Unlocking Hidden Value in Bioscience

The failure of the bioscience industry in the UK to deliver a sustainable sector hitherto has had significant impact within the investment community with venture funds reluctant to provide support in the same manner as previously.  Instead, their focus has become more heavily targeted on the generation of financial returns.  CEO's have less freedom than in the past and are now living a paradox whereby they are expected to achieve more with lower levels of investment in a world where drug development costs continue to spiral.  Similarly, investors are encouraging their portfolio companies to remain focused on their core capabilities with the consequence that they restrict them from fully exploiting their technology platforms.  All of this continues in an environment where investors are seeking to drive rationalisation in the sector, expressed through an approach of, "Merge or die".

Within this context, there is a real need for company executives to find ways to generate revenues far earlier in their lifecycle than previously.  There are several options available to companies:

• Exploitation of non-core assets

  Almost all emerging companies have assets that are not utilised which can potentially be revenue generating.  Normally these assets are dormant due to a lack of either resource or capability within the organisation.  The most likely route to successful exploitation lies through engagement of organisations with the ability to understand the value of these hidden elements and the capability to exploit them without impeding the progress of the company as it pursues its central tasks.

• Collaboration with Partners

  Emerging companies frequently shy away from partnerships fearing dilution of or interference with their intellectual capital and the potential for distraction.  However, identifying and securing partnerships at an early stage can have the opposite effect, promoting clarity in the development of technology platforms and allowing companies to focus on their own strengths whilst their partners provide support in other, weaker areas.

• Exploitation of synergies

  Companies can improve their chances of success through broader collaborations focused on delivering synergistic benefits.  It is rarely the case that a single product or technology will result in a successful business long-term.  Success is more likely to be secured through a willingness to integrate the best parts of complementary technologies in order to produce something that is more than the sum of its parts.  This approach depends upon intimate collaboration between organisations in pursuit of a common objective.

Although investors and Government continue to support new entrants to the bioscience sector, second and third-stage funding remains difficult, costly and time-consuming to obtain.  In this context, the generation of revenues from hidden assets will be key to the survival and prosperity of emerging companies.  Companies need to focus on generating returns more efficiently and effectively through maximising their technology advantages with a willingness to exploit non-core as well as core assets in ways that do not dilute focus.  To achieve this, there must be a new approach to co-operation and collaboration in order to realise those synergies that exist across the sector and a readiness to embrace this approach in order that the flagship profitable, growing companies that the sector needs for sustainability will be generated.

 
Author: Neil Murray

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