| Susannah Adams at Critchleys Chartered Accountants writes that when it comes to approaching potential investors, biopharmaceutical companies must present innovative and inventive ideas, and with adequate information to support them
Statistics show that the UK biopharmaceutical industry is booming. On May 6th, Malcolm Wicks, the UK’s Minister of State for Science and Innovation, announced that biopharmaceuticals are projected to rise to account for approximately 30 per cent of the global pharmaceutical market by 2015. Nowhere is this boom more resonant than in the UK, one of the top three centres worldwide for biopharmaceutical research. In 2005, one quarter of all European pharmaceutical R&D investment was focused in the UK, and a third of all European biotech floats also occurred here.
One particular success story has been the anti-rheumatism drug Humira®, the first product originating from the UK biotechnology sector to achieve ‘blockbuster’ status – achieving sales of $1.4 billion within two years of its launch. At the smaller end of the spectrum, university spinouts have led to swift development and commercialisation in all areas of technology, including the biopharmaceutical market. In two years’ time, the first ever university spinout, Oxford Instruments, will celebrate its 50th anniversary. In addition, many geographical regions have local investment networks which provide an effective interface between the high technology entrepreneur and investor.
In the Winter 2006 edition of EBR, Eileen Modral outlined the vital role played by Business Angel Networks (BANs) in providing mentoring and bridging the ‘equity gap’ faced by many young biotech companies. Each network has members willing to invest between £25,000 and £1 million – this can be a crucial source of matched funding for Government-sponsored growth and capital funds.
The harsh realities of raising seed or development capital from a private investor are well known. Simply having a good idea isn’t enough – not having a business plan or a grasp of the turnover and profit in the first year will lose an investor’s interest at a stroke. This is a problem faced by many young companies looking to attract investment in an innovative market; getting their message across effectively can be very difficult. This dilemma is not new. For centuries, innovators have had to ‘sell’ their ideas to wealthy backers, and ‘private equity’ as a concept began in the 18th century. A particularly famous example is the business collaboration between the talented, but impecunious, James Watt and the wealthy industrialist Matthew Boulton in the production of the steam engine. |
