The new normal for biotech (Ernst & Young)
Pressures on the business model: funding
There's good and bad news about biotech funding in 2010.
The good news: Across the US, Europe and Canada, biotech companies raised US$25 billion in 2010. This is about the same as the average during the four years preceding the financial crisis.
The bad news: The distribution of funding has become increasingly skewed."Innovation capital" — total funding minus large debt transactions by mature, profitable companies — declined by 20% in 2010. More and more venture capital is tranched, and up-front payments in strategic alliances have dropped steadily over time. The share of venture funding going to biotech declined in 2010, as Web 2.0 investments heated up.
The bottom line in all of this is that funding is being doled out in smaller increments and it comes with more strings attached and more risk "sharing" (which typically means that more of the risk ends up being borne by smaller biotech companies).
Pressures on the business model: innovation
Biotech innovation is under increased strain from numerous trends. The increased risk and uncertainty created by an increasingl...
