This article first appeared on LSX.
The 2018 C-Suite Challenges in Life Sciences Survey from Biotech & Money/LSX paints a positive picture of the biotech economy. With 34% of respondents having recently received seed investment, and a further 35% having received series A and B investment – the start-up and SME scene is clearly in rude health.
At the other end of the market too, 16% of respondents reported their most recent financing round as being an IPO or second and follow-on offering.
The growth and investment we are seeing in this sector is being driven by the big health challenges of our time. Almost one-quarter (23%) of respondents, for example, are in the field of neurology and 17% in cardiovascular – with biotech companies looking to meet the challenges associated with an ageing population. Also reflecting contemporary health concerns, 29% of respondents are in the field of oncology.
Even times of growth bring challenges however, in particular around the securing of investment to sustain growth, and the developing of partnerships to help companies enter new markets and deliver innovative joint ventures. While the solutions to these questions are always nuanced, intellectual property (IP) is a crucial piece of the jigsaw when it comes to attracting investors and partners.
Beyond the problem of finding appropriate investors with a mandate to invest, one of the major hurdles identified by 28% of respondents is investors having a lack of risk appetite. A further 31% said that investors are often deterred because they lack specialist knowledge of respondents’ therapeutic area. While good investors will always be detail orientated, technical knowledge will not always be something they have. Having a prospect built upon solid IP foundations however, is an attractive factor in favour of investment, demonstrating as it does a high barrier to market entry for competitors.
IP comes under particular scrutiny when it comes to later stages of investment, such as IPOs and dual listings. Investors at this stage will look at a company’s IP position carefully, to see what it says about prospects for future growth and the barriers to market for competitors. With 18% of respondents planning either an IPO or dual listing within the next two years then, and a further 39% saying an IPO is possible in the long term, we see how central IP should be to a business model in the biotech space.
On the collaboration front also, a healthy economy means lots of activity, which again necessitates good IP. An impressive 76% of respondents indicated that they intend to enter licence agreements in the next 12 months with further respondents planning mergers, joint ventures, research collaborations and more. All of this is indicative of a vibrant biotech ecosystem and IP will be crucial in making these collaborations work and maximising the opportunities of bringing products to market.
For those entering a partnership or licensing technology – whether to enter a new market sector or new geographical territory – clearly defined terms of engagement early on can save a great deal of wrangling down the line. Parties should be clear on who will own the IP on any products that result from the agreement, and who owns the IP on products coming into the agreement.
Another significant concern for the biotech community in this year’s survey is the impact of new technology. As with other sectors, biotech is being reshaped by emerging technologies that promise new ways of doing things and products that until recently sounded like science fiction. The potential of this technology, and the innovation it is unleashing, is recognised in the survey. One-fifth (21%) of respondents, for example, believe new technology will be beneficial in terms of drug discovery while 30% believe it will facilitate better patient engagement, monitoring and management (my colleague has written on the impact of tech in the medtech sector, and makes for interesting reading).
In terms of the technologies that respondents believe will have the biggest impact, more than half (52%) answered AI and machine learning. A further 21% believe connected devices will shape the future with 7% answering 3D printing. Again, the challenge for investors is recognised here with 14% saying that investor support for non-traditional life sciences products can be an issue.
Utilising emerging technology in the life sciences will again bring IP to the fore. Whether it’s the development of novel AI-empowered health devices or the licensing of 3D printing technology for the creation of skin grafts – clear IP will attract investors and ensure innovation is rewarded.
Reassuringly, 81% of respondents recognise the value of IP and consider it ‘very important’ in protecting their company. (Possibly, some of the other 19% are relying on brand awareness or trade secrets for their businesses – perhaps not regularly thought of as being types of “IP” in the biotech sector although in fact they are). What is often underestimated, however, is the central role that IP should have in any business strategy. Whether that strategy is focused on expansion into new markets, collaboration, raising further funds or even just consolidating a position in a current market – good IP is the foundation upon which success can be built and an important investment for any business.