Why do virtual companies gain more than big pharmaceutical companies

[market analysis of chinapharma.com] the so-called virtual R & D generally focuses on a preclinical new drug or asset, and obtains the development right through technology licensing Then we set up the company The founders and investors will inject funds in batches and time-sharing There is no need for laboratories or equipment There may be only one or two employees, 5-10 more All development work will be outsourced (why virtual companies get more than big pharmaceutical companies: Baidu pictures) this is because the R & D efficiency of big pharmaceutical companies is low, even if many employees are employed and many money is invested, they can't make good new drugs or blockbuster drugs It can be seen from the current hot drug list of major pharmaceutical companies that 70-80% of drugs are purchased from small and medium-sized companies or academic technology licensing, or acquired from the whole R & D company Since big pharmaceutical companies are willing to pay a high price for R & D projects and companies, this will give entrepreneurs and investors with innovative and entrepreneurial ability and spirit a good business opportunity Since 2000, such virtual R & D models have sprung up one after another Become the research and development mode and investment focus that VCs are willing to support The so-called virtual R & D generally focuses on a pre clinical new drug or asset, and obtains the development right through technology licensing Then we set up the company The founders and investors will inject funds in batches and time-sharing There is no need for laboratories or equipment There may be only one or two employees, 5-10 more All development work will be outsourced This kind of virtual company only spends half of the time, 20% to 10% of the funds to complete the trial application of new drugs, as well as the early clinical trial of proof of concept Once the ideal data is obtained, the project will be transferred to large pharmaceutical companies, or the company will be sold to listed companies and pharmaceutical companies According to the current market situation, such a virtual company can sell hundreds of millions or even more than one billion dollars in the pre clinical and clinical phase II stages, bringing very good prices to the founders and early investors / VC investment institutions Why can such a virtual company obtain higher development efficiency and efficiency than a large pharmaceutical company? Founder + investor's Errenzhuan: first of all, the founder and operator of the virtual company are bullish They not only have entrepreneurship, but also are often experienced in the field of R & D, with a wide range of resources and full of confidence He / she knows where the key to R & D success lies, and where time experience and funds should be invested They are practical, risk-free, creative and motivated Work efficiency is high, waste is little, improve the efficiency and success rate of R & D naturally in this way Of course, the founders of these virtual companies are usually successful serial entrepreneurs, venture partners trusted by venture funds, top managers of large companies, business BD managers, and the former R & D directors of some projects Due to the company's R & D adjustment and divestiture of assets, they start businesses in succession In addition, the investors behind the founder's virtual company are quite different from the big pharmaceutical companies in terms of the management pressure and time rhythm on the investment in R & D projects Most of the virtual companies are co founded and managed by venture capital or Tianshi investors These investors are more rigorous in project implementation progress, capital investment direction, cost and risk control, benefit assessment than large pharmaceutical companies, and more reasonable in resource matching Investors do not care about risk and are willing to bear the cost of failure But the pre investigation and due diligence of the project will be more rigorous Many important breakthroughs and heavyweight papers in the academic community, 60-70% of which can not stand the verification of the industry, which is the result of nearly 100 important papers that Amgen and Bayer have spent a lot of money to repeat and verify Therefore, in the development of new drugs, especially in the development of new targets and mechanisms, the founders and investors will do strict demonstration and experimental verification Experts will be invited to evaluate and check The project management and risk control of professional risk investors will be more rigorous than that of large pharmaceutical companies Progress and cost control will also be very refined management In the face of risks and problems, we will deal with them in a timely and proper manner We prefer to stop loss and give up, rather than waste time and energy Incentive mechanism: the corporate culture of virtual company is also the key In large enterprises, decision-making should be divided into several levels The organization is mediocre, nine to five, and the efficiency is very low There is also a lack of incentive mechanisms The efficiency of virtual companies is very high Although there are basically no hardware facilities, few funds and few personnel, they are very efficient Each link has experienced external consultants and service agencies, the company only do internal and external coordination and project management Don't waste money and time on superficial and fictitious aspects that have nothing to do with the project In addition, the ship is small and easy to turn around, and the decision-making is fast There is no internal political struggle and complicated relationship between superior and subordinate personnel and entertainment It is naturally much higher than that of a