Not Worth It Anymore
10/05/12 16:09 Filed in: GenomeWeb Daily Scan
Submitted by S. Pelech - Kinexus on Thu, 05/10/2012 - 16:09.
It is not surprising that venture capitalists and other investors are very wary of investing in biotechnology companies based on the last decade of very poor returns from this sector. This is especially so, because of the dearth of initial public offering opportunities for biotech firms, which provides for investor liquidity. Moreover, banking institutions such as RBC appear to be refraining from provide loans to biotechnology firms, at least in Canada. Part of the problem stems from the early unrealistic, short-term expectations placed on the performance of biotech companies to produce profitable products and services.
There is wide spread recognition of the wide gap between academic research discovery and its application to generate new biomedical products and services. However, such a translational gap is likely to keep growing as biotech companies continue to contract and collapse as funding dries up with recent economic conditions. Governments and disease charities pump a lot of funding in academic institutional-based research, but research in small and medium biotech enterprises remains relatively poorly supported by governments. Furthermore, charities refrain from more directly targeting their donors' contributions into creation of new diagnostics and therapeutics by industry, which is more likely to meet their stakeholders' expectations.
Roughly half of the new drugs entering the market place today originate from the biotechnology industry. Big pharma relies on a healthy biotech industry to meet its R&D needs, often by acquisition. However, these big fish will have a lot fewer small fish to sustain them the way things are going. On the one hand, with the current trends and the erosion of the biotech industry in North America, it is likely that we will see further declines in the rates of introduction of new therapeutics and diagnostics. On the other hand, in the Orient, with more biomedical research investment, and looser regulations and lower costs for clinical trials, their populations will benefit first from the latest medicines.
Link to the original blog post.
It is not surprising that venture capitalists and other investors are very wary of investing in biotechnology companies based on the last decade of very poor returns from this sector. This is especially so, because of the dearth of initial public offering opportunities for biotech firms, which provides for investor liquidity. Moreover, banking institutions such as RBC appear to be refraining from provide loans to biotechnology firms, at least in Canada. Part of the problem stems from the early unrealistic, short-term expectations placed on the performance of biotech companies to produce profitable products and services.
There is wide spread recognition of the wide gap between academic research discovery and its application to generate new biomedical products and services. However, such a translational gap is likely to keep growing as biotech companies continue to contract and collapse as funding dries up with recent economic conditions. Governments and disease charities pump a lot of funding in academic institutional-based research, but research in small and medium biotech enterprises remains relatively poorly supported by governments. Furthermore, charities refrain from more directly targeting their donors' contributions into creation of new diagnostics and therapeutics by industry, which is more likely to meet their stakeholders' expectations.
Roughly half of the new drugs entering the market place today originate from the biotechnology industry. Big pharma relies on a healthy biotech industry to meet its R&D needs, often by acquisition. However, these big fish will have a lot fewer small fish to sustain them the way things are going. On the one hand, with the current trends and the erosion of the biotech industry in North America, it is likely that we will see further declines in the rates of introduction of new therapeutics and diagnostics. On the other hand, in the Orient, with more biomedical research investment, and looser regulations and lower costs for clinical trials, their populations will benefit first from the latest medicines.
Link to the original blog post.