Small and Medium Biopharmaceutical Enterprises in North America and Europe - Biotechnology Clusters, Funding Characteristics and Regulatory Landscape

Countries covered: Europe, North America Small and Medium Biopharmaceutical Enterprises in North America and Europe - Biotechnology Clusters, Funding Characteristics and Regulatory Landscape Summary GBI Research, the leading business intelligence provider, has released its latest research, “Small and Medium Biopharmaceutical Enterprises in North America and Europe - Biotech Clusters, Funding Characteristics and Regulatory Landscape.” This pharmaceutical and healthcare report provides an overview of the small and medium biopharmaceutical enterprises in the North American and European regions. The report provides an insight in to the importance of Small and Medium Enterprises (SME) in the biotechnology industry. It covers market characterization, geographical spread of SMEs, drivers and restraints, regulatory scenarios and funding challenges faced by the biotechnology SME industry. The study reviews the role of SMEs in driving the pipeline within the biotechnology industry, the role of governments in promoting the sector, as well as potential gaps. It provides a comprehensive analysis of the deals in the SME sector and also provides competitive benchmarking to understand how SMEs compete. This report is built using data and information sourced from proprietary databases, primary and secondary research and in-house analysis by GBI Research’s team of industry experts. Scope The scope of this report includes: Biotechnology SME composition in North America, and Europe. In North America, the US (United States) and Canada are covered. The report covers European countries such as the UK (United Kingdom), Germany, Canada, France, Sweden, Switzerland, Denmark, the Netherlands and Belgium. Pipeline analysis data for the two geographies to provide an understanding of the contribution of biotechnology SMEs in the pipeline of the industry. Qualitative analysis of market drivers and restraints and funding for SMEs. Funding structure for biotechnology SMEs and issues faced in funding. Analysis of deals involving biotechnology SMEs. Competitive landscape covering key players Clovis Oncology, Pacific Biosciences, ActoGeniX, Aileron, BioVex, AC Immune, Avila Therapeutics, Chroma Therapeutics, KaloBios, Achaogen. Reasons to buy The report will enhance your decision making capability in a more rapid and time sensitive manner. It will allow you to: Develop an understanding of the SME biotechnology sector and the role played by them in driving innovation in the pharmaceutical and biotechnology industries. Understand the funding related issues that SMEs face and make use of the potential solutions. Exploit in-licensing and out-licensing opportunities by identifying the key areas of licensing activities of SME biotechnology firms. Understand and exploit M&A opportunities present in the biotechnology SME landscape. Develop a clear knowledge & understanding of how SMEs are supported in North America and Europe. Identify key players best positioned to take advantage of the emerging market opportunities.

Additional Information

Small and Medium Biopharmaceutical Enterprises in North America and Europe - Biotech Clusters, Funding Characteristics and Regulatory Landscape

GBI Research, the leading business intelligence provider, has released its latest research, “Small and Medium Biopharmaceutical Enterprises in North America and Europe - Biotech Clusters, Funding Characteristics and Regulatory Landscape.” The report provides an overview of the small and medium biopharmaceutical enterprises in the North American and European regions. The report provides an insight into the importance of Small and Medium Enterprises (SMEs) in the biotechnology industry. It covers market characterization, the geographical spread of SMEs, drivers and restraints, regulatory scenarios, and funding challenges faced by the biotechnology SME industry. The study reviews the role of SMEs in driving the pipeline within the biotechnology industry, the role of governments in promoting the sector, as well as potential gaps. It provides a comprehensive analysis of the deals in the SME sector and also provides competitive benchmarking to understand how SMEs compete.

This report is built using data and information sourced from proprietary databases, primary and secondary research, and in-house analysis by GBI Research’s team of industry experts.

The Biopharmaceutical and Biotech Small and Medium Enterprises will Drive Innovation in the Pharmaceutical Industry Through Strategic Partnerships

GBI Research’s analysis suggests that research intensive biopharmaceutical and biotech SMEs will contribute to the innovative pipeline of pharmaceutical and biotech companies through licensing agreements and research collaborations. Biotech SMEs focus primarily on research and development activities. The biotech SMEs play an important role in the industry by enhancing the product pipeline of the industry through their innovative ideas and products. SMEs have very few commercialized products and are valued based on the potential of their products in the pipeline. Almost all the resources and employees in a biotech SME are dedicated to research and development. In addition, the close association of SMEs with academic research enhances the innovative potential of the sector. Many of the biotech SMEs have been established as spin-offs from university research departments. GBI Research’s study of more than 3,000 pipeline products revealed that biotech SMEs account for more than 87% of the biotech pipeline. This indicates that a majority of the new compounds under development in the biotech industry belong to SMEs.

The larger pharmaceutical and biotech companies also benefit from the innovation of SMEs. The bigger companies enter into strategic collaborations with biotech SMEs in order to enhance their pipeline. Licensing agreements with SMEs provide bigger companies access to novel compounds under development. In addition, bigger companies also enter into research collaborations with smaller companies to leverage the innovative ideas of smaller companies. Big pharmaceutical and biotech companies also consider SMEs to be important M&A targets due to their ability to expand their pipeline.

The strategic collaborations between SMEs and bigger companies provide advantages to both parties. SMEs often have limited access to resources and funding, and enter into licensing and M&A agreements with bigger companies to enable them to continue R&D activities. Similarly, big organizations benefit by expanding their depleting pipeline. GBI Research’s analysis suggests that SMEs and big pharmaceutical and biotech companies will continue to collaborate for their mutual benefit in order to bring novel therapies to market.

