27 February 2009 18:05 [Source: ICIS news]
NEW YORK (ICIS news)--The biotech industry is struggling with an impending shortfall in funding, threatening its pipeline of products, industry sources said on Friday.
“It’s going to be a tough year coming up, and there are many companies that are facing cash shortfalls,” said John Richert, vice president for business and technology development at the North Carolina Biotechnology Center (NCBC).
“What we don’t expect to see are many first-time investments from venture funds. This will be a challenge for companies just getting started or that are looking for their seed round or A-round funding,” he said.
In 2008, US companies brought in $30bn (€23.4bn) through a combination of financings ($10bn) and partnering deals ($20bn). This was a 32% drop in funds raised compared with 2007, reflecting the difficult market conditions and the lower valuations of public companies in general, said Steven Burrill, CEO of Burrill & Co, a US investment firm involved in life sciences.
In terms of biotech initial public offerings (IPOs), the window closed early in 2008, and the year was one of biotech’s worst. Only one biotech IPO was completed, and 19 were withdrawn, according to Burrill.
Further, the future of biotech’s innovation, which resides in small and emerging companies, is at risk. These companies are shelving projects and reducing staff just to survive, he said.
Whether these projects will ever be re-activated again remains to be seen, Burrill said.
The biotech sector provides critical technology to the pharmaceutical, agricultural and chemical industries.
($1 = €0.78)
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