No Research, Development Only Business Model

"New business models are emerging in the biotechnology industry that are geared to reducing investor risk in order to attract funding from investors who are not willing to expose themselves to the level of risk normally associated with biotechnology firms...

Hence the emergence of the NRDO model. NRDO stands for No Research, Development Only, and refers to companies that attempt to reduce the high risk of failure and long periods of unprofitability typically associated with biotechnology start-ups by eschewing drug discovery. Instead they concentrate on shepherding existing but as-yet-unapproved drugs through the clinical trial pipeline and hopefully toward FDA approval...

Theoretically, the NRDO model has the potential of being beneficial to all involved parties.

By increasing the efficiency of the market, it allows biotechnology firms that are adept at drug discovery to concentrate on what they do best, while at the same time allowing big pharmaceutical firms to profit from licensing out technology that would otherwise have sat on a shelf without producing returns, and it obviously benefits the drug development companies that are following the NRDO model.

Consumers benefit from the availability of treatments that wouldnt otherwise have reached the market, and investors benefit because they will have more varied and lower-risk investment options...

In practice, however, it is unclear whether, or to what extent, the NRDO model actually reduces risk. The drug development process still has a high failure rate, and it is not yet known whether firms following the NRDO model will be more successful at getting drugs to the market than traditional biotechnology firms..."

From this Genetic Engineering News article via this post from About.com.