Biopharmaceutical and Biotech SMEs, Contribution to Industry Innovation, 2010

Source: GBI Research

Biotech SMEs and big companies collaborate in order to enhance the industry pipeline.

Biotech SME’s Organizational Structure Focuses Primarily on Research which Exposes them to Many Challenges

The top management in biotech SMEs are research oriented but may have limited exposure to business related aspects of running a company. Many SMEs originate as spin-offs from universities and are therefore founded and headed by experts from research backgrounds. As a result, a focus on research and development is built into the culture of biotech SMEs. This encourages innovation but can lead to a limited exposure to marketing, production, and commercialization experience. Although SMEs are not required to handle commercialization activities in the initial stages of their development, such exposure can be helpful in financing their research and crossing regulatory hurdles more quickly. Bigger companies on the other hand are much more organized and experienced in handling these business challenges and are strong competition to smaller biotech companies. Most biotech SMEs are acquired by bigger companies once they approach the commercialization stage which allows them to leverage the experience of bigger companies. In addition, SMEs need to enter into marketing and distribution agreements with bigger companies due to their lack of distribution expertise. Therefore, biotech SMEs rely on the bigger companies in order to survive while at the same time competing with them.

SMEs Face a Challenging Funding Environment Due to the Unstructured Nature of Funding Sources

The funding for biotech SMEs is unstructured as they depend on many different funding sources at different stages of their lifecycle. The funding depends on internal factors such as the pipeline strength of biotech SMEs and external factors such as economic conditions. The traditional sources of funding for SMEs are under pressure due to the Impact of the economic recession. The biotech SMEs differ in their funding model from pharmaceutical companies. Big pharmaceutical companies rely on the revenue and profits from their products in order to invest in various activities. SMEs do not have revenue generating drugs and therefore depend on Venture Capital (VC) financing. An analysis of the funding activities of biotech SMEs reveals that all their traditional sources of finances have taken a hit due to the recession. The total number of initial public offering (IPO) and VC financing activities declined in 2008 by 18% as compared to an increase of 10% in 2007. This decline in the VC and IPO markets is likely to have a major impact on the biotech SME sector which is dominated by small companies incapable of surviving for long periods of time without funding. If such a scenario persists, these small companies will not be able to develop their pipelines any further and will eventually face extinction if they are not acquired by bigger companies or receive government aid.

Financing Activities: Biotech SMEs, 2006-2009

Source: GBI Research

Biotech SMEs rely on M&A activities, VC funding, and IPOs for their financing needs. However, the number of these activities have declined in the recent in the recent years indicating greater challenges for SMEs

SMEs are Challenged by a Strict Regulatory Scenario Due to Their Small Size and Few Resources

The regulations for drug development and approval in the US and Europe are stringent with many processes. Industry players are required to adhere to regulatory guidelines at every stage of research and development. The players are also required to maintain extensive records for regulatory authorities. This requires considerable expertise and experience. Relatively new SMEs have limited exposures to such processes and generally find it difficult to adhere to all standards without impacting the productivity of other departments. Therefore, with very little expertise in areas other than research, SMEs find it difficult to handle the regulatory requirements in North America and Europe. While the bigger players are experienced in taking their drugs through the various stages of regulatory approval, smaller companies struggle due to their limited experience in this field. This makes the regulatory landscape challenging for SMEs.

Biotech SMEs will Continue to be Targets for Acquisition by Big Pharmaceutical and Biotech Companies

Biotech SMEs are considered important targets for M&As and partnerships by the bigger pharmaceutical and biotech companies. The collaboration with biotech SMEs enables the pharmaceutical industry to tackle challenges such as patent expiry of key blockbusters and low R&D productivity that it faces. These issues have left the major pharmaceutical companies with unproductive pipelines, and therefore in-licensing new drug candidates from smaller innovative firms is considered as an important strategy to enhance the R&D pipelines. Licensing activities not only provide big pharmaceutical companies with the essential boost to their R&D pipeline, but also help the smaller companies to finance their research and development activities. In addition to licensing activities, biotech SMEs will continue to be a target for acquisition by bigger biotech or pharmaceutical companies. Recent acquisitions of small biotech companies indicate that these smaller companies will continue to attract buyers or partners because of their innovative pipelines. Small biotech companies and academic research organizations have been the targets in the majority of the licensing activities since 2008. Therefore, even as traditional sources of funding such as VCs and IPOs remain under pressure, biotech SMEs will increase their reliance on other big pharmaceutical and biotech companies for their funding needs.

Biotech SMEs’ Competitive Positioning is Based on a Strong Pipeline and Bringing New Products to Serve Areas of Unmet Needs

Biotech companies compete in the market by positioning themselves as players in niche segments with areas of unmet need. This allows biotech companies to develop first-in-class medicines in different disease indications. Most of the SMEs focus on one or two therapy areas, unlike the big pharmaceutical companies which have a diversified R&D pipeline focusing on multiple therapy areas. This limited focus helps SMEs to optimize their limited resources and effectively engage in R&D activities for finding innovative therapies. Success for these biotech companies is measured in terms of the patent portfolio and the product pipeline of company at any given time. Biotech SMEs with strong products in the pipeline find it easier to attract VC funding and partner with bigger pharmaceutical and biotech companies. In some cases SMEs license some of their products while retaining the rights to other products in their pipeline. Such a strategy is used by smaller firms in order to leverage the experience of big companies to enhance the quality of their pipeline and also to gain experience in handling clinical trials related information. Biotech SMEs have few resources but they utilize them to compete in niche segments with other SMEs and big pharmaceutical and biotech companies.

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