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I know what you mean but it doesn't often work that way, at least not anymore, Universities got smarter. The work done in most University labs is basic research, not usually focused on pharmaceutical endpoints. Some of the basic research does pan out for future pharma development, stuff like Digoxin, Taxol and a lot of biological and natural molecules did start in basic research University labs and they do eventually move on to the pharma world. The discoverers of Digoxin and Taxol and I'm sure a lot more were totally and fully ripped off by the pharma companies so Universities got smart and instituted Tech Transfer Departments to make damned sure that doesn't happen any more. Now Pharma companies will fund University research if they see a promising endpoint too, that's how I got into the business.
When I was in graduate school I was working on a protein that we hoped could be an important veterinary and maybe human vaccine candidate. When I first started I was funded by a Government grant, it was basic research interested in the interactions of two different proteins. By the time we figured out that it could be a viable vaccine candidate my research project was fully funded by Novartis for the final two years, goodbye Government grant. That's not bad, it's the way it's supposed to work, somebody else can use the money. Governement grants have really been getting harder to get. My University negotiated a technology transfer agreement (all University research is the property of the University, not the researcher) with Novartis in which a percentage of future profits would be returned to the University and an even tinier amount to my supervisor and those of us on the patent in return for the protein and vaccine research. That was 10 years ago (damn but time flies) now and there still hasn't been a product put out for either vet or human therapy. Likely it's been dropped because it didn't function as well as hoped in the clinic. For Novartis it was a pretty small investment, University labs run on pennies compared to their in-house labs and it's good PR and recruiting for the pharma companies.
Most drugs are still discovered in house, either by the pharma companies or smaller biotech companies that then sell the technology to the larger pharma companies because the really expensive part of the drug development game is in development. Scale up of either small molecules or biological compounds from bench level gram amounts to hundreds of kilograms for clinical trials is a huge hurdle for poorly financed small companies and is never done in the University environment. I visited one of our Development sites and couldn't believe the size. I do cell culture work in discovery and buy media in 10 liter jugs, at the cell culture development site they had it brought in in tanker trucks that they hooked up to hoses. Clinical trials (phase I, II and III) cost up to hundreds of millions of dollars to set up, monitor and evaluate so again few biotechs and no Universities fund these. Even large pharma companies group together to share the risk if something goes down the drain at this stage.
Since I graduated I did a post-doc with an NIH funded Government lab and then moved on to two different small biotech companies that were heavily leveraged with single technologies. It's a fun job when you're single and can move around because it can blow up in a hurry. A large part of your "salary" comes in the form of stock, if it fails you can use it to paper the walls of the apartment. The first biotech job ended with a failed pre-clinical trial when the investment went away, I packed up and moved across the country to another biotech company, we sold that product to a big-pharma company. I took my stock option payout, got married and moved to big pharma because we wanted kids and I couldn't take that much personal risk anymore.
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