Cultivating innovation post-acquisition: Bayer and Vividion’s arm’s length model

Most biopharma acquisitions follow one of two models: full integration of the smaller biotech into the larger pharma company, or an autonomous collaboration where the smaller company retains almost all its independence from the acquiring firm. In the case of Bayer’s acquisition of Vividion, however, there is an example of a third, somewhat hybrid approach that the parties call ‘arm’s length,’ and it offers some significant advantages for both parties.

The arm’s length model is intended to help maintain the innovative edge Vividion had built on its own while benefiting from Bayer's research alliances and financial resources. Vividion CEO Jeff Hatfield explained that the arm’s length model means his team is in regular contact with Bayer scientists and executives, but they are never compelled to do things ‘the Bayer way.’ He likened it to an ideal sibling relationship where both sought to support the other, which is quite different from the more common parent-child dynamic of other industry acquisitions.

The arm’s length model means that Vividion can benefit from Bayer’s scale and laboratory expertise without handing over control of their comparatively smaller R&D operation to the German company. Marianne De Backer, Head of BD & L at Bayer, explained that Bayer has already seconded two chemists to Vividion’s San Diego research lab and remains on-call to leverage its chemistry expertise to the advantage of Vividion. This efficient deployment of resources benefits the smaller biotech by allowing it to accelerate its clinical program and, in time, will see Bayer generate the return on investment it foresaw when it initially acquired Vividion.