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With the average cost of getting a novel drug to market at almost $2.5 billion, and few products achieving blockbuster status, deal-making is becoming increasingly vital for pharmaceutical companies to offset rising Research and Development (R&D) costs, says business intelligence provider GBI Research.
The company's latest CBR Pharma report states that pharmaceutical companies are considering various strategies to overcome the current challenges, which also include shifts in patent laws and the struggling global economy, with deal-making the foremost method of boosting short-term revenues.
Mr Priyatham Salimadugu, analyst for GBI Research, says deal activity can help pharma firms to enhance their research and regulatory approaches, and can aid portfolio expansion and diversification, geographic expansion, entry into niche markets, commercialization, and sales.
He explains: "Small companies that primarily carry out research, development and production activities are looking towards entering into agreements with key industry leaders. They are seeking to utilize their strengths in terms of commercialization expertise and global presence in order to boost their revenues.
"Meanwhile, big pharma corporations keen to secure novel and promising molecules are willing to co-operate with small players to expand their portfolios and reduce R&D risks."