Not Your Father’s R&D — Distributed Innovation

Pfizer is laying off roughly 800 researchers in an effort to shrink its $7.5 billion R&D budget. Though research divisions of Big Pharma have long been considered untouchable come budget-cut time , the company and industry at large have had a dry spell when it comes to developing the sorts of blockbuster drugs that justify the costs. 

The dearth of new drugs, as well as those drugs that are coming off  patent protection in the next few years, have led to some bullish sentiment on the biotech sector in expectation that these firms may be good acquisition targets for the drug makers.

That Big Pharma is forced to look past its own R&D walls to source new drugs candidates is an example of open innovation. Dr. Cliff Gross of innovation consulting firm UTEK Corp, (Amex:UTK) maintains that the most successful firms will be those who can commercialize products built upon successfully outsourced research. UTEK helps companies source, analyze and license promising discoveries from scientific labs from all over the world. It manages a veritable multiple-listing service of intellectual property – more than 62,000 discoveries – each with the potential to be a difference maker for a company in need of an innovation jump start.

 Phillips Electronics CEO Peter Wieranga claims that “innovation” has long been synonymous with the word “proprietary” and viewed as a closed, almost secret activity conducted in R&D centers. The Internet has changed that. The networked- knowledge economy has made innovation a distributed activity, allowing companies, universities and research institutes to share costs and ideas from outside their own boundaries.

 More than anything, open innovation requires trust. For that, Wieranga recommends a detailed list of IP rights ensured through appropriate protection strategies.

The list of small, potentially acquirable biotechs with drugs and vaccines that address very large diseases and conditions is as long as anyone’s arm.  Some are outside the US, like Stockholm-based Diamyd Medical AB (OTCQX: DMYDY, with a vaccine program for diabetes; or Sydney-based QRxPharma Ltd (OTC:QRXPY,, with a program in pain management that avoids drug abuse by eliminating euphoria as a side effect, or Singapore-based BioSensors International (SGX:B20,, with drugs to prevent restenosis in stents.  In the US there are various biotech indices, notably the Nasdaq Biotech Index (



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