With Wall Street investment rapidly drying up for small United States biotechnology companies and large foreign drug firms eying lucrative overseas markets for American biotech products, partnerships between the two may be the wave of the future, biotech executives and industry analysts say.

Benjamin Isaacs OBSERVER: Formatech president and AAPS official Benjamin Isaacs notes benefits of the increase in alliances.

These international alliances generally include a combination of R&D collaborations; product manufacturing, licensing, and royalty agreements; and, most important, equity investments by the larger companies in exchange for relinquishing future European or Asian licenses to potential products.

"There are two dynamics working toward one another," says G. Steven Burrill, managing partner at Burrill and Craves, a private merchant bank in San Francisco. "You have the need by large pharmaceutical companies for innovation and the need by small biotech firms to access capital to achieve sustainability. Both sides are now aggressively participating in...

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