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Has Biotech become less attractive?

Posted on: 21 Aug 03
Has Biotech become less attractive?

Summary

Given the financing crisis in European biotech, how will the next wave of biotechs attract the necessary talent from pharma?
With the spectacular implosion of the .com bubble venture capitalists cleaved into two groups, those who scurried to the safety and security of established industries like pharma, finance and retail and those hungry for more risk and potential return. The risk-takers quickly found a friend in biotech, an emerging industry that held much of the promise of .com but on a more stable basis. Biotechs too were set to exploit a technological revolution, the decoding of the human genome, and weave it into products that could be tailored to individuals, heralding a new era in health and healthcare profits. Unlike the ill-fated .commers though, biotech companies appeared to have some big-hitting allies with many touting research, licensing and marketing agreements with powerful pharma companies. The influx of venture capital that followed made biotechs cash-rich, and eminently capable of poaching big name professionals from stereotypically conservative big pharma. But generating profit from the genome has proved more difficult, and time consuming, than many expected. Much like the internet, the genome revolution will eventually pay dividends, but in the meantime, the venture capital has, in many cases, run out, and big name professionals in stereotypically conservative pharma companies aren’t stampeding to Cambridge anymore.


The reality of the situation for the Biotech industry in the UK is that they are now having to compete for talent on an inverted playing field. Whereas two years ago, everything seemed to be in their favour, now it is very much an uphill struggle. The pressing nature of this problem has led to a distinguished gathering of European bio-pharma leaders calling for the sector to radically re-think its approach to recruiting senior managers from the pharmaceutical industry. If they do not, the new think-tank says, then the much needed talent transfer from pharma to biotech will remain problematic. This outside-the-box thinking should really have been part of biotech from the start, speaking at the inaugural meeting of the PiR Group’s Pharmaceutical Advisory Board in London last month Dr David Ebsworth, formerly of OGS plc said, ‘The central promise of biotech is that it can be more creative than big pharma. Creativity requires teamwork by talented people in an entrepreneurial culture.  Too often biotech companies imitate big pharma,’ and his words were echoed by Ed Hoskin of Chiron Vaccines, ‘Team dynamics in small early stage companies are critical – a mistaken appointment can be very disruptive. We need better ways of assessing the skills and dynamics during the recruitment process.’


The Pharmaceutical Advisory Board has been set up to provide a forthright forum for leaders in both emerging and established pharma, an opportunity to come together and discuss the challenges facing the industry, and in particular recruitment issues at the heart of building management teams in bio-pharmaceutical companies. And principle among these challenges is the title of this article, “Given the financing crisis in European biotech, how will the next wave of biotechs attract the necessary talent from pharma?”


The Board’s conclusions are enlightening, particularly in their exhortation for recruiters and biotechs themselves to look beyond pharma for the next wave of talent, and the advice is virtually unanimous. Dr Ken Cunningham from Arakis said ‘Running an early stage biotech venture is very different to running an established pharma company. Biotechs need to be sure that they appoint candidates who understand and relish the risk, then appropriately reward them for success.’ So who are these risk-takers, and where are they going to come from? John Bath from Brecon Pharma offers a possible answer, ‘Too often we assume that only ex-pharma people can run bio-ventures. We are ignoring huge pools of talented managers in industries like automotive, aerospace, and electronics.’ Could there even be a strong case for appointing those managers and CEOs who survived the cull in the .com sector? After all, these people are risk takers, steeped in entrepreneurial culture and experienced in getting the most out of a small team with the hot breath of VCs on their necks, very different to the managers at Big Pharma PLC whose goals are long term research and marketing success to augment and enhance existing blockbuster product profits. Dr Barrie James of Pharma Strategy Consulting puts it in no uncertain terms, ‘Management is the rate-limiting success factor in biotechs. Hands-on pragmatists are needed, who can drive organisations to success. Few in big pharma have the track record for, nor aspire to, the task.’


But all is not lost, Biotech can still be an attractive proposition for leading management talent. However both the companies themselves and the recruiters they utilise must be flexible in their searches, and the packages they offer. The lure of big share options and subsequent IPO wealth has evaporated, the focus should now be on product development and commercialisation. And in these small, but growing, teams emphasis should be on getting the team dynamic right. The science that promoted the initial investment is rarely the work of managers but as Dr James mentions above, management is often the rate-limiting success factor, by casting their net wider and by thinking more carefully about team dynamics recruiters can bring the right people into Biotech firms, and the industry itself can get over it’s recent stutters.


The PiR Group’s Pharmaceutical Advisory Board meets quarterly and the next meeting is planned for later this year and will bring together pharma executives with leading life science Venture Capitalists (VCs). For more information please contact Carolyn Douthwaite on +44 (0) 1480 493344 Carolyn can also be emailed at cdouthwaite@pir.co.uk


Latest news and updates can also be found at www.pir.co.uk

Carolyn Douthwaite

Last updated on: 27/08/2010 11:40:18

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