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Investing in bioscience for the long haul

on November 5, 2013

Investors in bioscience are looking not just for financial returns, but societal returns over the long haul in a global economy. And that will take collaborative efforts and a crowdsourcing of expertise as well as capital.

That was the main theme of a panel of biotech and pharmaceutical experts discussing investing at the Partnering for Cures conference co-sponsored by the Kauffman Foundation and held in New York City this week.

"One of the exciting things that have emerged in our industry is the concept of impact investing, social investing," said Michael Milken, chairman of the Milken Institute, founder of FasterCures and moderator of the Investing in Bioscience plenary. "If you can solve a problem with society, if your company or organization is perceived as meeting the needs of society long-term, it will have significant value for long-term investment."

Investment in bioscience has doubled life expectancy, eradicated once-deadly illnesses and improved sanitation, and the impact has been felt around the world, driving the global economy.

"When investors do well, they can only do well if the companies do the right thing for patients. You want to invest in the best drugs that are going to change people's lives and fundamentally make things materially better, save lives. In the economy today, this is going to be required of our industry," said Rajiv Kaul, manager of Fidelity Investments' Select Biotechnology Portfolio and advisor to the firm's Biotechnology Fund.

Big Returns, Bigger Needs

Bioscience has outperformed the NASDAQ and the Fortune 500, panelists pointed out. In fact, the panelists agreed that this year has been one of strongest years for equity markets. "But it is a continued challenge to find capital to fund basic science research and produce the innovative medicines and devices of the future," Milken said.

Finding financing to meet the pressing global health needs of emerging nations with innovative medications and devices will take a broad vision as well as capital investment, a meeting of minds and ideas from the worlds of bioscience, industry and academia, the panel agreed.

"We face clear issues in our industry, specifically to help the policymakers and the leaders of our societies understand the real need for coordinated efforts within the biomedical and patient ecosystem," said Robert Hugin, CEO and chairman of Celgene.

"If we are going to capitalize on the incredible opportunities in bioscience, the revolution of molecular biology and information technology, it is going to be through integrated solutions, where we are going to knock the silos down. And we are going to invest in the places with people who will make that promise a reality," said Hugin.

The way the industry is structured today is a barrier to more investment. Right now, 80 percent of capital is in large conglomerates, but they are not that innovative, added Kaul. "They are looking at the short-term, only at cutting-edge, breakthrough drugs and everything in the middle goes away."

Collaboration means tapping into resources from several industries and sectors, combining assets from academic medicine, venture capitalists, philanthropists and the pharmaceutical industry.

"Bringing in different partners can accelerate progress. We have to work collaboratively, to look for many ways to find the best solution, set the right goal and put the right resources there, bring the right people to bear. We have no choice but to collaborate. But it's also the best business strategy," concluded Hugin. "Part of our basic core strategy is to understand what we are good at, exploit it in a positive way and enlist people who are also committed to it. It's a great opportunity to share risk, share the opportunity, and the knowledge of making decisions on how to accelerate investment in targeted areas."

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Tags:  Entrepreneur, Startup, Healthcare, Investment, Crowdfunding

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