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European Biopharmaceutical Review

A Season of Turbulence

THE STORY SO FAR

By late 2008, it was abundantly clear that the deepening economic recession would not leave the biotech sector untouched. In fact, the capital structure of the smaller pharmaceutical and biotech enterprises and their symbiotic relationship with the sources of private equity investment has left them vulnerable to the same forces that decimated the home mortgage industry. In contrast, during the previous decade, the biotech and pharmaceutical industries had existed in a relatively stable environment of increasing sales, improving profit picture, and abundant access to risk capital.

Access to capital had been excellent throughout 2007, as the major worldwide financial markets reached new highs. Venture capital financing continued its decade-long upward trend to US$8 billion invested in biotech (1). However, during the first half of 2008, storm clouds were on the horizon. VC investment trend began the year at about the same rate as 2007 but began to decline as the year progressed.

VC funding was down by 17 per cent in the third quarter (2) and overall investment in biotech was down by 54 per cent in the first nine months of 2008 (3). The large pharma and biotech companies entered 2008 with $105 billion in cash and equivalents, prepared for continued robust M&A activity, licensing deals, and aggressive pipeline development.


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Dr Emile Bellott is a private consultant in drug development, based in the Boston area. Over 25 years of industry experience, his pharmaceutical activities have focused on drug discovery and development, synthesis and design of small molecule therapeutics, and informatics and structural biology. He has served as VP of Operations, co-founder of two development-stage biotech companies and founder of a lifescience software company. His operational experience spans medical devices, pharmaceutical development and chemistry outsourcing. He earned a PhD in Physical Organic Chemistry from Harvard and a MBA from the Harvard Business School.
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Dr Emile Bellott
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