I am a biotech VC, but not a techie. So I don’t follow stem cells, gene therapy, and other similar “blockbuster” technologies in the life sciences. Rather than looking at all the gosh-and-golly stuff going into the biotech pipeline, I wait to see what is coming out of the other end. So far, very little in the most innovative areas.
People are excited about biotech’s IPO window and money flowing into venture funds as reflected in, for example, Bruce Booth’s blog posts. But what he sees as a new day in biotech, I see as the same fundamentals in a new synthetic financial environment manufactured by Ben Bernanke. I applaud Bruce’s optimism. Without people like him and the enthusiasm they bring to the space, biotech would be afflicted by the same anxieties that are paralyzing pharma today.
When I assess bio-pharma through the lens of my 27 years in the business, however, I don’t see substantially better conditions than in the past. Life on the commercial side of the business is tough and expected to get tougher. No one knows how to make money developing innovative drugs. While a subset of VCs have made money for their investors, only time will tell if it is a result of luck or brains. If pharma can’t maintain, let alone grow their business, the outlook for bio-venture will not be good. Everyone needs a healthy eco-system to thrive.
The innovations that really matter are in business models that will enable us to create a profitable and therefore sustainable industry. The models that I and others like me are pursuing require some modicum of support from pharma. While interest abounds, the money required for a serious commitment remains woefully inadequate. As the industry comes under increasing pressure, the confidence needed to take chances on new approaches is diminishing. At a time when the large companies should be experimenting with new development strategies, they are reducing their commitment to discovery and early drug development. The survivors of interminable reorganizations and layoffs are fighting over shrinking budgets and are not in a position to share their meager resources with outside groups that could bring new and complementary resources to the table.
Here are my top innovations of 2013:
—The GSK-Avalon co-investment program for discovery. This is a new approach to large-company-small-company partnerships that has the potential to utilize the best features of each in drug discovery—small companies for small tasks and larger for large tasks. Will it work? Who knows? It is an ambitious undertaking to generate 10 clinical candidates in three to five years. It is an experiment worth running. In fact, pharma should be running many more like it if they hope to
