Written by Mark Osterman, Senior Vice President, Kineticos
Kineticos recently announced Q4 2015 results of the Biopharma CEO Confidence Index, which showed a tempering of enthusiasm among biopharma CEOs compared to the Q3 2015 study. The results of the Q4 index, which is intended to serve as an indicator of CEO sentiment in the biopharma industry, confirmed that leaders of biotech companies are aware of what might be ahead if the capital markets continue to decline.
Our CEO respondents, of which 89% were privately owned or had a market cap of <$250M, showed only a marginal dip in confidence and are not overreacting to a difficult market. The data indicated that the majority of biotech CEOs are focused on a 3-5 year window for either entering the market or potentially exiting. Also, the deals or financing that they’re seeking will fund assets that may not generate revenue until long after that.
The CEO of a biotech start up must have a clear idea of resources needed for achievement of the near term milestones but not lose sight of ultimate goal – breakthrough technologies that help save patients’ lives. It’s imperative for the leaders of the biopharma sector to maintain a longer and wider vision that will not constrain them to quarterly sales and earnings.
When Regeneron finally started to receive positive press, CEO, Leonard Shleifer, stated, “We are treated like an overnight success, but it’s been 25 years of overnights”. More often than not, the long, slow development timelines are forgotten when the success of a clinical trial is reported. Leadership in the biotech industry requires a unique skill set: balancing the vagaries of current market conditions with and long term commitment needed for developing a new therapy.
The market will constrain and expand access to funding, but it takes certain fortitude to look beyond the current horizon and assuage anxiety within the company and among investors.
In today’s world, we can create a telecommunication application that will provide benefits within a few months, and realize significant revenue almost immediately. For several reasons, the biotech industry cannot move at this pace, and it’s hard to fathom that it will ever evolve to anything close. Rather, it is a high risk/reward environment, with the risk almost always coming long before the reward.
In light of the recent negative press regarding the industry, we need to remember perseverance and passion is critical to make this life saving industry a successful one.
Mark Osterman, Senior Vice President of Kineticos’ Biopharmaceutical Practice, brings 25 years of experience in the biopharmaceutical industry to the team. His team is focused on helping growth-oriented biopharma companies realize their commercial potential at the corporate, portfolio and product levels. Mark’s therapeutic expertise includes cardiovascular, pulmonary, metabolics and cell/gene therapy.
If you would like to receive emails containing insights on life sciences topics relevant to you, please subscribe