Biopharma Ecosystem R&D

Contract Research Organization

What is a Contract Research Organization?

A contract research organization (CRO) is a firm that provides services to pharmaceutical companies around the conduct of various research activities including activities in discovery, preclinical, clinical development, or any other research activity including real world evidence generation. CROs have grown in use in recent years as pharma and biotech companies try to remain lean in terms of internal organizations.

Pharma companies contract with CROs to execute on specific studies and they own the overall direction of the study and what should be done including in the execution phase around specific decisions that need to be made. The CRO often does the actual day-to-day management of the study logistics.

Examples of large CROs include Covance, Syneos, and IQVIA.

Biopharma Ecosystem


What are Biobucks?
Biobucks are commitments for the provision of future money contingent on certain outcomes that companies may include as part of business development or licensing deals. These future provisions may depend on hitting certain sales, clinical, or regulatory milestones (such as a dollar amount of sales per quarter, positive readouts in a certain phase of development, or FDA approval).

Biobucks often headline deals due to the appeal associated with high dollar values, but critics suggest that the upfront payouts are often more important given the general risk associated with achieving milestones.

Biobucks have occasionally been the subject of lawsuits when shareholders of an acquired company or company that out-licensed a product feel that the acquirer mishandled execution of development or commercialization which cost them potential biobucks in previously agreed-to deals.

Biopharma Ecosystem

Biotech Hubs

What are biotech or pharma hubs?

There are a few geographic areas in the world where there is an especially high concentration of biopharma companies. The two largest biotech hubs are in the San Francisco and Boston/Cambridge areas in the United States. New Jersey and the Philadelphia area also have a high concentration of larger pharma companies. Smaller hubs in the US as found in Research Triangle Park in North Carolina and San Diego.

Why do biotech hubs exist?

The existence of the high concentration of companies in just a few geographies is likely due to talent pools, academic infrastructure, and local laws which favor the companies financially. Hubs are often viewed as the result of a snowball effect- once it hits a certain size and influence, it feeds on itself, driving more scientists, investors, startups, etc. to the area in order to leverage the existing and growing network. Employees in various functions often prefer to live in these hubs as it allows them flexibility and easier room for growth within the ecosystem long-term.

Biopharma Ecosystem Functions

Business Development and Licensing

What is Business Development and Licensing?

Business development and licensing (BD&L) in biopharma refers to assessment and execution of potential opportunities for partnerships, acquisitions, mergers, and other deal-making. Professionals in BD&L follow developments in research and development at other companies and in the general scientific community and conduct due diligence on specific opportunities. There is typically a very rigorous process of due diligence in an attempt to de-risk opportunities before a company commits to an agreement. As a result, the majority of deals that a BD&L professional works on are unlikely to ever see the light of day.

Business development parts of the organization are typically heavily fire-walled from the rest of the organization (especially in large public corporations) in order to reduce the risk of non-public material news accidentally breaking to the public or people who are not directly involved in the deal-making processes.

Licensing specifically refers to the act of partnering on a drug with in-licensing being the act of a company to purchase rights to a drug for one or multiple markets. The company which sells rights or partial rights to a market is out-licensing in this scenario. Such partnerships can be structured many different ways including complete sale of rights in specific or all markets or co-promotion deals where profits are split. Furthermore, deal terms like royalties and milestone payments can be common in these deals. BD&L professionals are key in negotiating the specific terms of these agreements.