Life Sciences Blog
Welcome to our Life Sciences Blog. We hope it will stimulate some thought and look forward to reading your comments.
UK has led Europe in biotech and is second only to USA in biotech patents, so why are there no large UK biotechnology companies? In the past there has been more capital available and more liquidity in equity markets in the US. The recent global economic downturn is obviously having an effect on smaller life sciences companies.
Biotech is funded by big pharma, public investors and VCs. Although there is money available from them, biotech has to compete with companies in other sectors that have lower but less risky potential returns and there is intense competition for funds. With high risks, investors are looking for safer investments or simply are not investing while there is so much uncertainty and venture capital-backed IPOs have dried up.
Developing companies who rely on getting products to market are at a disadvantage compared to those with products for sale, and not dependent only on investors for cash. There might be more casualties with developing companies looking to refinance. Big pharma is cash-rich and needs to bolster pipelines so it is likely there will be increased M&A activity, particularly in acquiring developing companies with products on the market. The way out for developing companies might be to attract interest from larger companies.
Ian Kent, the speaker at a recent Harvey Nash Life Sciences Practice Dinner (Click here to read discusion), suggested that budgets of £400 million for the BBSRC and £500 million for the Wellcome Trust could be used in part to help the biotech industry in the UK. The biotech industry is therefore going to have a rough ride for a while, though should recover.
Thankfully not all of the flow is to big pharma. BTG has bought Protherics in an all share deal which creates a company with the critical mass to develop and market drugs, creating the UK’s current largest biopharmaceutical company.
What needs to be addressed in the longer term is how to capitalise on the biotech IP generated in UK and help the biotech industry to develop companies into a much larger size. In the meantime, the industry needs to be aware that talent might be lost to other countries or to other sectors, a problem exacerbated by big pharma rationalising its composition.
Chris Goward, Head of Life Sciences Practice, chris.goward@harveynash.com
January 30, 2009 09:07 AM | Permalink
