The Success of the Biotech Industry

A recent boom in the biotech industry saw venture capital investment climbing from $4.52 billion in 2013 to $5.29 billion in 2014. Joel Marcus, who has been in the industry for 30 years and is currently chief executive of Alexandria Real Estate Equities Inc., recently discussed trends contributing to the growing success. Marcus believes the industry has changed. Science is constantly evolving as new discoveries are continuously being made. Many fields have seen dramatic progress over the years and with the emergence of new science, a new generation of companies has emerged beyond the traditional Genentech and Amgen. There are exciting areas of opportunities developing.

For example, the neuroscience field which hasn’t seen as much progress in clinical trials as cancer research, is poised to excel in the current boom. Lack of funding for the FDA and NIH may hinder progress, though, as funding issues are causing young scientists to leave the public sector. The occupancy of properties is also a problem. There is fierce competition for space in the current biotech hubs of San Francisco and Cambridge, especially Cambridge where occupancy is already at 97%. Pharmaceutical, tech, and other companies, like Uber, all want space in these areas as well. However, with the resurgence of the biotech industry, other hubs are likely to emerge. NYC is a strong hub already and Texas is prepped to explode. With quality research and clinical practice, the only thing Texas lacks to become the next big hub is a strong commercial sector.

But why are biotech start-ups succeeding in an industry that doesn’t usually breed success? If you remember a piece I wrote back in January on Mark Ahn, the entrepreneur, executive, and consultant says resilience is the key. It takes longer for a product to reach the market in the biotech industry because of long development cycles and strict regulations. Therefore, companies generally require several rounds of outside funding before a product generates income. According to Mark Ahn, it doesn’t help to get caught up in what’s trending or get involved in the newest hype. Instead companies that succeed generally stick to their business plan.

The interview with Joel Marcus, originally reported in the Wall Street Journal, can be found here.

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