Not Invented Here

The partnership, of course, is rooted in mutual need. For as much as Idera wants access to Merck's capacity for testing, manufacturing, and selling drugs on a mass scale, Merck needs know-how in areas such as nucleic-acid chemistry and RNA interference, an approach that shuts down selective genes. Indeed, with biotechnology poised to produce more potential drugs these days than traditional research, Big Pharma is racing to tap that expertise. Merck, for one, had just 4 licensed products in its pipeline in 2004; now it has 12.

Merck's defining discovery: It can no longer claim all the top scientific talent, or all the answers.

Which is why, last summer, the scouts were all over Robert Rando. The Harvard biochemist had discovered a molecule that could possibly stave off macular degeneration, a major cause of blindness in the elderly; he needed someone to turn it into a drug. Rando says he spoke to a couple of venture capitalists, but the idea of starting a new company didn't excite him. A deal with Merck would skirt much of that hassle--and besides, company reps also understood the science in a way that some of the venture capitalists didn't, Rando says. After Rando's collaborators at Columbia University confirmed the effectiveness of his molecule, Merck offered Harvard and Rando $3 million for rights to the research. If all goes well, Rando's research could produce a blockbuster.

If not, of course, the work could sit on a shelf forever. That's the downside of these deals. "If it works, it's perfect," Rando says. But "when something goes into someone else's hopper, lots of things can change.... Projects get scotched for a variety of reasons--including when they don't work."

But like Merck, he's willing to take a chance.

Tinker Ready writes on science and health care from Cambridge, Massachusetts.