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In general the top 10 pharmas need to do both. Others, such as Shire can in-license products. Some might claim that the likes of Glaxo (now GlaxoSmithKline) were initially successful not through R&D but being an excellent marketing machine. There are convincing arguments that Richard Sykes' policy of investing heavily in R&D didn't produce the necessary results but others will point to Merck, which has been successful in growing organically (i.e. without acquisitions). Even Merck, however, did this year pay $0.7bn for Rosetta a US biotech company and it is the feeling for many people that Biotechs will be providing the R&D for big pharmas in future years.

Let me illustrate that point
Pfizer has a market cap of $243 bn
Top 100 biotechs pooled together have Mkt Cap of $241bn

Phase III compounds for Pfizer? 14
Phase III compounds for top 100 biotechs (pooled)? 96

Pfizer Total drugs in development? 484
Top100 bio total drugs in development? 55

2000 Sales Pfizer? $29.6 bn
2000 Sales Top 100 Biotechs? $17.6 bn

R&D Pfizer? $4.4 bn
R&D Top 100 Biotech? $6.6 bn

Cash position Pfizer? $9.0bn
Cash position top 100 biotech? $31.7 bn


2000 Net Income Pfizer? $3.7 bn
2000 Net Income Top 100 Biotech? $0.13 bn

Headroom for growth???

Considering the immense marketing machines that top 10 Pharmas have it might not be a bad idea to take their pick from what biotechs churn out to plague holes in their pipeline. GSK have already changed their R&D set up making project managers compete for R&D funding internally, practically turning them into 'mini-biotechs' themselves. Don't forget, however, that a lot of the biotech products in development are already licensed out to Pharmas!

Hope that helps
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