Kind of a depressing way to start the day…
The Mass Biotech Council’s Annual Meeting
began with an overview of the group’s newly-issued strategic report
, which observes that biotech in the Bay State is likely to undergo a serious shake-out in 2009. According to analysis by Deloitte and L.E.K. Consulting, half of all public biotech companies in the state could run out of cash before the end of this year, and one-third to one-half of all private companies will be out trying to raise money in 2009.
By the end of the day, things hadn’t gotten much sunnier. A panel on the economic outlook for the next year seemed to conclude that things will get worse, not better, for most life sciences companies over the coming year.
“If you have cash flow, are close to cash flow, or are cash flow positive,” the outlook isn’t so terrible, said Jonathan Fleming, managing general partner at Oxford Bioscience Partners. What’s happening right now, Fleming said, is kind of like a forest fire. A lot of things will burn, but that creates opportunities for new breakthroughs, he said.
MIT Sloan School economist Ernie Berndt suggested that companies working on diagnostics and vaccines will likely feel more wind at their backs than others. But Berndt noted that while disease foundations (like the Gates Foundation or the Michael J. Fox Foundation) have been ardent supporters of drug development over the past few years, that funding seems to be slowing in the current economic climate.
There was a smidgen of good news from the panelists. Berndt said that the pathway to bringing follow-on biologics to market “is going to be much more difficult than predicted.” Fleming said Africa is an interesting market for vaccine development, mainly because the US government has been so supportive with its financial backing. Berndt said that as big pharmaceutical companies are increasingly dedicating their resources to developing blockbuster drugs, opportunities exist for small companies to come up with “niche-busters” for more focused groups of patients.
“You guys are painting a rosier picture of today, and a more negative picture of a year from now,” said moderator Bob Buderi. “The President has been saying the opposite.”
Things could be worse, quipped Frank Hatheway, Nasdaq’s chief economist: at least you’re not in real estate, or a community banker in Michigan. Not sure that made people feel much better…
The day wrapped up with a quick visit from Governor Deval Patrick, who tried to jawbone the despondent agglomeration into hiring union contruction workers
for any expansion projects they might be planning. “One out of every five people claiming unemployment benefits are from the building trades,” the governor said. They see a billion dollars of public funding going into the life sciences field, and yet “they don’t feel they get a fair shot at jobs on your projects,” he said. “I ask you as a partner, a friend, and your governor, to give union workers a fair chance to compete.”
Gov. Patrick ended with what I thought was a nice phrase: “Innovation is our edge” in Massachusetts. Sectors like biotech, cleantech, health care, high tech, and smart manufacturing “will be our path out of this recession and into a strong and secure economic future.”
That, at least, offered an upbeat segue into the cocktail hour.
Labels: biotech, Deval Patrick, Ernie Berndt, Frank Hatheway, Jonathan Fleming, MIT Sloan School, Nasdaq, Oxford Bioscience Partners