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BayBio2009: Industry Trends & Implications for HR

by Frank Spada, Published April 29, 2009

Given the impact of the current economic crisis on the life sciences industry, the BayBio 2009 conference was appropriately titled, “Navigating the Storm.”  Here is a summary of the key issues and trends presented at the conference:

Find creative ways to raise capital. Seek out non-dilutive financing alternatives and alliances: Government grants and contracts, private foundation contracts, corporate alliances, academia/industry alliances, and stimulus package funding via the NIH and California.

Preserve your human capital. Anticipate and plan ahead for potential crises and reductions. Retain and engage top talent. Tune-up compensation and performance systems to motivate employees and maintain morale.

Outsource. Beyond controlling cost, outsourcing has been embraced by executives and investors as a means to more efficiently and flexibly staff projects. Biotechs are turning to CROs across all disciplines – preclinical R&D, clinical development, manufacturing, and even HR – with the promise of de-risking and accelerating their drug development programs by engaging experts in their respective fields. Given the dismal state of the capital markets, emerging biotech companies must do more with less, on time, on budget, and right the first time. For all of these reasons, the next generation of biotech startups are turning to CROs and operating as virtual companies. These companies will remain much leaner than traditional fully integrated biopharmaceutical companies (FIBCO).

For overviews, reports and trends in the Life Sciences Industry, visit the following sites:

The Burrill Report -  http://www.burrillreport.com;  Sign up for the Burrill Weekly Brief by emailing your contact information to skirby@b-c.com

The Journal of Life Sciences:  http://www.tjols.com/

Fierce Biotech:  http://www.fiercebiotech.com/

The Biotechnology Indsutry Organization: http://www.bio.org/

BioWorld:  http://www.bioworld.com/

Life Sciences World:  http://www.lifesciencesworld.com/

Recent quotes:

“What we’re hearing is that 80% of the biotechs in the United States today, public and private, have less than a year’s worth of cash. That’s going to force massive consolidation.” - James A. Datin, VP and managing director, Safeguard Scientifics (http://www.pharmalive.com/extra/2009/jan09_biotechnology.cfm)

“Nearly one third of the small biotech pharma companies in the US are expected to go out of business within a year.” - Roger S Newton, CEO Esperion Therapeutics (http://economictimes.indiatimes.com/News/News_By_Industry/One_third_of_small_biotech_pharma_cos_in_US_to_loose_biz/articleshow/4071531.cms)

Did you see the December 2008 cover story of FAST COMPANY?   The title reads: Cisco Gets Radical and the subtitle is How CEO John Chambers is turning the Tech giant into a socialist enterprise.  What is he talking about?  Read the article.  What's the company's No.1 blog?  It's about collaboration. 

John Chambers is quoted as saying "some people need a command-and-control environment.....(but that's not the way of the future)....We now have a whole pool of talent who can lead these working groups, like mini CEO's and COO's.  We're growing ideas but we're growing people as well...where I might have had two potential successors, I now have 500." (p.134)

And they are scaling up, in a collaborative way.  "The global marketplace and the ubiquity of Web 2.0 tools demand a workforce empoowered to generate ideas, solve problems and contribute to the greater good without micromanagement." writes the author, Ellen McGirt (p.135)

Here's an excerpt from the Fast Company website:

Cisco's CEO John Chambers On How to Weather the Downturn
By Fast Company Staff
• "Focus on what we can influence, and not over- or underreact to things we cannot. It's a question of living in the world as it is, not the way we want it to be."

• Assess the damage externally -- vendors, customers, colleagues. "In 2001, we went to our customers in energy, manufacturing, and automotive, to name a few. We asked, 'How are you handling this?' "

• "Ask yourself, 'Is this a market-driven phenomenon or did we do it to ourselves?' " Based on the answers you get, formulate a response. "In 2001, our strategy was working extremely well before the downturn, and it seemed to be working from the customers' side, so we said it was 90-10. That turned out to be about right."

• Make a determination of how long this will last and how deep it is going to be. "Prepare yourself for it to be longer and deeper than you think. And then build flexibility to adjust quickly if you need to."

• Get ready for the upturn. "What's our vision for where this industry is going with or without us?" That, he says, is a five-year horizon. "What is our differentiated strategy within that vision?" That's a two- to four-year plan. "How are we going to execute in the next 12 to 18 months?"

If you'd like some context for the changes and uncertainty that we face in our future, check out this 5 minute video titled Did You Know.  It offers a compelling picture of how technology, education and population growth will effect the way you and your company do business in the future.  What implications does this have for you? and HR? 

An expanded 8 minute version of this video Did You Know (also titled Shift Happens) is available on YouTube.  The original version of this video was created by two High School teachers in Colorado in August 2006 to start a conversation about what students need to be successful in the 21st Century. By June 2007, it had started more than 5 million conversations around the world.  For more information, visit:  shifthappens.wikispaces.com.

Did you read the article in the SF Chronicle published on Sunday, November 16th, 2008?   The title of the article read:  Biotechs claw for their lifeblood - financing

Here are the first two paragraphs:

Biotechnology companies, which pin their fate on biological theories, are playing out a real-life Darwinian exercise as the grim economy inflicts merciless pressure on the weakest among them.

Although the biotech field in general is a sheltered habitat compared with the harsh business landscape in other sectors, many smaller biotech companies are struggling to survive. Infusions of cash, the essential nourishment that allows fledgling biotechs to grow for years until they finally market a product, have been cut off as banks, hedge funds and other sources mete out their investments to lower-risk businesses.

If you'd like to read more, click here to skip to the SFgate webpage.

What does this mean for you?  and your company?