D'Antuono is vice president of process chemistry solutions at services company Row2 Technologies, and last week highlighted the increasingly prominent role compound licensing is playing in pharma firms' business development strategies. Big pharma is due to haemorrhage around $100bn over the next few years as numerous drug come off patent, but the industry is facing even more challenges as it fights to fill the holes in its pipeline. "The cost of R&D is rising, over the last 28 years it's actually increased 23-fold - that's way above the cost of inflation, and way above increases in drug prices," said D'Antuono. "But while [R&D cost] is going up, productivity is going down. Fewer and fewer drugs are coming out of the pipeline and making it all the way to market…[pharma companies] have a real crunch in their pipeline." Evidence of this growing pipeline crisis can be seen in recent forecasts from analysts Frost & Sullivan, who have predicted annual pharma industry growth at a meagre rate of 8-10 per cent over the next decade - not enough to sustain many companies over the long term. So with an increasingly challenging environment within the pharma sector, and growing pressure on R&D to deal with patchy pipelines, more and more companies are turning to licensing to fill the gaps in their portfolios. "The number of drugs that were developed by pharmaceutical companies in-house was 80 per cent in 1970," said D'Antuono. "In 2000, it was 40 per cent. The rate has gone down significantly, and according to estimates, 50 per cent of revenues that large pharma is going to make in 2010 is going to come from licensed compounds. This is real - this is happening today." Indeed, D'Antuono highlights Novartis as one company that is taking the lead in the licensing initiative, with over 120 collaborations with biotech companies and 138 products in their pipeline, six of which are in Phase III. Thanks to this investment and forward-thinking, the company expects five or six drug filings every year for the next three years. In contrast, AstraZeneca has not been quite so proactive. The company currently has eight molecules in Phase III, but over 2007 suffered no less than five Phase III failures. According to D'Antuono, AstraZeneca does not expect to launch any new molecules for the next two years, leaving it to rely on the products that are already on the market. Though slightly slower off the mark than some of its fellow pharmas, AstraZeneca has now at least taken some actions to try and fill this blank space in its pipeline, and from 2006-2007 licensed 12 products in-house from other companies. The four front-runners in the licensing game - GlaxoSmithKline (GSK), Roche, Novartis and Aventis - are between them likely to be responsible for 50 per cent of the licensing deals struck by the top 20 pharma companies, says D'Antuono. However, there is a stumbling block in the licensing route. "Statistically, 50 per cent of the licensing compounds that [pharmaceutical companies] in-license fail because they can't make the drug," says D'Antuono. He claims that while traditionally, biotechs (for example) tend to assess a compound's efficacy, pharmacology, toxicology and pre-clinical data, they fail to give due consideration to synthesis and scale-up, leaving a compound to fall towards the final hurdle. Synthesis problems can also put a pharmaceutical company off licensing a particular compound, particularly if the firm lacks the expertise to effectively develop a synthetic route. Similarly, an out-licensing firm could find its potential partner cutting their proposed price, due the extra work the company has to put to establish whether a compound is scalable and then develop a suitable process. This situation means that companies such as Row2 are likely to see increasing demand for their services, offering process chemistry expertise to both in-licensing and out-licensing ends of the chain to help establish whether particular compounds are viable and develop an appropriate, scalable synthesis. Looking to external sources to provide expertise that pharma companies themselves may lack as they try and shore up their dwindling pipelines reduces the risk of signing up to a new compound and saves time and money potentially wasted by inadvertently heading down blind alleys. The last thing any pharmaceutical company needs right now is to fritter away funds chasing molecules that, when it comes to the crunch, bring no return on investment.