Biotech: where Mars meets Venus

Investors are from Mars and scientists are from Venus, according to one of the presenters at a biobusiness briefing in Melbourne this morning.

Jim Murray, formerly of global accounting firm Ernst and Young, now at consultancy Atholl, told the first BioMelbourne Breakfast for 2004 that when it comes to deal-making and competitive intelligence, investors and scientists view value from very different perspectives, which can lead to misunderstanding, stress and tension.

Scientists, for example, look at adding value as expanding the capabilities of their product or technology -- such as finding new disease targets with multi-billion dollar markets that a lead molecule or therapy can be used against, or new applications for platform technologies. "People get very excited about this," Murray said.

But investors, on the other hand, look at value as the ability to generate earnings, and use models to estimate the value of an opportunity. "Investors think about the cost of developing a single drug -- how do you calculate the pay-off?" Murray said.

Typically, investment models take into account several factors, including the size of the opportunity, the expected share of that market, experience with similar companies, and the time required to get to market, balancing that with knowledge about comparable deals in the marketplace.

"You have to understand where the value lies, using competitive intelligence and market information," Murray said.

BioComm's Andy Gearing also weighed in with advice on gathering competitive intelligence, outlining a range of ways to maximise its collection and use in deal making. "It starts at home, with understanding what you have," he said.

From there, he said, thinking global is key, making sure that every possible avenue from web searches to partnering conferences is covered and every network is tapped. "Despite advances in technology, the best, most current intelligence we get is from being on the ground and actively looking for it," Gearing said.

Global thinking was also on the mind of Biota CEO Peter Molloy, who believes it is critical to have a presence in the big markets -- particularly the US market -- in order to make deals. "You must have US-based business development as big pharma has a business development presence in the US not in Australia. It's also good to have people on the ground in Europe and Japan," he said.

But the value of a good deal could not be missed, Molloy said. "Pharmaceutical partnerships are vital for the growth and evolution of biotech companies. You learn so much during that five- to 10-year period of hand-holding," he said.