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Could this major partnership be a sign of things to come?

January 15, 2007

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In a story from last week that may have been missed, AstraZeneca has agreed to pay Bristol-Myers Squibb $100 million up-front and up to $950 million more in milestones to partner up on two new diabetes drugs.

Certainly pharma development partnerships aren’t unusual. What is unusual is that both parties in this partnership have market caps over 50 billion (BMY – 51B, AZN – 87B).

This partnership could suggest several things.

  • First and foremost, BMS must need the cash or it would be developing this on its own.
  • After a few recent drug development setbacks, AstraZeneca is in need of a hit. A recent torrent of M&A and licensing activity also suggests they are fighting to fill their pipeline (deals with Schering FG, Cambridge Antibody Technology Group and Pozen).
  • This could be a move to try and mitigate risk and cost of development by splitting the project.

I’m speculating, but this may be an early indication of some cozying up between these two drug giants.

Kevin Downing @ MaRS

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Kevin currently manages initial client engagements with the MaRS Venture Group. He also administers a federal fund that provides mentorship to start-up companies across Ontario.

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