Collaborations in the Pharmaceutical Industry

Welcome to a discussion on collaborations within the pharmaceutical industry. Collaborations are defined as partnerships or joint ventures between companies, often between pharmaceutical companies, biotech firms, and academic institutions and involve sharing resources, expertise, and intellectual property to accelerate drug discovery, development, and manufacturing.^1,2 Collaborations ultimately help advance innovation and efficiently bring new therapies to market. 

My previous article discussed mergers and acquisitions (M&A) which is important to differentiate from collaborations. Both collaborations and M&A are two distinct strategies used by pharmaceutical companies to produce new treatment options for many different therapeutic areas. M&A involves one company fully acquiring or merging with another. This results in complete integration of assets, operations, and intellectual property. For example, a major pharmaceutical company might acquire a biotech firm with a promising late-stage drug candidate to expedite the product’s commercialization.

Collaborations involve partnerships between two or more independent companies that agree to work together while maintaining their respective company identities. These partnerships can take various forms through research and development, licensing agreements, co-marketing arrangements, or manufacturing partnerships. They are utilized to accelerate drug discovery, leverage new or complementary technologies, or expand market reach. For example, a small biotech firm may collaborate with a larger pharmaceutical company to develop a new therapy as well as gain access to funding and regulatory expertise without giving up ownership. Collaborations allow companies to share expertise, resources, and financial risks without fully integrating operations.

Types of Collaborations in the Pharmaceutical Industry:^3,4,5

1. Research & Development (R&D) Collaborations
   • Focus on discovering and developing new drugs or technologies.
   • Often involves partnerships between pharma companies and biotech firms or academic institutions.
   • Example: Novartis and the University of Oxford entered a collaboration to develop a gene therapy for spinal muscular atrophy. 
2. Co-Development Agreements
   • Two or more companies jointly develop a drug, sharing the costs, risks, and potential profits.
   • Example: Amgen and Kite Pharma entered a collaboration to develop novel CAR T-cell therapies. Both companies jointly take on regulatory and commercialization responsibilities.
3. Licensing Agreements
   • One company grants another the rights to develop, manufacture, or commercialize a drug or technology in exchange for upfront payments, royalties, or milestones.
   • Example: AstraZeneca agreed to pay Daiichi Sankyo $1 billion upfront over two years for ex-Japan rights to datopotamab deruxtecan for various oncology indications.
4. Co-Marketing & Co-Promotion Agreements
   • In co-marketing, two companies sell the same drug under different brand names.
   • In co-promotion, two companies market the same drug under one brand name but use separate sales forces.
   • Example: Merck markets lisinopril as Prinivil, and AstraZeneca marketed it as Zestril. 
5. Manufacturing & Supply Agreements
   • One company manufactures a drug on behalf of another. This may involve working with a contract manufacturing organization, CMO.
   • Helps companies scale production without investing in costly facilities.
   • Example: Sanofi and Lonza, a Switzerland-based CMO, co-invested in a facility in Switzerland to ease the financial burden of developing novel biologics.
6. Public-Private Partnerships (PPPs)
   • Collaborations between pharmaceutical companies, government agencies, and non-profits to develop treatments for public health needs.
   • Common with global health initiatives.
   • Example: Novartis, Harvard University, and the Dana-Farber Cancer Institute entered a collaboration to develop immunology and oncology therapies.

Pharmaceutical industry collaborations provide advantages because they allow companies to combine resources, expertise, and capabilities to accelerate drug discovery and development. A main benefit is the ability to share high research and development costs. This allows companies to pursue large, ambitious projects that may not have been financially feasible alone. Another key advantage of collaborations is access to specialized expertise and technology. Many pharmaceutical companies enter partnerships to gain knowledge in areas such as, among others, gene therapy or personalized medicine. Smaller biotech firms, which commonly aim to produce innovative therapies, may benefit from the financial backing and regulatory experience of larger pharmaceutical companies. At the same time, large pharmaceutical companies can take advantage of novel scientific approaches from smaller firms. This partnership can lead to efficient drug development processes and potentially larger success rates in bringing new therapies to market.

Collaborations can also improve market access and allow companies to expand into new territories or therapeutic areas. A pharmaceutical company looking to enter an emerging market may partner with a local company that understands the region’s healthcare and regulatory environment. Similarly, collaborations such as co-marketing and co-promotion agreements allow companies to reach broader patient populations without having to develop a large sales force from the ground up. These agreements help companies maximize the commercial potential of their products. 

While collaborations in the pharmaceutical industry offer numerous advantages, they also come with significant challenges. One of the primary challenges is the need to manage complex partnerships. Collaborations often involve multiple stakeholders who may have different goals, corporate cultures, and decision-making processes. Aligning on various priorities including R&D direction, commercialization strategies, and profit sharing is extremely important to avoid future conflicts or halts in progress. 

Another limitation is the loss of control over proprietary research and innovation. When companies collaborate, they may share sensitive data, technologies, or pipeline products. While contracts may outline terms for intellectual property ownership and usage, there is a risk that one party may gain more from the collaboration than the other. At the same time, regulatory and operational challenges also pose risks to pharmaceutical collaborations. When two companies work together, they may have different regulatory strategies, compliance practices, and quality control standards. These differences can complicate the drug development process especially when working across different global markets and regulatory environments. Managing these concerns can require careful negotiation, legal protections, and ongoing trust between companies to ensure adherence to company and regulatory policies as commercialization initiatives advance.

Overall, healthcare will continue to be shaped by pharmaceutical industry collaborations. Evolving technologies, internal practices, and regulatory requirements will continue having a significant role in collaboration efficiency and effectiveness. Collaborations within the pharmaceutical industry will continue to produce new treatments with goals of accelerating drug development, reducing costs for collaborating companies, and improving access to new therapies. These partnerships are crucial for innovation by leveraging the strengths of the involved parties. I look forward to following the achievements of future collaborations that improve the quality of care for patients throughout the world. 

Resources:

1. Steadman VA. Drug Discovery: Collaborations Between Contract Research Organizations and the Pharmaceutical Industry. ACS Med Chem Lett. June 2018;9(7):581-583.
2. Baca MR, Suzuki GJ, and Zuro AM. Co-Commercialization Deals in Life Science Collaborations. Bloomberg Law. December 2019.
3. Shah-Neville W. The ABC of Biotech Partnerships. Labiotech. July 2024.
4. Challenger CA. Three Decades of Collaboration: Evolution From Basic Partnerships to Complex Open-Innovation Models. Pharma’s Almanac. March 2025. 
5. Banks MA. Biopharma-Academic Collaborations in 2021. Applied Clinical Trials. November 2021; 30(11). 

*Information presented on RxTeach does not represent the opinion of any specific company, organization, or team other than the authors themselves. No patient-provider relationship is created.