Somewhere over the rainbow is…strength from diversity
Chris Doherty, Managing Director, Alderley Park
If you are the biotech entrepreneur who has walked through valley of funding death to create your intellectual property and get it to market, the option of exiting early can seem like the end of the rainbow. It is the reward for all your hard work, the moment to realise the hard-won value you created in the business.
BIO International, which I am attending this week, attracts scores of entrepreneurs and industry leaders who know this journey well. In many cases it has defined their careers. For them, the question of how long to stay in the game of building a business is pivotal for the industry - and profound for the individual.
At Alderley Park we work with a significant group of biotech entrepreneurs, some 150 individual businesses, on what is today the largest single site science bio and life science campus in the UK. Our whole approach is designed to support growing life science entrepreneurs. We have developed an ecosystem which helps companies scale up.
Having spent my entire career in the industry, I know well that, at present, the ‘getting bigger’ part is something the sector struggles with. Pharma is broadly an industry of two halves: global multinationals like AstraZeneca and Glaxo Smithkline and then quite a gulf to a spectrum of ambitious SMEs. The space between the two halves is rather thinly populated.
And, unlike other industries, where the likes of Branson and Dyson remain involved with the businesses they founded, it’s difficult to name a single, stand-out pharma entrepreneur. Many show great promise, and the companies they create do very well, but then they seem to disappear.
Pharma is undoubtedly a tough nut to crack. The attrition rate for start-ups is higher than found elsewhere. These are businesses based on finding breakthroughs and cutting edge innovation and they require successive rounds of investment to fund R&D.
Even for those companies that do thrive, selling out to a global pharma firm with very deep pockets, rather than scaling-up can be an attractive option after some initial success has been achieved.
Yet the fact that smaller businesses are so often subsumed by the major players is not a good thing for the sector. As any scientist knows, there’s strength in diversity. Fledgling businesses and SMEs that are perhaps working a little differently are important to the industry’s overall well-being.
It will not serve the sector well if the sector becomes too homogenous and reliant on a small number of large, global companies.
We are playing our part at Alderley Park but more needs to be done to support growing pharma businesses – and their entrepreneurial owners or investors – to get up the ladder to the next stage of operation.
Helping small pharma companies acquire the capital they need in order to grow is part of the solution. Indeed the Bio Industry Association (BIA) has recently responded to the Government’s Industrial Strategy green paper by calling for it to address the UK’s “chronic” shortage of scale-up capital and makes suggestions for measures it thinks can help contribute to a “sea change” in the quantum of capital available to bioscience companies and address the “shortermism” of many investors.
The BIA also notes that much more needs to be done in developing management and entrepreneurial talent in the sector, even suggesting that training in this area should be incorporated into degrees and post-doctoral research courses. There is also a third pillar that can help businesses grow, rather than sell out and that is location. Biotech businesses have a very specialist set of requirements, and they require very specialist settings and equipment if they are to thrive. But of course, that costs money. And that’s one thing that start-ups don’t tend to have in abundance.
Locations like Alderley Park, which in the last three years has created a new environment where independent pharma businesses can thrive whatever stage they are at, undoubtedly have a part to play in supporting the re-balancing of the pharma sector.
For example, with translational funding so often an issue, we can provide funding through Alderley Park Ventures, through which we offer Pre-Seed funding (£80k) or Seed Capital (£80-500k) to help get promising biotech ideas off the ground. And of course, we support start-ups through the BioHub Start-up scheme and indeed the BioHub itself, which is a specialist incubator for new and growing biotech and life science businesses.
This was designed with life science businesses in mind and the companies we work with can rent highly specialist equipment as and when they need it, and scale-up or even temporarily scale-down without having to move premises or spend capital that it is unlikely they will have at this stage.
The right location is a significant factor too. At the new Alderley Park collaboration and cross-pollenation of ideas happens naturally and of course, working together becomes much easier when you’re working in the same location. We also run a mentoring scheme to help smaller businesses learn from those who have gone before them - meaning making the step-up from a smaller business into something approaching mid-sized can feel like a much more realistic proposition.
If more start-ups like this could be supported to feel like this, they wouldn’t just benefit, the whole industry be strengthened.
If you would like to arrange to meet with Dr Chris Doherty at BIO International 2017 please click here.