Realising a biotech’s potential

Booming biotech sector at the centre of innovation

While many sectors have struggled during COVID-19, the biotech sector has continued to grow and attract high investment. By the summer of 2020, 37 biotech companies raised a total of $6.7 billion through US IPOs, compared to $5 billion in all of 2019 across 51 IPOs.The Nasdaq biotechnology index rose to a five-year high in December 2020 – up more than 25 per cent since the start of the year.

Biotech’s presence in biopharma research and development (R&D) has also been increasing in recent years. In 2019, the number of biotech products in the R&D pipeline increased by 14 per cent from a year earlier – from 4,751 products to 5,422. In particular, more than 300 next-generation therapies, such as gene and cell therapies, are currently in biotech’s late-stage pipeline, three times more than in 2009, and between 2018 and 2019 the number of these therapies in pipelines rose by more than 20 per cent. In addition, biotech companies continue to play a leading role in developing, alone or in collaboration with other players, COVID-19 vaccines or treatments.

What is required to scale?

As biotech companies attract fresh investment, they need to consider how they can scale up and what is required, in order to deliver on their promise of providing innovative medicines to patients. Early in the life cycle, a biotech company’s management team typically grows the business through a few core assets and limited programmes, focusing its resources where the most value can be gained such as differentiation in manufacturing, understanding of disease and biology, or drug chemistry. As the company grows, however, and attracts significant capital (including from IPOs), management needs to consider the following:

• Do we need to build a commercial organisation or can we remain an R&D company as we scale?
• What pipeline or portfolio will be required to support our growth into a mature biotech business?
• How many products/candidates does it take to ‘win’?
• How many therapeutic areas should we enter?
• To what extent should we collaborate or go it alone, and in which geographies?

One of the core drivers of longer-term success is to build a portfolio of products to sustain growth – this research seeks to identify which portfolio approaches have enabled biotechs to scale, brought innovation to patients and created financial success for investors and founders.

By balancing these dimensions biotech companies are in a position to build the right capabilities and teams, galvanize the organisation and implement their chosen route to scale successfully.

It is not sufficient to just plan and implement a route to maturity; a biotech company's management team must routinely reassess their position and decide when a change in path is needed. A clear understanding of the choices to be made across dimensions and a blueprint matching the company’s profile and ambitions makes it possible to navigate the scaling journey successfully.

What does this mean for Switzerland?

Switzerland is a key Life Science and innovation hub (ranked #1 in the Global Innovation Index for the last ten years) and is well positioned to support biotechs across the five key dimensions of their scaling journey:

• Switzerland has a high density of world-renowned academic, universities, research institutes and science parks (over 40 hosting more than 2000 companies) provides an ideal environment for asset development and partnerships development
• The country benefits from a broad and highly skilled Life Sciences talent pool (over 15’000 employees working in biotech) enabling sourcing of the required commercial and medical expertise
• Switzerland’s unique location and tight integration into EU regulations via Mutual Recognition and Free Trade Agreements make it an appealing headquarter to drive EU expansion
• The Swiss Biotech market benefits from a large Swiss and international investor base and a favourable tax environment (e.g. patent box and R&D super deduction 2020 corporate tax reform) facilitating access to capital ahead of launch and balancing quick-wins vs. more long term approaches