When times are tough, partnering is more important than ever. The “BIO-Europe Spring” conference, held in Milan recently, attracted 1,550 international biotech and pharma delegates who engaged in over 7,000 partnering meetings, a 21% increase over last year’s event.
“The marketplace of the next ten years is going to be dramatically different,” explained Steven Burrill, CEO of Burrill & Co. “We built biotech mainly on the healthcare side—most of the capital went into oncology and cardiovascular disease because people thought they could make money. But green and white biotechnology are now getting more attention.”
On the whole, Burrill’s outlook was optimistic—he calls the current situation a sea change and says this is generally a change for the better. “We will be a stronger industry in the end than we are today,” he promised.
However, Burrill admitted that much had happened in the last year and a consumer credit crisis—to follow that experienced by the banks—is now looming. Each country is experiencing recession in its own way and this could last for five to ten years, he added. Healthcare systems, too, are going through dramatic change.
Regulation is a barrier to the biotech and pharma industry, he noted. The regulators are increasingly interested in pharmacovigilance, which can mean taking products off the market. The industry, of course, wants to keep them on the market. The U.S. will become pro-generics and anti-innovation, he predicted.
In reality, healthcare systems have not changed for 2,000 years—people wait to get sick—it is only the tools and technologies that have gotten better. But between now and 2020 everything will change, Burrill said. He believes there will be WalMart-style delivery of products like genetic screening, and that we will enter a “consumer, digital, healthcare world,” in which diagnostics will be based upon information being sent via iPod or Blackberry to a lab.
“All of these technologies exist already—we just need to integrate them,” he added. These efforts will lead to the customization of healthcare based upon e-records and smart cards. Indeed, some countries, like The Netherlands are already making significant progress in this direction.
This new patient-centered healthcare model has many implications for the industry. Prescriptions will likely be tied more to diagnostic results, and lower margins will likely be seen on ethical drugs. Patents will be devalued, and big pharma will become more focused upon production and distribution. Research and development will move to Asia, and there will be international regulations. “Every company will have to be global from day one,” Burrill said.
As far as the Wall St. implosion is concerned, after 30–40 years of access to cheap capital, financing is now harder to find and more expensive. VCs have deep pockets, but short arms. “Buy side is not interested in microcap companies worth less than $1 billion,” Burrill explained.
“We have created extraordinary value,” he concluded. “There is capital. It is just more expensive. And there will be another IPO market, but it will be different. Wall St. will be back in 2010 to 2011—but will not finance what it has historically. And finally, physical cluster will become less important, but there will be more virtual clusters.”