Report from BIO 2005
I attended two full days of the BIO 2005 conference, held this week in my hometown of Philadelphia, and caught as much of it as I could, attending a variety of business forum sessions (where companies showcase either their partnering capabilities (licensors) or their product pipelines (licensees)) and lectures by biotech and finance executives. I also walked the entire exhibitor floor and even caught some of the meager protest outside the convention center.
So, what’s the unique purpose of the BIO meeting? The event is certainly a convenient way for companies to meet in anticipation of doing deals, but there are many other forums available for this purpose. The raison d’etre of this meeting, it appears, is for all variety of municipalities to impress upon entrepreneurs and investors the advantages of doing business in their city/region/state/country, primarily by locating (or re-locating) business there. Nearly the entire exhibit floor was occupied by representatives from governments and public-private economic development partnerships hoping to lure new business to their region. Bottom-line: Biotech and life sciences are still hot properties, perhaps hotter than ever.
What isn’t so hot, I was reminded over and over again, was the funding available to the startup and early-stage companies in the sector. Yes, the exhibitors all touted financial incentives, including grants and loans, available to start new businesses, but these modest sources amount to far less than what is needed to sustain new businesses. Venture capitalists continue to raise impressive funds, but are diverting such funds away from early-stage ventures towards established companies, with marketed or late-stage products. Suffering even more, are non-product companies, those developing technology platforms, for instance, who are finding the VC well nearly completely dry. So, what is the biotech entrepreneur doing to keep the cash coming in? If what I heard at the meeting is indicative, entrepreneurs are relying more frequently on private-investor (angel) money, and, concomitantly, angels are becoming more sophisticated in how they size up their biotech investments. I also heard more than once, however, that the early-stage VC drought will eventually work itself out and money will once again flow to the entrepreneur with a patent and a dream and little else.
This was my first BIO meeting, and one thing surprised me–perhaps I should have expected it–this industry is mature. I don’t mean mature in the sense that it’s profit growth has peaked, I mean mature in terms of its executives. These guys (And I do mean guys. There were very few women executives who spoke at the meeting. Even less visible were ethnic minorities.) are getting old. Many of the execs I heard from were first-generation biotech mavericks, guys who have been in this business since there was a business to be in.
Seemingly in concert with the graying of its executive class, has come a maturity in the industry’s views of how it must function now to continue to thrive. I heard what sounded like soul-searching from participants who are struggling to reconcile the need for funding and the desire to move quickly forward, with the need for corporate profits and the desire to serve society with novel, important therapies. The industry now well understands the weighty risks involved in developing new drugs and diagnostics, and the realities of serving multiple constituencies. Yes, biotech, as was said so often this week, has come of age.
