By Randall Osborne
West Coast Editor
SAN DIEGO ¿ During a lunch break Tuesday outside the convention center here, a young man in shorts stepped up to a reporter, pointed a finger at him, and smirked, ¿I want a patent on you!¿ Then he stomped away.
The level of discourse generally was somewhat higher inside the center¿s expansive conference rooms, most of which were packed with note-taking attendees of the eighth annual BIO 2001 International Biotechnology Convention & Exhibition.
Speakers grappled not only with the perennial matter of raising capital and making more money to prosper, as well as complicated ethical issues that shadow the industry. But much of the discussion, during the ¿Partnering for Life¿-themed event, had to do with how biotechnology companies find and keep the pharmaceutical collaborators that often become drivers of their success.
More of the same old thing it was not.
For example, in contrast to the long-heard talk of increased mergers, acquisitions and overall consolidation of the industry, Stelios Papadopoulos sounded a different note.
¿Deconsolidation¿ is what the future will be about, he declared during a panel called ¿Does Biotech Need Pharma in the New Economy? Strategic Alliances in the Post-Genome Era.¿
Papadopoulos, managing director of SG Cowen Securities in New York, said Wall Street¿s unreasonable pressures for constant earnings growth will force companies to act in new ways. Leaders, detecting a weaker aspect of the firm¿s efforts, will separate it from the main enterprise, he said.
¿You will choose the worst one,¿ he said, and ¿chop it off, sell it, close it, bury it. As you do that, by definition the average goes up for the rest of the organization.¿
Afterward, ¿who¿s going to be there? Big venture capitalists have an awful lot of money,¿ Papadopoulos said. ¿It¿s happening already. There are signs already of pieces separating from big pharma companies, and being the subject of major venture capital investment.¿
He called the current environment a ¿dynamic equilibrium . . . a sort of swinging pendulum.¿ Whereas consolidating has been the trend in recent years, the opposite will prevail during the next period.
¿To the extent there is scientific knowledge emanating from the universe, and to the extent there is disease left untreated, there will be biotech companies,¿ he said. ¿We¿ll be doing this for the 20 or 30 years, God help us, and hopefully, without a lot of demonstrators outside.¿
About genomics, though, the tune is unchanged. Another panel member, Juan Enriquez, director of the Life Science Project at Harvard University, offered an Ivy League-style primer on how alphabets developed and how subsequently developed computers are letting the improved flow of data generate wealth to a degree never known before.
¿The societies that speak these languages become the dominant civilizations on the planet,¿ he said. ¿This stuff actually matters, because it means your company, your country, your region becomes dominant, if you are literate in this language, and if you¿re not, you are out of the game.¿
Even a non-biotechnology panel member was included on the panel: Mark Chandler, director of corporate development from Agilent Technologies Inc., of Palo Alto, Calif., an instrument company split off from Hewlett Packard, which deals largely in communications and electronics, but also has a health care products division that is in the process of being sold off to the medical unit of the Netherlands-based Royal Philips Electronics. Chandler spoke about the complexities of making mergers, acquisitions and other deals that work.
Ravi Kiron, senior alliance analyst for external technologies with New York-based Pfizer Inc., moderated the panel. Like Papadopoulos, he spoke of threats as well as opportunities in the sequencing of the human genome, and predicted ¿the [further] fragmentation of the already fragmented industry.¿
The answer to the question contained in the panel topic is obvious ¿ pharmaceutical firms and biotechnology companies need each other as much as ever, Kiron said. Pfizer has 75 alliances, ¿but still that is not enough,¿ he added. ¿We have to do more.¿
With 100 screenings done to identify 12 drug candidates resulting in one drug, and with an investment of $250 million to $500 million per product to bring it to market in 12 years, and with only one in four marketed drugs showing a significant profit, alliances will be critical.
Tighter FDA strictures are another problem, Kiron said. ¿It¿s going to get even tougher,¿ to get drugs approved, making the careful development of them even more critical.
BIO 2001 continues through today.