How is the biotech industry faring in the current economic and scientific environment?

Biotech ― What’s next for the business of big molecules?

There’s bad news and good: productivity’s still low, and money scarce, but the industry’s no longer trying to ‘go it alone’. A growing number of biotech and pharma companies are joining forces to tackle the challenges they face with increasingly creative alliances with new partners and in new territories.

If the biotech industry’s contribution to productivity is still questionable, what about the business model on which it’s traditionally relied? We argued two years ago that this model – based as it is on external investment, typically venture capital, in an innovative idea arising from an entrepreneurial source – was collapsing. Again, the news is mixed. Indeed global financial crisis has exacerbated this.

On the upside, US venture capitalists are back on the scene; venture funding in the domestic biotech sector topped US$4.7 billion in 2011, 22% more than in 2010. On the downside, the total number of deals dipped again, after perking up in 2010. And first-round financings fell by 19%; only 98 of the deals struck in 2011 involved start-ups.

Corporate venturing has been a saviour for some Big Pharma's productivity issues whilst others have directed their investments towards academia.

The number of alliances is growing again, including alliances with new partners - philanthropic VC, academic medical centres, competitors and new technology players.

Curious? Read our new publication Biotech - What’s next for the business of big molecules? Find out more