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Tapping into Pharma's Cash

The biotech industry is important for the creation of new drugs, job growth, and the health of the overall economy, but companies in this sector have continually found it challenging to raise the money they need to operate, says biopharmaceutical investment professional Mark Kessel in The Scientist. One solution, he says, would be for big pharma to create a biotech fund that utilizes pharma's cash to support biotech where needed. "To understand the biotech sector's capital crisis, consider the wide gulf that exists between the 12- to 15-year timelines for new drug development and the much shorter time horizons of venture capital, biotech's most common source of funding," Kessel says. At the same time, pharma has struggled to develop innovative new drugs to replace off-patent blockbusters of yore, and some have a lot of cash sitting around.

"That creates a very unique opportunity for collaboration between big pharma and biotech," Kessel says. "A biotech fund, seeded by pharmaceutical companies, could focus on investing in early-stage drugs being developed in smaller biotechs, which could, in return, fuel big pharma's need for innovative drugs. Such a fund would simultaneously solve the biotech industry’s current capital constraints and reduce the threat to pharma's pipeline."

The Scan

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