How Big and Little Pharmaceutical Companies Bring New Drugs to Market

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80% of clinical research and life science companies in Canada have less than a hundred employees.
Photo source: mri.gov.on.ca

For the pharmaceutical industry, small, lean and agile research firms are the growing trend. Research in the life sciences, as in the cutting edge of any field in Canada, follows a complicated path of private and government investment that mixes for-profit companies with public universities. In this trend, while the big players in the pharmaceutical industry continue to help steer the development of new drugs by providing a large amount of the capital and guidance for the emerging technology, the actual muscle behind the laboratory and clinical research is coming from independent labs with less than 100 people, which makes up more than 80% of the companies in Canada.

These small groups offer more nimbleness, and often make a single project the focus of their work, essentially building the company like independent contractors. Often they are birthed in graduate studies and top notch undergraduate programs, where the company founders meet and network in life science and pharmaceutical courses. Sometimes, the drug they are developing may even be an extension of the cutting edge research that goes along with their studies. Universities tolerate this private use of public resources because it generally means large grants, and the ability to publish the research.

Forging partnerships between high-tech research companies

80% of clinical research and life science companies in Canada have less than a hundred employees. Photo source: mri.gov.on.ca

80% of clinical research and life science companies in Canada have less than a hundred employees.
Photo source: mri.gov.on.ca

But these relatively young, often start-up companies generally lack the ability to independently bring drugs to market or secure the necessary venture capital. The large companies provide both internal investment and just as importantly, put the reliability of their name and industry know-how to help coordinate venture capital and forge partnerships. For example, the recent creation of a $150 million venture capital fund, TVM Life Science Ventures VII, created by Eli Lily and based out of Montreal.

Some of the push behind this trend, as well as the natural structure of how high-tech research is coordinated, is also based on the patent life cycle. As many patents on money-making drugs reach the end of their lifespan, companies with long term tenure seek an infusion of fresh ideas. This can culminate with outright acquisition of a particularly successful smaller company, for example the recent $1.1 billion dollar acquisition of Pharmasset by Lumira Capital.

The take away is that these trends are good news for people with laboratory skills like HPLC training. While life sciences generally have a reputation for lower incomes, in practice, there’s a great top ceiling for income potential for the companies on the cutting edge.

Would you rather work for a big or a small company, or found your own?