Venture capital investment remained healthy throughout 2006, and the approximately 170 deals completed that year set a record
high for the US industry at $4.2 billion raised. The story surrounding IPOs was mixed. The public equity markets remained
extremely cautious about new biotech offerings, much the same as in 2005. The year 2006 saw two more deals than in 2005, but
the average amount raised per deal was approximately the same, at approximately $50 million. The challenging IPO market was
one of the contributing factors to a banner year for mergers and acquisitions, and for partnership deals.
Following biotech's extraordinary financings of 2000, generating a record $32 billion, financings have been in a fairly steady
state year after year since 2003. Even in 2006, removing the outlier debt financings of about $8 billion, the total raised
was comparable to the previous three years. Given these data, the question has to be asked, Is $20 billion in financings
annually now the industry standard? The answer is, "probably yes." All things being equal, it would take a significant change
in sentiment toward biotech IPOs to raise the bar. Although the biotech IPO window has remained open since 2003 and continues
to be active, there is no sign that the wild investor enthusiasm that characterized the white-hot biotech IPO market of 2000
will ever return.
Table 3. Selected significant mergers involving biotechs
Even a projected 30 IPOs for 2007 (this could be a conservative number because by June 2007, 20 biotech IPOs had been successfully
completed), raising an average $40 million each, amounts only to about $1.2 billion—a far cry from the heady days of 2000,
which saw $6.7 billion raised from 66 IPOs.
BIOTECH NOW GLOBAL
Thirty years after the first biotechnology company opened its doors, the sector is reaching a new level of maturity and globalization.
Biotechnology is driving a global transformation from the treatment of illness to the treatment of wellness; at the same time,
the changing world is transforming biotechnology. The biotech industry is no longer centered in the United States and Europe:
its maturity means that competition for resources (both human and technological) is increasing as the number of countries
supporting viable life sciences industries grows. Nearly every part of the world is looking toward a future dramatically affected
by biotechnology. The term "global transformation" refers not only to geography. The transformation is pan-industry, and it
extends across technology and the innovations that result.
We have begun to understand disease "globally," i.e., from a systems point of view, from gene or single nucleotide polymorphism
(SNP), to protein, to networks, to disease. In parallel and conversely, the notion of "one size fits all" is being replaced
by medicine targeting the individual. The biopharmaceutical industry, which has been built on the foundation of "blockbusterology,"
is finding it hard to adjust to this new "personalized medicine" world. But we will, and indeed, we must! What our industry
has is the brightest and best, and there is no shortage of innovation. The trick is to figure out how to bring twenty-first
century medicines to a world that sees healthcare costs as rising out of control, to an aging and affluent population that
demands the best, and to a pandemic that is potentially waiting in the wings—and to do all this while creating and capturing
value for the industry.
Table 4. Financing in biotech (value in $)