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Posted by: north40000 Date: Tuesday, December 16, 2008 11:26:19 AM
In reply to: None Post # of 70289
N.J. biotech executives discuss options in economy:
>>CRANBURY, NJ — Some New Jersey life-sciences executives last week expressed doubt that the US financial crisis will improve over the next year, but are confident that they will survive it.
Other industry stakeholders shared this belief, and the state government and local trade groups have stepped in with tools to help the industry survive the financial upheaval.
“We are in a healthy position to hopefully weather the storm, no matter how long it lasts,” Christian Schade, senior vice president of finance and administration and CFO of drug maker Medarex said during a life science conference here last week. “We have never spent more money than we needed to execute our business strategy.
“We understand the difficulty in the capital markets … [and] have no idea when they’ll open, or when they won’t, or how long they’ll stay closed,” said Schade, whose Princeton-based company develops human antibodies against cancer and other diseases. “But we also understand that there’s a need for products [from] the bio and pharmaceutical companies. We understand that that is a source of cash, and a source of partnerships, that we’ve used in the past and hopefully can use again in the future should our programs reach a proof of concept. If they don’t, then you just eliminate that spend.”
However, he stressed that “because we get to proof of concept doesn’t necessarily mean” that Medarex will build a commercial manufacturing facility or hire 50 salespeople “to go out and sell something that’s not commercialized yet.”
“We’re just not going to do that,” Schade added.
...In the meantime, big pharma, which has increasingly been laying off staff and acquiring smaller biotechs to help save cash and shore up soft pipelines, is expected to eliminate much of its internal research base and outsource more — which could trigger additional layoffs, said Shiv Krishnan, senior director of partnering and innovation for Sanofi-Aventis.
Such a shakeout could have a silver lining for smaller biotechs, which could be poised to benefit in the same way computer companies benefitted a generation ago with a market shift from mainframes to PCs.
However, the computing sector “changed very quickly” whereas big pharma, because they are regulated, “will change much more slowly,” said Krishnan, who spoke during a panel focused on partnerships and collaborations. “Other than that, the dynamics are very similar: You have very large companies with really smart employees and really big wallets. The decisions they make, whether they focus on what they have done in the last few decades or whether they grow more forward-looking and become the HPs [and] IBMs,” will enable these companies to “take their wallet and expertise and evolve and thrive with the new upstarts.”
...Paul Schmitt, managing director of Novitas Capital, said his firm has cautioned biotech CEOs whose companies are doing well not to enter any mergers and acquisitions with pharma giants, since pharmas are hunting for cheap deals, and to focus instead on improving their products.
“We saw the chairman of Novartis. We saw the chairman of Roche. We think pharma is just looking at picking up things really cheap. There’s huge stacks on [the desks of] every head of business development in pharma of distressed deals looking for money. And those are the only deals I think that are going to get done this year,” Schmitt said.
But Schmitt’s co-panelist at “Assessing the Stage — Understanding the Funding Envirionment,” cautioned that biotechs shouldn’t ignore the pharmas beating down their proverbial doors — but should wait to capitalize on those relationships when the economy improves and pharmas are more willing to shell out bigger bucks for the product pipelines and technologies of biotechs, let alone those companies themselves.
(from Dew's biotech board. Thanks to "north4000")
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