Pharmaceutical companies alliances with

Increasingly, the large pharmaceutical companies formed partnerships and alliances with smaller biotechnology startups. In addition to providing... 

These alliances required that smaller biotechnology firms accept diluted property rights in their new products. Not only would the returns be shared but decisions and control over the research process would now be negotiated with an outside partner. An obvious question is why they were willing to do so. One answer is that these steps were needed to raise capital that would not otherwise be available. However, if that were the only factor, other investors than the large pharmaceutical companies would have equal standing and be as likely to respond. This capital is typically provided by pharmaceutical companies, which suggests that other factors are also important. 

Many more biotech-based products are currently in the pipeline and expected on the market soon. Most pharmaceutical companies today admit that they are dependent on alliances with biotech startups for the development of new drugs and new ways of treating diseases. The value of collaborations formed between pharmaceutical firms and the biotech industry amounted to no less than USD 4 billion in 1998. 

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