Which big drugmakers are perceived by cash-hungry biotechs as the best potential partner for doing a deal? A recent survey indicates that Merck scored highest among 17 individual attributes, such as being able to value to a compound and offering sales and marketing muscle, and has the most favorable overall impression. But Roche notched the highest average score and was mentioned most often as a desirable top partner.

“Roche has been writing the playbook on how to run an effective partnership organization – training staff, clarifying its message and, in general, in the way it deals with partners at negotiations,” says Simon Goodall, a partner and managing director at Boston Consulting Group, which gathered responses from 95 biotech chief executives and business development heads. “But Merck is now one of best-regarded partners out there. It’s a story of how to turn a company into a partnering powerhouse” (see this from BCG).

The backdrop, of course, is the need in big pharma to fill pipelines thinned by laboratory disappointments and, simutaneously, compensate for the staggering loss of patent protection on big-selling meds. Over the past few years, this eventuality has created tremendous competition for the few late-stage compounds, prompting big pharma to become more aggressive about doing deals and scouring about for prospects earlier in the development process.

Among the findings: big pharma wants more late-stage deals. In particular, there was a widening gap between Phase II and Phase III deals between 2008 and 2009. Although the average deal value rose quite a bit between 2004 and 2008 - from slightly north of $100 million to $350 million - it fell back to about $275 million in 2009. Meanwhile, the number of deals has largely declined consistently, from 549 in 2004 to an estimated 340 last year.

At the same time, though, big pharma is getting picky. As BCG notes, the small to mid-cap biotech universe is increasingly divided into haves and have-nots. And those have-notes have more debt that makes for bargain hunting. And even those with some cash still have to worry about gaining FDA approval, which can mean running unexpected - and costly - trials that were not foreseen originally.

But what attributes do biotechs want in a big pharma partner? Sales and marketing capability as well as manufacturing expertise and research capabilites. Also cited were adding value to the compound and clinical capability. Then there was responsiveness during negotiations and allowing partners to retain control in development and commercialization also count. Beyond these items, there is also creativity and flexibility in structuring a deal and a willingness to pay a high price (read one chart here)

One interesting note: biotechs report that there is little overall improvement in perceived performance among big drugmakers that are jockeying for position, but the differences between the best and the worst has been narrowing. By the way, after Roche and Merck, three other drugmakers - Eli Lilly, Novartis and GlaxoSmithKline - consistently polled near the top in three categories: the highest average score across all attributes, most nominations as top partner and best impression among the most respondents.

Hat tip to the In Vivo blog

pic thx to o5com on flickr