The global credit crunch and the equity meltdown may have caused pain to companies in most sectors, but it has had unexpected benefits for cash-rich established drugmakers such asShire, the Ireland-based speciality pharmaceutical business, The Financial Times reports. “It has strengthened our negotiating position,” Angus Russell, Shires’ ceo, tells the FT.

This has helped shift the balance of power away from biotechs in their discussions with large drugmakers that are willing to pay high prices as they compete in their search to find future drugs to replenish thin portfolios.

“In the past few years, it was a sellers’ market driving up valuations for less and less mature technology,” Tibur Papp, head of advisory at PharmaVentures, tells the FT. “Now the environment is changing and with a significant impact on biotech finance, it has become more difficult to find partners and good deals.”

The credit crunch is hurting even larger companies, such as Amgen, that are finding borrowing costs are soaring. The biotech retired $1 billion in debt this year and has another $1 billion expiring in November. “We can repay the November maturity with cash and may do so depending upon market conditions,” an optimistic spokesman tells Bloomberg News.

Neil Mackison, head of European healthcare investment banking at Piper Jaffrey, tells the FT that “companies that are running out of money are looking for new strategies.”

With few prospects for initial public offerings or follow-up equity financing, and venture capitalists seeking returns of 25 percent to 30 per cent, he says some have turned to “venture debt”, offering coupons that he says are typically in the high teens. Those lucky enough to have meds on the market are doing more deals with specialist royalty companies to provide cash up-front in exchange for the rights to future sales.