of innovation risk through acqui- sition to innovation risk that is shared through jointly supported activity. M&A strategies, for example, represent the most extensive and costly collaborative approach, as fixed infra- structure, capabilities, and portfolio of intellectual property are transferred to the purchaser. In-licensing strategies represent the midrange of the continuum, where the licensor has assumed some development risk to advance intellectual property (eg, the investment of capital and infrastructure) and is now trans- ferring the remaining development risk to the licensee. Co-development arrangements sit on the opposite end of the continuum, as both parties share the development risk through 1 Tufts Center for the Study of Drug Development, Tufts University School of Medicine, Tufts University, Boston, MA, USA Submitted 27-Oct-2013; accepted 03-Jan-2014 Corresponding Author: Joseph A. DiMasi, Tufts Center for the Study of Drug Development, 75 Kneeland Street, Suite 1100, Boston, MA 02111, USA. Email: joseph.dimasi@tufts.edu Therapeutic Innovation & Regulatory Science 2014, Vol. 48(4) 482-487 ª The Author(s) 2014 Reprints and permission: sagepub.com/journalsPermissions.nav DOI: 10.1177/2168479014521419 tirs.sagepub.com at Teachers College PARENT on January 19, 2015 dij.sagepub.com Downloaded from