Biotechnology financing, not acquisitions, for filling the pharma pipeline – a sustaining strategy

Abstract

The traditional model of start-up biotechnology companies was to invent, invest, build, partner and make a public offering. This model failed, following an era of investments in far reaching technologies, such as genomics and combinatorial chemistry, that did not yield near term products. In recent times, products that are at or near the clinical stage have again attracted investors to start-up biotechnology companies. After a short period of development, these biotechnology companies are bought by large pharma companies for high prices. If the product fails, the investment is simply written off and there is no backup compound developed, as the biotechnology company with the expertise and the accumulated knowledge of the program and products has been shut down. Most large pharma companies have also downsized exploratory programs. It remains the purview of government and a handful of ‘angel’ investors to fund new ideas. The pharma and biotechnology industry must re-examine this model and build an investment model that retains creativity and the entrepreneurial spirit that allows the time to yield multiple products.

Keywords::

• acquisition
• biotechnology
• financing
• merger
• pharma pipeline
• product
• start-up
• venture funding