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Biotech / Medical : VD's Model Portfolio & Discussion Thread -- Ignore unavailable to you. Want to Upgrade?

To: Rocketman who wrote (9607)	6/7/2003 2:35:19 AM
From: Rocketman	Respond to of 9719

The New Biotech Incubator Model: Pfizer buys Sugen in April. By the end of April they announce they are closing the S. San Francisco Sugen facilities and will be moving some people to places like Indiana, Ohio, and La Jolla. I'm sure a few will go, but not many of the 350 layed off will. In the meantime 300K square feet of great lab space and hundreds of people are now available. That is the new incubator model. The pharmas come, buy the technology that is in mfg stage, move it to a real pharma production facility, and then axe all the people who got it there as overhead who don't fit their in-house R&D model. They'd rather have the R&D done on VC money and then pick and choose after it succeeds rather than fund it themselves. So, those people are now free to take all that space and equipment and start new companies so the pharmas can buy them again in 5 or 10 years, move the products to cheap areas for production and fire everyone again. Where the pharmas are going wrong is that they run it by spreadsheet and not like a family or team, which is what the small companies are like. The good leaders actually know and care about their people. Millenium just did the same thing. Bought up a bunch of companies, such as Cor Therapeutics, promising to not hack them, and then a couple of years later, they grab the tech they want, move it to the main headquarters in Cambridge Mass, and cut loose all the people and space. No better than Pfizer and Sugen. What I think (and hope) will happen is that biotechs will stop selling out to the pharmas. They will realize that they like their teams and jobs and don't want to start all over again in a new company. Thus, I think more and more biotechs are going to take the path to becoming Pharma competitors and keep their drugs in house, either mfg themselves or outsourcing it, selling themselves, or licensing it for sales by existing pharmas. But, not let the pharmas buy them and take them apart. Us startup folks find it offensive to have our tech bought and our companies dismantled. The pharmas will only get away with this for a while, it is not a sustainable model. But, they don't care, they are too busy looking at this quarters spreadsheet to worry about the long term. By the way, the old biotech incubator model was that the startups move into space that was built out by somebody a generation ahead of them. Their are buildings around here that have had a dozen companies come through them over the years. Incubators don't work for biotech unless they are government subsidized. The facility requirements are too unique, so to build a truely flexible facility makes the costs to build the incubator so high, that the startups can't afford to be there. Incubators work in office based businesses, where you need rooms, and conf rooms, and a copier, fax, network, phones and receptionist. All stuff that is generic and works for anyone in the field. Rman