Print
Email
Print Edition Stories
Friday, March 13, 2009
Biomed Notebook
MIT speaker paints a gloomy picture for life sciences
By Marc Songini
MHT's Jim Connolly: Pink slip parties make a comeback
Interactive map of Greater Boston tech layoffs in 2009
MHT's Marc Songini: Mass. bio firms prep for lifting of stem cell ban
One of the pleasures of being a reporter is getting to listen to people far smarter than oneself make predictions in public — and be wrong. Less enjoyable is when those predictions are correct.
Last week, one such illustrious speaker at a Cambridge event painted what definitely was a gloomy portrait of the current life sciences environment (in fact, a gloomy portrait of the entire global economy). That man was Steven Burrill, keynote speaker at the MIT Enterprise Forum Life Sciences Innovation Series event. For those that haven’t yet heard of him, he’s also the CEO of Burrill & Co., a San Francisco-based life sciences finance company with $950 million under management.
He also has a curriculum vitae longer than Bernie Madoff’s list of unhappy customers, which makes one pay attention. The packed audience certainly did. One might say Burrill’s mood was tragically optimistic. “I’m not here to write the obituary of our industry,” he said. However, he did have some mean things to say about that industry.
For starters, Burrill said that the bad economic climate prevailing right now is, in a sense, relatively not that bad. That’s because things are actually going to get much worse. “We are going to get more crisis with credit cards,” Burrill told to the audience. People aren’t working and can’t pay off the credit card debts they incurred, and their defaults will make the current mortgage-caused disaster look like “child’s play.” The recession will last for years and be “devastating to the world. It’s not a United States phenomenon. It’s long term and not short term.”
Nor is the U.S. going to be the world’s dominant biotech player for long, he said. There will be changes in the tax code, and the cost of raising capital will become more expensive than it has been. The developing world, including India and China, only wants drugs that are cheap and generic. They are not going to necessarily foster the sort of environment that boosts innovative companies that are looking to make lots of money on unique, expensive and limited-application drugs. Medical tourism — people crossing borders to have operations performed in countries where it’s less expensive, will continue to grow, as well.
Then there’s President Barack Obama’s presence on stage. Obama released his budget plan on Feb. 26, and it seeks massive savings to pay for a health care overhaul. This will mean providing access to cheaper generic versions of drugs, cutting Medicare payments to private insurers, and letting consumers buy cheaper medicines from overseas providers. It will also involve stopping drug companies from making deals that block generic competition. “This will be very tough on the industry.”
On the bright side, in the next decade, for us that are going to be patients, not professionals, we are looking at a major shake-up in how health care is delivered. Doctors have been in the business of fixing broken things for the past 2,000 years, Burrill pointed out. Now, with the ability to unravel someone’s genetic structure with a point and click, the emphasis will be on the prediction and prevention of disease, he said. People will go to Wal-Mart to get a blood test that will let them know what might be wrong with them. Or as he put it: “Data will trump doctors.”
Ultimately, said Burrill, the way biotechs and pharmaceutical companies function is outdated. The methodologies that involved raising cash and proceeding with a startup he used when founding successful companies decades ago no longer apply. “If you try to do today what we did then, you will fail. We are amidst a sea change.”
The tenor of Burrill’s speech made an impression on the audience. “What he had to say was a bit ominous and very relevant,” said attendee Geoff MacKay, CEO of Organogenesis Inc., based in Canton. “There’s been a structural change in the investment community and early-stage biotechs must find more creative ways to find financing. The sources of funding for early-stage biotechs no longer exist.” His own company is far past being a startup, although he noted that some smaller companies are reaching out to midsize firms such as Organogenesis and not the usual venture capital firms to act as investment partners.
If, as Burrill claimed, it is a sea change, one must also wonder of what magnitude it will be — and is it time for a life preserver or to start building an ark?
RSS Feeds
Comments (1)
Please Login/Register to post comments.