Building billion-dollar healthcare businesses in Europe is dependent on a number of success factors:
1) cutting edge science, usually first-in-class or disruptive 2) strong, experienced management 3) evolve or die 4) timing 5) location 6) cash.
We often hear the question “why isn’t Europe more successful at doing this”, so we were delighted to have speakers who have built sustainable companies of scale and are currently doing it again.
On 11th October 2017, we launched the Company, Optimum Strategic Communications, at the 9th Annual Healthcare Investor Conference with our partner Bloomberg, at their offices in London. The theme of this year’s event was Building billion-dollar healthcare businesses in Europe, and was popular, as ever, with over 250 seasoned pharma industry veterans rubbing shoulders with dynamic biotech entrepreneurs, venture capitalists and private and public equity investors.
Here, in Optimum Strategic Communications’ first blog, we provide you with an overview of the conference themes, threads and topics.
Building billion-dollar healthcare businesses in Europe – “The Fast & The Furious”: It is unappreciated that healthcare businesses with billion-dollar valuations have indeed been built in Europe e.g. Genmab, Ablynx and Evotec. The leaders of some of these successes variously reflected on how they think they got there and what has changed in the industry:
A faster, nimble and dynamic industry compared to a decade or two ago – A scientific vision is needed, not just a prospective company valuation. There is no such thing as a defined investment exit – technology is changing so fast, the life sciences industry is no longer linear and is far more fascinating and vibrant – so today’s healthcare leaders have to be creative financially, agile, adaptable, move fast to IPO and find ways of doing research and clinical trials faster and more cost efficiently to get proof-of-principle and create value. If you find first-in-class technology, you have to run with it hard & fast as competition is never far behind.
How to be fast and first-in-class:
- Be non-linear, employing networks of players/partners with different strengths that allow faster, efficient R&D at the highest scientific quality and who then profit share. This should lower the cost of capital too.
- Off-the-shelf deal terms, for example for academic collaborators allow deals to be done & the research to start far quicker.
- Build a sustainable place of work for scientists built around portfolios so that they will come to your Company, migrating if necessary and stay, not feeling that one program failure means their job will disappear and committed to a real career at a Company.
- Only employ high quality scientists. Make it tough to get into the Company to filter out scientists that run experiments likely to fail and thereafter reward the science and scientists equally, taking the fear out of failure to encourage innovation.
- Believe in & understand analytics and what could be disruptive and use this to inform your Company’s biologic risk as well as corporate risk.
Raise money aggressively: European companies are still drip-fed cash financing in a linear fashion whereas US companies are much more aggressive in raising large sums of money, which can be done faster on the East Coast of the US. These “war chests” allow a company to work through any setbacks and be opportunistic. It was commented that investors are starting to have to commit investment money faster too, especially to gain access to the best technology prospects. Some observers were surprised by just how much more capital is now available to European biotech & healthcare companies, not just from a swath of new VCs but also big pharma corporate sources, although others, including Company managements themselves, thought that the available capital is still not enough. For example, it was pointed out that certain European funds only have around 4-5% of their investment allocated to European companies.
The only thing that doesn’t change is change: In healthcare, and biotech in particular there can be transformation after transformation. Leadership and employees need to be adaptable and able to cope with change. It takes a certain type of mentality to cope. Transparency with employees is helpful to ride through this.