Overview

The biotechnology sector has gone through several phases of development since its inception (arbitrarily pegged to the formation of Genentech in 1976). These phases have correlated as much with movements in the capital markets as they have with each breakthrough in science. While scientific advancements sometimes provoke a reconsideration of business models, or perhaps innovative approaches to structuring a business, each turn of the capital market clock has ushered in a rethinking of business models and the strategy for creation, development, and investment exit. The harsh reality is that the great promise for the alleviation of human suffering through the creation of novel protein-based drugs or vaccines is dependent on the vagaries of the global economy. Moreover, the winds of change for the “Big Pharmaceutical” sector have had and will continue to have a defining role for the biotechnology sector. All in all, during its march from origination to the present day, the sector has encountered changes in social expectations and business conditions that have been far more volatile than anticipated. This has required agility in reconfiguring scientific, business, and financing strategy. Biotechnology companies have had to respond in kind to challenges such as:

• proving their own technologies on the complex path of preclinical research and clinical development;

• navigating through an ever-expanding and evolving corpus of science and the related global base of intellectual property (IP) owned by disparate, unrelated entities – each with economic objectives of their own;

• compensating for an ever-expanding competitive environment;

• adapting to a regulatory process that is itself evolving to accommodate the changing nature of the technology;

• responding to the volatility (and often a loss of confidence) of the capital markets;

• managing in a period of evolving public policy as related to regulatory, environmental, IP, and, in particular, ethical concerns;

• reconfiguring relationships with initially enthusiastic but ultimately reticent pharmaceutical company partners, who are at the same time responding to these same challenges affecting their internal biotechnology programs, further compounded by a non-productive research pipeline and a portfolio of expiring patents, all within the midst of massive pharmaceutical industry consolidation. In short, a co-dependency now characterizes the dyad of “Big Pharma” and the biotech sector.