With two life science IPOs earlier this month, and seemingly fewer stories of biotechnology firm liquidations, it seems that the tides are turning — ever so slightly — in the favor of biotechnology. The Burrill Report has a good detailed profile of the two IPOs, but I’d argue that there is still much to be resolved. The status of data exclusivity protection, while it seems positive for the industry, is yet to be ratified. SBIR eligibility for VC funded firms is still uncertain, and healthcare reform — which will influence reimbursement and hence profitability — is still undefined.
Aside from all these external issues, reduced drug approvals and increasing R&D costs are questioning the business models and profitability of the sector.
Of course, the factors supporting the industry are that (most) drugs serve pressing medical needs and can have positive effects beyond health, even impacting economic prosperity. The non-drug applications, such as improved crops and industrial enzymes likewise fill unmet needs and can reduce the cost and environmental impact of farming and industrial processes.
The biotechnology industry has always faces challenges — it has never been “easy” to operate in it — the key is to remain flexible and adapt to the changing environment.