This morning at the 2006 BIO meeting in Chicago, I listened to a panel of high profile executives at a range of companies within the biotech/pharma sector, all of whom seemed to agree that pharmaceutical companies are taking more risks in recent years by investing in earlier-stage products. This is a major shift for the industry, which has traditionally chosen to spend more money on later-stage products with more data to suggest they work, rather than throw the dice and invest in an earlier-stage, less known, entity.

As a result of this change, the climate of the deals may also have shifted. In some cases, big pharma companies may compete with each other over an early product, and the small biotechs that develop those products get more of a say about the financial details of the deal, rather than pleading for anyone to buy them, regardless of the particulars.

So what's driving the shift? Chair Bruce Jenett a lawyer at Heller Ehrman in Menlo Park, Calif., said one of the drivers is that venture capitalists are lately following a "mantra" of only investing in phase 2 products, or beyond. In addition, he noted that the drug pipeline is generally dry, both internally at pharmaceutical companies, and in non-Western regions, such as Japan.

The trend remains somewhat difficult to quantify, but panelists Douglass Given of Bay City Capital and Graham Brazier of Bristol-Myers Squibb said they sat down before the talk to brainstorm about who's doing what, came up with a list of 20 recent deals spearheaded by pharma, and half were in the pre-clinical stage. Chris Seaton, senior VP of global licensing and business development at Bayer Pharmaceuticals, agreed that all of the top 25 companies are looking at early-stage partnerships. "Everybody's out there."