Strategic alliances between pharmaceutical and biotech companies will become increasingly necessary, and the deals could garner the companies billions of dollars, according to a new report from an analyst firm.

The report, from Best Practices, stated that the industry is increasingly turning to these alliances to overcome rising drug discovery costs and budget cutbacks.

The report, which was based on interviews with business development executives, focuses on the successful strategies used by nine pharma and biotech companies, including Aderis, Atherogenics, Atrix, Bristol-Myers Squibb, Medical Imaging, Cardiome, CV Therapeutics, Micrologix, GlaxoSmithKline and Fujisawa.

Morrie Ruffin, vice president for business development and emerging companies at the Biotechnology Industry Organization, told United Press International that strategic alliances between the two sectors have been going on for 20 years, but there has been a dramatic jump in the last decade.

"There's been a tenfold increase in the last 10 years," Ruffin said. "The reason for that is drug discovery and drug development today requires partnerships. Merck and all the other (large pharmaceutical) companies have, in the last 2 or 3 years, acknowledged they can no longer go it alone," he added.

Successful alliances require the creation of a "win-win" situation for both parties, Best Practices said. "Too often, the tone of negotiation turns to discussions in which one company seeks to claim all or dominate key deal elements," the analyst firm said in a statement. A better strategy would be a transparent and well-managed alliance.

This ensures that "large pharmaceutical organizations become 'partners of choice' for smaller biotech companies enabling them to tap into cutting edge technologies and compounds -- on an on-going basis," Best Practices stated. "The biotech companies, in return, gain access to capital, development expertise and market knowledge, which in many cases are drivers of successful alliance negotiations."

Building these types of alliances requires five key factors, according to the interviewed executives. These include exhibiting transparency, maintaining an air of cooperation, openly discussing risk-taking scenarios, involving key decision-makers and maintaining a core alliance management team.

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