Curing the world’s ills

Edie Lush

Edie Lush says UK biotech and medical research is world-class, but that start-ups face a challenge to raise capital and must think global from the start

Even fans of the biotech industry admit their sector isn’t flavour of the month at the moment. The big pharma groups are currently downsizing – last year Pfizer let go 10,000 employees. ‘Usually the best of those people would go into biotechs and start a flurry of development of good premium drugs, but there’s no appetite for the sector at the moment,’ says Professor Malcolm Young, chief executive of e-Therapeutics. ‘The result is that capacity to deliver the next generation of really important new medicines is shrinking.’

Ian Crosbie, head of international healthcare at Jefferies International, an investment bank specialising in smaller, high-growth companies, says there are almost no opportunities to raise money publicly at the moment. ‘There hasn’t been an IPO in the US since 2007. Two public UK biotech companies, Ardana and Phoqus, ran out of money and went bust this year, and Atherogenics filed for Chapter 11 in the US this week. While not unheard of, it’s pretty unusual. The market has never been shut for this long before.’

If the environment for investing in medical devices and diagnostics looks challenging, it is still better than the appetite for biotechs. Bruce Macfarlane runs MMC Ventures, a company that invests in early-stage start-ups through managed funds and a syndicate of business angels. He is looking for investments in the medical devices sector, having had success with Neoss, a dental implants developer. (Dental implants are titanium ‘roots’ that are placed into the jawbone to support a crown to form an artificial tooth.) Macfarlane says the UK is a strong source of interesting medical device companies ‘because we have world-class academics and centres of excellence’ but ‘funding for start-ups and companies in the very early stages remains patchy’.