"The whole pharma industry is hungry for deals, in particular for Phase III compounds, as there is a shortage of drugs in pipelines," said Rob Hockney, director of alliance management, Global Discovery Alliances at AstraZeneca.
"If you are a biotech company and you can't sell your product to big pharma now, there is something wrong with it!"
In recent years, the number of big pharma companies acquiring biotechs has increased but what has also increased significantly is the number of partnerships, alliances and licensing deals.
The reasons behind this are simple: the costs for bringing a new drug to the market have soared - currently between $900m (€670m) and $1.2bn - and R&D departments have struggled to provide new products to offset the flood of generic alternatives to formerly untouchable blockbusters.
As a result, drug makers have been looking at alternative options in order to feed their starving pipelines and recent Datamonitor statistics show that the number of licensing deals signed by the top 20 pharma companies has risen 16 percent in the past five years.
And this trend is showing no sign of slowing down as it is predicted that large pharma companies increasingly will partner with biotech firms over the next five years in order to maintain revenue growth.
According to a panel of industry leaders gathered this week by the Tufts Center for the Study of Drug Development (CSDD), this is driven by pharma firms' need to improve clinical development and R&D productivity.
"Success in new drug development rests to a large degree on determining if you have a clinically meaningful product sooner rather than later," said Tufts CSDD director Kenneth Kaitin, who co-chaired the panel.
"Since small and mid-tier companies and biotechs operate principally in Phase I and II development, they can feed new molecular entities efficiently to large pharma."
While aiming for annual real revenue growth in the 5-8 per cent range through 2012, large pharmaceutical firms individually face potential sales gaps of tens of billions of dollars, according to Tufts CSDD.
In order to achieve these revenue goals, companies would have to develop and launch 12 to 50 new products between now and 2012, or about two to nine each year.
In reality, during the last five years, the top 10 pharmaceutical firms have typically brought less than one (0.6) new drug product to market every year, according to data from Tufts CSDD.
Meanwhile, Hockney added that big pharma companies were also desperate for drug discovery technologies, as their own are insufficient to overcome attrition rates - a huge problem in the industry as only one in 10 drug candidates makes it to market launch.
In addition, licensing a discovery technology is cheaper than licensing a compound, said Hockney.
Although, he stressed, products have to be valued correctly to attract the interest of big pharma.
Alliance vs acquisition Asked whether big pharma companies were seeing alliances as a 'pilot' for acquisitions - the British giant acquired Cambridge Antibody Technology (CAT) last May, two years after it bought 20 per cent of the company's shares - Hockney said "No.
Our business moved on, the environment changed and then we decided to buy CAT".
It is all down to a different perspective between biotechs and big pharma have on their products, he concluded.
"Big pharma companies work with big portfolios to combat attrition whereas small biotechs believe one drug candidate will make it to the market," said Hockney.
"Big pharma companies have the luxury of not having to worry about 'paying the rent' so when financing a deal with a biotech firm, they can look directly at the pipeline benefits for patients."