Capital

From start-ups to multinationals, capital is essential to the growth and operation of any business. Global healthcare spending is on the increase and forecast to reach $10 trillion by 2022. Coupled with the fact that the pharma industry is estimated to be worth $1.2 trillion worldwide by 2024, the sector still presents excellent opportunities for investment.

Within the UK, the life sciences sector attracted a record £2.2bn investment in 2018, with key trends including an increase in the use of AI, expanding sources of funding for drug discovery and increased government commitment to funding through the Industrial Strategy.

Of course, with the current political climate, it is important to exercise caution. The uncertainty of a potential no deal Brexit is contributing to market instability and affecting investor confidence. The UK also receives €1.28bn (£1.15bn) every year from Horizon 2020, the EU’s funding programme for science and innovation, which could change once the UK is no longer part of the EU.

At our inaugural Bio Integrates conference, the mood about the current state of capital remained buoyant. Keynote speaker and Mogrify CEO, Darrin Disley, encouraged delegates to create an ecosystem of “innovation and aspiration”, whilst Congenica Chairman Andy Richards CBE emphasised the importance of new business models going forward, with a particular emphasis on “the recycling of people with experience and money”. This was echoed by serial entrepreneur and CEO of KaNDy and NeRRe Therapeutics, Mary Kerr, who remarked that “training the next generation of physicians with pharma and biotech experience is critical to the future success of healthcare”.

The prospect of capital from seed, through to series and sale was the subject of many discussions – from panels to the networking reception! Jane Dancer CBO of F-Star remarked on the importance of using your network in the early stages of development, stating that “funding will always be from local sources as they know you.” When it comes to nailing your exit strategy, Maciek Drozdz, Principal of Venture Investments at Johnson & Johnson, commented that it is never too early to get to know and start working with potential buyers, saying: “Build relationships. We get to know our companies early and let them grow.”

Capital is no longer just drawn to the traditional biotech clusters of Cambridge, Oxford and London. The “Midlands Engine”, Northern Powerhouse”, Scotland and Northern Ireland have all seen a huge influx of investment. Alderley Park MD Chris Doherty commented during his Bio Integrates interview that “86 companies have formed at the former AstraZeneca site alone and, with a capital pull of £130m, the campus plans to grow to ~300 life science and health tech companies.”

Could the future of biotech investment also be increasingly female? Whilst 90% of investor money is funnelled into organisations founded by men, and women only make up 9.4% of senior positions at private equity firms globally, new research shows that gender-diverse investment committees of private equity fund managers experience comparatively higher returns compared to an all-male committee.

As the industry faces uncertain times, both politically and with the ever-increasing focus on health economics, selecting the right business model and finding the appropriate sources of capital have never been more important. At our Pharma Integrates conference in November, we will tackle the issues of positioning for growth in turbulent times, winning the talent war and combating the “brain drain”. We look forward to seeing you there!

Want to learn more? Audio from all the roundtable discussions, breakout sessions and keynote presentations at Bio Integrates is available here.

Capital