GSK and diaDexus' Rx-Dx Partnership Model

Drug firms don't have a firm grasp of the development of biomarkers or their potential role in clinical decision-making. Nor have they, with few exceptions, looked to the diagnostics industry for help-they've been unwilling to outsource activities related to highly proprietary drug development projects. Moreover, traditionally, drug and diagnostic company alliances haven't fared well because both parties have different value expectations. Small diagnostic companies want biotech-like prices for their contributions; pharma marketers often see diagnostics as limiting to their sales efforts, and certainly something that can take attention away, in a 30-second detail call, from the main event-the higher-priced drug. But an eight-year-old alliance between British drug maker GlaxoSmithKline PLC (GSK) and diaDexus Inc. seems to address these barriers with some novel approaches now starting to bear fruit.

For drug companies, diagnostics are hot tools that can help maximize R&D productivity and improve their drugs' safety and efficacy profiles. The ventures funds at Eli Lilly & Co. and Pfizer Inc. have both made diagnostics investments. Arguably the lack of the relevant biomarker has forced AstraZeneca PLC to withdraw its European marketing application for gefitinib (Iressa)—which does help some people.

But drug firms don't have a firm grasp of the development of biomarkers or their potential role in clinical decision-making....

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