Press release

The number of biotechnology companies has only decreased by 10% despite the crisis
The budget of the Ministry of Science guarantees the financing of all the contracts, grants, research projects and transfers of research to public institutions, according to the Minister.
Larry Fritz, president and CEO of Covella Pharmaceuticals and partner of Westfield Capital Management, has stressed that the current model of venture capital has to be revised.
The global biotechnology industry has been more resistant to the economic crisis than expected. This has been one of the main conclusions of the international round table “Opportunities and Challenges of the Global Biomarkets”, held as part of the 5th International Meeting on Biotechnology, BioSpain 2010, organised by the Spanish Association of Biocompanies (ASEBIO) and the Government of Navarre through SODENA. During this event, experts from around the world have talked about their experience of each of their geographic locations in the field of biotechnology. Among the most important issues discussed they highlighted two: the increasing selectiveness of investors and the cuts in R&D+i.
An important figure that was discussed was a “modest decrease” of 10% of the number of biotechnology companies worldwide, despite the crisis. This figure has not been greater mainly thanks to the stimulus of the United States. During the round table it was made clear that “financing is the main problem faced by biotechnology today”. In fact, “a large part of the financing, particularly public financing, is normally destined to large companies, which makes it more difficult for the rest to take part”, said Siegfried Bialojan, head of the European Life Sciences Center (Ernst & Young) and moderator of the round table. “We need to make the capital investment efficient”.
Regarding investment in R&D+i “we have gone from a situation where two thirds of biotechnology companies invested in it to one where two thirds of companies have reduced investment to cut costs”, explained the expert. All the speakers agreed that the sector faces an excellent opportunity to improve. In the context of red or medical biotechnology, there are two important fields in which it could play a significant role: personalised medicine and biobetters (biosimilars strengthened with additives). The important role that emerging countries such as India or Brazil are playing was also mentioned. “They should be taken into account”.
Also participating at this round table were Sean Darragh, Executive Vice President for International Affairs at Biotechnology Industry Organization (BIO, United States); Anna Lavelle, CEO of Ausbiotech (Australia); Albert Sasson, President of BioEuroLatina; Sean Thompson, Vice President of the Health Advisory Board of BIOTECanada (Canada); Ludovic Lacaine, Director of Health Care Biotech (Europa Bio), and Manan Bhatt, Vice President of Avesthagen.
The Science and Innovation budget, excluded from the cuts
The Minister of Science and Innovation, Cristina Garmendia, has visited BioSpain 2010 to “see how Pamplona has become the nerve centre of European biotechnology” According to the last report by ASEBIO, this sector has multiplied the number of companies by three over the last five years and is “still creating jobs”. The Minister has mentioned the support offered by the central Government. “Undoubtedly, the biotechnology sector is bound to become one of the crucial sectors involved in our economic recovery, and I think that the figures and the international interest shown are proof of this; this helps us understand that it is the way forward”.
Garmendia referred to the General State Budgets, presented today, which allocate over 5.35 billion euros to the Ministry of Science and Innovation, 1.2 % more than the previous year. "With this budget, which has yet to be passed through parliament, we can guarantee the financing of all the contracts, grants, research projects and transfers of research to public bodies". Likewise, “the same level of credit for companies will be maintained”, in line with the National Plan of R&D+i and the State Strategy for Innovation. “Right now biotechnology companies attract a volume four times greater than the weight they have in the GDP, which indicates that they are highly competitive companies regarding the attraction of resources”, she added.
The current venture capital model, debated
The protagonist of today's plenary session was Larry Fritz, president and CEO of Covella Pharmaceuticals and partner of Westfield Capital Management, with a long entrepreneurial career in the biotechnology sector, who stressed that the current model of venture capital has to be revised. "Venture capital has lost its entrepreneurial mindset; today –he pointed out- investors leave their decisions in the hands of external consultants who, in many cases, are too critical of the projects that require financing".
Larry Fritz, who focused his talk on how to create and develop a successful biotechnology company, insisted that investors are more conservative and that work is done more slowly than a few years ago. “It takes longer to get financing and biotechnology entrepreneurs have to anticipate the search for funds for the next development stages -he said-; we have to think about how to get new investors to join the project in the later stages”.
As Fritz stressed, optimism and energy are fundamental when creating a company, along with a deep prior reflection on whether it is the right moment and an assessment, among other issues, of the technical risk, the economic risk and the commercial risk. The latter –he added- is of vital importance today. “Investors –Fritz pointed out- now have more experience, they ask themselves questions they did not used to ask about how a product will perform in the market”.
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Lucía Cecilia Mercado
Head of Communication at ASEBIO
Tel.: 91 210 93 74
Mobile: 663 117 293
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