Can Biotech Learn From the TV Production Market?

4/26/13Follow @oli_rayner

The recent Xconomy piece on Noubar Afeyan’s ideas for a biotech ”innovation supply chain” got me thinking about how other industries strike a reasonable balance between their big distributors and smaller creative types.

I don’t work in the biotech sector but, as a 37-year-old with cystic fibrosis, I am interested in the end-products. I live in the U.K. and used to work in investment banking and private equity but now I have had to step back from full-time work. I try to strike a balance between work and the increasing demands of my disease. I am a director of a couple of companies, do some consultancy and act as a patient advocate trying to improve rare disease drug development and patient access. One of the companies I am involved with is an independent production company making factual entertainment TV shows for viewers in China.

While the capital requirements are quite different, I think the biotech industry is similar to the TV production industry in the sense that both are highly creative and a small number of gorillas control access to the end-customer. Like independent TV producers, biotech companies need to invest a lot of time and money on developing a product before they can ever hope to be rewarded with product revenue.

The U.K. independent production sector was essentially created by the Broadcasting Act of 1990 which introduced independent production quotas forcing broadcasters to commission a certain percentage of their programming from independent production companies. The sector was then transformed by the Communications Act of 2003 which introduced new “Terms of Trade” in 2004 and fundamentally rebalanced the rights ownership position as between broadcaster and independent producer.

The Broadcasting Act of 1990 created a defined and regulated market for independent producers in the U.K., which required that operators of Public Service Broadcasting licences (the BBC, ITV, and Channel 4 at that time) devote not less than 25 percent of the total amount of time allocated to ‘qualifying programs’ to independent productions.

Because of these reforms, the U.K. independent production sector has grown to a position where U.K. companies can be considered as leaders in the global market for television programs and associated intellectual property (IP) with the UK program supply market ranked as the leading net exporter of television formats in the world.

Prior to 2004, the U.K. TV industry was driven by a basic ‘cost-plus’ business model. Typically, producers would agree on program production costs with the commissioning broadcaster and would receive a production fee in the range of 5-15 percent on top of costs. Independent producers were … Next Page »

Oli Rayner was diagnosed with cystic fibrosis in 1978 at the age of 3. After graduating from University College London with a law degree in 1998, he spent 12 years working in investment banking and private equity in New York and London. More recently, he has had to step back from full-time work in order to meet the increasing demands of his disease. Follow @oli_rayner

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  • http://twitter.com/Zymewire Pete Bastedo

    Great way to think about the process. As an extension of your analogy, the show script’s counterpart is the intellectual property contained in the patent portfolio around a new drug. The actors are the scientists and contractors, while the directors are the management.

    I like the comparison to TV production, but in some ways the drug development process might be more akin to movie production in that there is really only one “season” for a drug. All the investment, risk, and creative input is upfront in hopes of a big payoff down the road. What do you think of the movie analogy?

  • Kyle Serikawa

    Nice post! Comparing across industries can be enlightening–as in the earlier baseball/drug discovery piece I wrote for this forum earlier this year. Your post also echoes some of the elements of Stewart Lyman’s piece earlier, in which he discussed how biotech can get snookered by big pharma who either license a product and then sit on it, leaving the biotech cashless and helpless, or else set up terms that are so unlikely that the biotech never gets the full value. In Stewart’s piece he also described the need for the kind of diversified strategy I think you’re getting at, where rights are carefully parsed and bits are sold to different interests to diversify risks.

    I’m not sure the movie analogy is better, partly because the movie business model has changed rapidly over the past few decades due to the rise of secondary markets (video, then DVDs, now streaming). The extremely low cost of digital distribution means it’s now possible to make money on pretty poor movies as long as you can get a small fraction of Netflix users to download it. I do think there are huge parallels, including the reliance on “me-too” movies just like there are “me-too” drugs