Bio-Tech On the Edge
Posted on September 17, 2009BIO-Tech On the Edge
Buried deep in the New York Times today was an interesting story about the future of one of our most important industries. Bio-tech is not only important economically (jobs, productivity, wealth creation, growth etc.). It is also important for future health care in this country. The most promising treatments for cancer, Parkinson’s Disease, AIDs, Alzheimer’s Disease and many others comes from the biotechnology industry.
The story in the Times says it all though. “Bio-Tech Tries to Shrug Off Setbacks”, the headline reads. (http://www.nytimes.com/2009/09/17/business/smallbusiness/17edge.html?ref=todayspaper)
As the story relates: “FROM one perspective, the life sciences industry — the biotechnology companies that develop drugs and treatments to combat disease and the biomedical firms that create medical devices — is a picture of expanding horizons and confidence. Young companies are taking advantage of advances in medical and computing sciences to develop new ways of dealing with intractable health problems.
One new company has developed a disposable device with software that would help surgeons to perform knee replacements with greater accuracy. Another has a microscopic device implantable in the eye that would continuously release medicines to alleviate glaucoma or macular degeneration…. But even as the industry seems to be making progress, its biggest benefactors are pulling back. The traditional providers of venture capital in the United States are university endowments and pension funds, whose assets have been reduced sharply over the last year in the collapse of financial markets.
Even a successful investor in the life sciences industry sees danger now. Domain Associates, a company based in Princeton, N.J., and San Diego, raised $500 million for a new venture fund in August. It is the eighth such fund Domain has started in 24 years, and in that time, it has backed more than 200 life sciences companies. But few other venture funds were able to raise money, said James C. Blair, a Domain partner.”
One of the unnoticed victims of the credit crunch from earlier this year was the bio-tech industry. Venture capitalists just didn’t have the money to invest in the risky investments. The investment drought has put the industry on the edge, and if we don’t do something about it, we will all suffer as a result.
The stimulus package has done nothing for the bio-tech industry. Nada. Zilch. And that is a shame, because bio-tech jobs are not only high-paying, they also lead to break-through cures.
One of the few good things that have come from the health care debate is a provision that is in the Senate HELP bill that gives investors the proper incentives to invest in bio-technology. By giving inventors a proper time to recoup their investments, this provision could help with the investment drought.
But this may not be enough, and we may be losing ground to the Chinese, who are investing heavily in bio-tech, with the objective of overtaking American leadership in this key industry.
Deeper in the Times story there was a reference to a joint effort by the City of Shanghai and American venture capitalists to invest in a biotech firm. As the story put it, “In a possible sign of major things to come, the Zensun Science & Technology Company, based in Shanghai, has raised $30 million to perfect a treatment to strengthen cardiac structure after a heart attack. Zensun is backed by Morningside Investments of Hong Kong and the Shanghai city government, said Jack Z. Chen, chairman of the Transworld Capital Group, a consulting firm based in Arcadia Calif., with offices in Beijing and Shanghai. Zensun was founded in 2000 by Dr. Mingdong Zhou, who earned a doctorate at the State University of New York, and Dr. Xifu Liu, whose doctorate is from the Genetics Institute at the China Academy of Sciences. Its heart treatment is now in phase two F.D.A. trials, which measure effectiveness.”
The Chinese get it. We better get it too.