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Donna L. LaVoie outlines the takeaways of a recent industry webinar discussing global trends on public and private markets, JPM virtual week, and more.
The “2021 Preview: A 360 Degree Global Market View,” virtual webinar was designed to discuss global market trends on public and private United States, Europe, and China markets, JPM virtual week in January 2021, and more. Panelists, including myself as moderator, consisted of industry leaders, including Dr. Alexandra Goll, Managing Director of Biopharma Advisory; Brad Loncar, CEO of Loncar Investments; and Amit Munshi, President, CEO and Board Member of Arena Pharmaceuticals. Key takeaways for biotechnology industry executives include China’s policy changes promoting incentives for life science innovation which are predicted to have implications for US and EU innovation and strategy as well as the continued importance of emerging EU companies having a footprint in the US and solving for the talent shortage in our sector.
The Chinese economy has recently shifted from being manufacturing-based to now being more global industry-based, with a new focus on biotechnology. The Chinese government is discovering the long-term benefits of contributing as a global competitor in the biopharmaceutical market. China has quickly caught up with the United States and Europe from a regulatory and drug development perspective.
Brad Loncar explained, “Something very important is happening in China... up until essentially today, China’s pharmaceutical market was almost exclusively in the generic space. That is changing very rapidly to a R&D model.”
The addition of China to the biotechnology industry will only make it more globally competitive when it comes to drug pricing. “One day Chinese companies are going to be global competitors and global leaders in our industry. China has taken the high-volume, low-price business model to the world in all industries except ours, and one day that will happen,” Brad said.
US and EU biotechnology markets should not wait for China to make the first move. Brad suggests global companies should pull in a China component to their global development strategy. Not only does this pave the way to address the vast China market, but it also lowers the cost development component to global development plans. Moving forward, proactively adding a Chinese element will be a smart and possibly integral part of global strategies for drug development.
With the US acting as the driving force of innovation in biotechnology, EU companies must consider how they can stay competitive. When EU companies are considering growth models, expanding into the US should be a top priority. Not only does the US have key KOLs and strong clinical research programs, but it is also where EU companies can find the investors, they need to fund their development activities.
“If I were an EU company, I definitely would immediately build a foothold in the US to access capital,” Dr. Alexandra Goll explained. “With a lot of proceeds, it gives your company different power in terms of getting your milestones right and further accessing US capital.”
To secure later rounds of financing from investors, it is essential for EU companies to have people on the ground in the US. These consistent face-to-face interactions will build close relationships with investors. It can be difficult to build these US investor relationships from overseas, commented Amit Munshi.
When discussing how to obtain the assets to grow, Amit elaborated on the key elements, “Our business is essentially three things: intellectual property, capital, and people. Our industry does not have a capital or science problem; we have a people problem.” Amit explains that starting with the right people on your management team, no matter what country you are in, is most important for a successful, emerging company. Strong leaders are crucial, but there remains a low supply.
“Those who are transatlantic and cross borders can leverage much more.” Dr. Goll closed by saying how EU companies need to expand to be successful. “You need to have US touch.”
CEOs, CFOs, and investors alike are unsure exactly how JPM will turn out with its novel virtual format. The social aspect of JPM will be absent in 2021. The moments outside of investor one-on-one conversations are often great networking tools and build relationships between executives and investors, but these may not be as intimate without in-person interaction.
Brad explained that investor meetings are essentially the same virtually and often much easier. Industry feedback has implied virtual meetings feel more efficient.
Amit explained that he is interested in how the virtual JPM will impact businesses in the next six months, specifically for the second tier of deal-making. He does not predict there will be a huge shift in mergers and acquisitions, but licensing agreements and business-to-business development will be unusual because the in-person business development meetings cannot be replicated virtually.
Looking to 2021 and beyond, given China’s policy changes to provide incentives for life science innovation, global companies need to plan for the emerging Chinese biotech market by maintaining their innovative edge to stay competitive but also take advantage of the additional investment and business development opportunities coming from China. As the pace of the pandemic continues to rise again, the biotech industry must stay dedicated to developing and building relationships virtually. A great place to start is to take advantage of the BIO partnering system1 to schedule investment and business development meetings. In past years, JPM week has set the tone and driven priorities for the new year. While partnering meetings look different now than they ever have, we need to be vigilant about developing these critical relationships remotely.
Donna L. LaVoie is chief executive officer of LaVoieHealthScience.