Biotech Is Raising More Cash, But Don’t Be Fooled: Startups are Hurting
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have all the answers, because they can’t develop everything in-house, no matter how many mega-mergers they do. Biotech companies generally realize they can’t raise a billion dollars, and wait 15 to 20 years for a payoff, in hopes of becoming the next Genentech. More and more R&D functions—chemistry, toxicology, formulation work—can easily be outsourced to contract research organizations who can do it faster and cheaper.
Since we’re talking about experiments, some will pan out, some won’t. But ultimately, these ideas need to be tested in startups if we’re going to make real progress. I’m reminded of the time biotech pioneer Leroy Hood told me that “new ideas need new organizations.” He brought this up while telling the story about how nobody in industry wanted his technology in the 1980s for an automated gene sequencing machine. Big companies just had too many other projects going on, and didn’t believe it would work. Somebody needed to come along and take the risk to finance Foster, City, CA-based Applied Biosystems, now part of Life Technologies. And we’re lucky that somebody did, because that company made the workhorse machines that made the Human Genome Project possible in the 1990s and early 2000s.
We’re at a point now where there are lots of good ideas, perhaps some even as good as high-speed gene sequencing was in the early 1980s. The question is whether we as a society will recognize the challenge we are facing with early-stage biomedical R&D, and step up to solve it. If we don’t, we’ll never know which of today’s ideas will turn out to be great advances for medicine.