large pharmaceutical factory to make decisive decisions and complete the progress and substantive progress of the project Another advantage of Virtual R & D companies is that they are more focused, do not attack everywhere, do not support idle people, have clear goals, and spend money on cutting edge The products developed by virtual companies must have clinical rigid needs, and the development cycle is relatively short, especially orphan drugs / rare disease drugs As long as there is safe and effective data, it will generally go through fast channels In this way, R & D companies will not always stay in the early stage of R & D, but try to enter the clinical practice and get key human test data The ultimate goal of the virtual company is to build to sell, so the key is to sell the data of big pharmaceutical companies As for when to sell, it depends on the selling skills of the virtual company Now big pharmaceutical companies have more money in hand and less dried new drugs For new drug projects with good data and great strength, there are people asking for them at different stages It depends on the price Whether the valuation acceptable to both parties is reasonable Risk control virtual R & D company is not without risk, but compared with the big pharmaceutical companies that pay hundreds of millions of dollars, billions or even billions of dollars, the investors and entrepreneurs of virtual companies have their own bottom line Millions of dollars or tens of millions of dollars will be sold as soon as they are made If we can stick to the later stage of clinical data, it is bound to sell at a better price However, from the perspective of risk control and investment cycle, most virtual companies are willing to consider selling for as long as the price is appropriate after three or five years of operation Of course, big pharmaceutical companies will not spend silly money, regardless of cost, let virtual companies bargain Now more and more transactions will lock in an overall price and pay virtual companies and their investors with down payment, milestone payment and sales commission It will be at least several years before we can get all the money of the transaction amount It depends on the end result and market feedback (total sales) At present, virtual companies are more and more concerned and sought after The purchase price of virtual companies with good products, good concepts and good data is also rising It seems that big pharmaceutical companies are looking forward to such companies and projects In order to prevent competitors from bidding at high prices, big pharmaceutical companies with ide1 are simply engaged in the preclinical stage in the OTB way, cooperate for a while, then get married, and then acquire wholly The advantage of this approach is that it doesn't spend much money in the early stage, but it can be developed together with the internal strength of the company until there is more convincing data I have noticed many such cooperative transactions It reflects that the big pharmaceutical companies are very keen to search and purchase pre clinical assets, and the competition is also very fierce Of course, virtual companies are not the only way to be acquired Virtual companies with a solid foundation and capital operation capability prefer to continue to raise funds and re IPO The case of scenery here is roviant Sciences, a virtual company of Vivek Ramaswamy, an Indian American In 2015 and 2016, he made an IPO of two virtual R & D companies It is not only a short time from the establishment of the company to the listing, but also a large amount of financing funds and a high market value, which has become the man of the moment in the biotechnology capital market He was only 31 years old and had never spent a day in a pharmaceutical factory developing any new drugs His ability is to buy the assets that big pharmaceutical companies don't want at a low price, then repackage them, and develop them again with different development strategies Although the two companies he founded have gone public and recruited some competent professional managers, he has to create more companies and create more capital myths Whether his enterprise can be strong or not depends on whether the clinical development of the virtual company can achieve the desired results Otherwise, everything will return to zero or we must make it a stove, and choose another project to continue to develop Judging from the amount of funds that have been financed, he can do drug research and development of multiple project companies according to the platform of the holding company Maybe if the East is not bright and the west is bright, there will always be project companies that can do it This is the capital game It remains to be seen whether it will About the author: As one of the early professional investors in the field of American venture capital, he once served as the head of Asia Pacific China region of paramount capital, a well-known American venture capital company, in the 1990s, and personally participated in the cross-border cooperation between China and the United States as a venture partner, to become a virtual R & D operation company, and the core technology and Products introduced to North America Sold to us listed companies High return on investment After returning to China in 2002, dingxiangyuan has invested and established many companies in a similar mode Among them, dingxiangyuan also relies on early virtual operation to become a domestic influential doctor social professional platform service company with small, broad and virtual incubation The author has published many articles on the investment and operation mode of Virtual R & D operation, with both theoretical and practical experience, and is willing to provide corresponding guidance and consulting services for innovative entrepreneurs.