Pfizer’s VC Leader, Barbara Dalton, on Corporate Venture and Northwest Deal Hunting

Pfizer is the world’s largest drugmaker, and it tends to make headlines when it pulls off megadeals like its pending $68 billion takeover of Wyeth. It’s one of the deals the company is hoping will help replenish its pipeline with new medicines after the patent expires in 2010 for atorvastatin (Lipitor), the $12 billion a year drug that accounts for about one-fourth of its revenues.

Plenty of people have written about Pfizer’s R&D failures and subsequent cutbacks, but what fewer people have noticed is that Pfizer is also looking to fill up its pipeline partly through corporate venture capital investing. In July 2007, it hired Barbara Dalton, a “venture capital star” according to Pharmalot (a great blog that is, sadly, now defunct). Dalton was in Seattle this morning to give a keynote talk at Invest Northwest, so I caught up with her for an interview before she gave her talk.

Dalton, the company’s vice president for venture capital, is part of a four-person VC team based at Pfizer headquarters in New York. She had previous stints in venture capital at SR One, a corporate venture firm aligned with the world’s No. 2 pharmaceutical company, GlaxoSmithKline, and Euclid SR, a more traditional venture firm with limited partners, that also included Glaxo. Dalton, an immunologist by training, made her connections with Seattle biotech at SR One during the mid-90s, when she invested in Corixa and got to know its founder, Steve Gillis. She has managed investments in more than 60 companies in the U.S. and Europe.

Here are the highlights from our conversation:

Xconomy: Who are some of the folks you know in the Northwest, besides, obviously, Steve Gillis?

Barbara Dalton: All the venture guys in healthcare out here, from Arch, Frazier, and OVP Venture Partners.

X: It sounds like you had a lot of experience here in the mid-to-late 90s, then went away. Why is that?

BD: Opportunities were elsewhere. It was never a geographic focus for investment, it was a matter of going where the deals were. That’s the way we invest now. We’re not wedded to Boston and San Francisco. We look for good companies, and good management teams, wherever they may be located.

X: What kind of strategy are you employing in terms of the number of deals, and the kind of disease areas that can make a difference for a company the size of Pfizer?

BD: My mandate is to invest for return, in areas that are of current or future strategic interest to Pfizer. With a company the size of Pfizer, that’s quite a broad mandate. There’s a lot of different things we can touch on. We do not have to be aligned with the company, we can be out in front of them in many ways. New areas, new technologies, new targets.

X: What kinds of diseases are you most interested in?

BD: Pain, Alzheimer’s disease, schizophrenia, diabetes, inflammation, oncology, and anti-infectives. There are very few therapeutic areas we don’t touch on. We don’t do women’s health per se. We’ve announced we’re no longer doing research in ophthalmology, although we are maintaining our ophthalmology products on the market. We have de-emphasized dermatology, and gastro-intestinal disorders.

X: When you look at what’s here in Seattle, why come to Invest Northwest? Why look at what’s here?

BD: You need three things to create great companies. … Next Page »

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