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Despite dire predictions, the biotechnology industry appears to be weathering the recession better than most. According to a CNN Money.com post “Biotechnology leapt ahead as the biggest recipient of U.S. venture capital money in the second quarter, but first-time venture investments in companies overall dropped to a 15-year low.”

Biotechnology funding grew 54% to $888 million in 85 deals, software came in flat at $644 million in 135 deals and Internet companies fell 15% to $524 million in 124 deals. While biotechnology company investments are leading the pack, the current funding levels pale in comparison to those of the late 1990s and early 2000s. Also, it is important to note that many of the biotechnology company investments were in mid to late stage ventures. Fewer investments were made in seed or early stage companies which historically have outpaced funding in late stage ones.

Venture capitalists may be favoring biotechnology investments because there is a clear exit strategy—there are more acquisitions and initial public offerings in life sciences as compared with other industries.

Look for continuing investments in the biotechnology sector—especially in molecular diagnostics and medical devices.

Until next time...

Good Luck and Good Job Hunting!!!!!!

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In the February issue of Genetic Engineering and Biotechnology News, J. Leslie Glick a former CEO of Genex and veteran of the biotechnology industry put forward a novel solution to financial crisis that is currently gripping the life sciences industry and the rest of the US economy. Dr. Glick proposed that the US government ought to consider injecting taxpayer monies into venture capital firms (VC) which, he believes, would foster creation of new companies, create more jobs, stimulate the ailing economy and also provide the government with an outstanding return on its investment.

According to Dr. Glick, “historical results reported by the National Venture Capital Association for the 20 year period ending December 31, 2007, show an annualized return of 16.7% to investors in some 1,860 U.S. venture capital and private equity partnerships. If the U.S. government had made annual investments of $10 billion in VC firms throughout the U.S. during that 20year period, the $200 billion total investment would have yielded a total return of almost $1.5 trillion.” Further, he asserts that according to the  International Trade Administration of the Department of Commerce, from 1970 to 2000, U.S. VC firms invested over $270 billion in more than 16,000 companies. In 2000, the surviving VC-backed companies employed 7.6 million people, representing 5.9% of all U.S. jobs, and generated sales of $1.3 trillion, accounting for 13.1% of the U.S. GDP.

This financial upside sound enticing but who is going to keep track of the money and keep an eye on how and what the VCs are investing in? Dr. Glick proposes creation of a non-partisan funding mechanism, possibly overseen by an independent panel of business people that would disburse $10 to $25 billion annually of taxpayer’s dollars to vetted and certified VC firms. Because of its investment, the US government would become a limited partner in these firms and could direct them to invest in technologies that would help to reduce health care costs, develop energy alternatives or improve food production capacity. While this proposal is unprecedented and controversial, we are living in extremely uncertain financial times that may necessitate innovative and out-of-the-box solutions to restore normalcy to the US economy. That said, all proposals—no mater how unconventional or outrageous—ought to be carefully evaluated and vetted to determine whether or not they have merit to help overcome our deepening recession.

Kudos to Dr. Glick!

Until next time,

Good Luck and Good Investing!!!!!!

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Despite a recent report heralding the ascendancy of the Welsh biotechnology industry, the majority of biotech companies in Britain are in danger of fading away according to a report in London's  Financial Times. According to the Times; “Over the past year the sector has witnessed a string of high-profile drug failures, share prices have plunged and there have been almost no public listings. The sector is shrinking as private biotech companies are bought by cash-rich pharmaceutical companies, most of which are based abroad”.

“The quality of British science has never been in question. Commercial biotech’s perennial problem, say the pundits, is instead a lack of financing, management expertise and commercial savvy. “The UK has always labored under the yoke of not having enough venture capital around and not having the people prepared to take risks” said one analyst.” Nevertheless, the UK is currently  responsible for more than one-third of the European Union’s total drug pipeline.

The British biotechnology industry isn’t alone. Consolidation of the US biotechnology industry has been quietly going on for the past 5-10 years. Many successful American companies have been acquired by major pharmaceutical companies. For example, MedImmune and Millennium Pharmaceuticals were recently purchased by Astra Zeneca and Takeda Pharmaceuticals respectively. That said, I don’t think that what is happening in the UK is unique to the British biotech industry. The bottom line is this; Biotech is a capital-intensive, briskly paced, risky business that is, at most, 35 years old. More companies than not are expected to fail. Pharma, on the other hand, is a conservative and experienced cash-rich industry that is over 100 years old. Therefore, it follows that pharma companies, when possible, will buy successful biotech companies to bolster their thinning pipelines to stabilize their stock prices.

In my opinion, the seminal underpinning and essence of the biotech industry is to harness scientific originality to create innovative l technologies and products. That said, I believe that the biotechnology industry has finally become an integral part of the life sciences ecological food chain (think of biotech as a producer and pharma as a consumer).  I can’t think of many biotechnologies company executives (with the exception of Biogen) that wouldn’t consider acquisition or merger with a major pharmaceutical company as an ideal exit strategy for their stakeholders!

Until next time….

Good Luck and Good Job Hunting!!!!!!

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Bristol-Myers Squibb announced today that it has sold its medical device and wound care business, ConvaTec, for approximately $4.1 billion to Nordic Capital and Avista Capital Partners. The divesture is part of BMS’s corporate restructuring that was announced late last year to become a “next generation biopharma” company—whatever that means.  

ConvaTec which became part of BMS after Bristol Myers bought Squibb back in the 1980s, will continue to operate as an independent entity according to analysts close to the deal.

I suspect that there may be some downsizing in ConvaTec’s future since it is no longer a part of the BMS.  This is not good news for New Jersey, which is already struggling with major pharma layoffs and ongoing corporate right sizing moves.

Until next time…

Good Luck and Good Job Hunting!!!!!!

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