Overall healthcare industry is very resilient to recessions and even more the strong innovators biotech firms. Also, with Big pharma having more than USD 170 Billion in excess reserves, they are ready for M&A spending in biotech. Already in 2021, venture capital in biotech was 60% higher than in 2020, deals were 66% larger, and there were 19% more IPOs, with an average of $150 Million. There is a lot of money for biotech, specially in the USA! The global biotechnology market (approximately 10,379 firms) was USD 753.48 billion in 2020 (being USA 40% of the market) and is expected to grow annually +15.5%. But it is not so easy; it is tough; some advice:
- Know your (own) weaknesses: many technological companies tend to take decisions based exclusively in technical issues (“The product”) mostly because decisions are taken by former/present researchers and they consider market/strategic issues as simple “common sense”. It is common sense, but “structured well planned and executed” common sense. You should rely in market/strategy experts as you rely in other technical experts in areas you/tour company has no real expertise.
- Finance 101: High profit, high risk; low profit, low risk. Some studies indicate that only 1 out of 10 biotech companies make any profit. Only one in six firms in the Nasdaq biotech index did so in 2020. The remaining five-sixths lost a combined $33bn. Vertex lost money from 1989 until 2017. ModeRNA made a profit in 2021, for the first time ever. BioNTech, a German company with two Turkish researchers discoverers of the Pfizer marketed Covid vaccine, reported 2.8 Billion euros net profit in the first 6 months of 2021, where in the same period of 2020 first had losses of 141.7 million euros: 2021 it the first time they made a profit. You do believe your product is a “winner” but, quite likely, will not reach the market, even if you are confident of its “technical” benefits; get ready for this hard truth.
- FDA: If you thought you have very high standards, get ready for the FDA; they have seen much more than you. In 2020 26 accelerated approvals were granted by the FDA, the highest ever, but only 44 of the 130 accelerated approvals granted in 2010-20 have been converted to final approvals. Get experts, get experts very soon.
- USA is Big: If you want to enter the US market, think like a continent, not a “country”. There are significant market, regulatory, legal and tax (and subsidies/aids) differences between the different states and regions. You need to know and evaluate all factors in order to make the right decision. But, USA is USA; if you decide to set up your own affiliate, automatically you ARE a US biotech company; you can globally as a US biotech (and consolidate fiscally in USA paying, quite likely, less taxes and getting more support). USA is always “open for business”.
- Where, how, when, how much and what?: Basic market entry decisions. A) Where: state, region/county. Specific cluster? Cambridge/La Jolla/LAX/NYC/NJ/Md? Closer to a potential/present partner? Closer to a University/Research center that can be critical for you? Wherever is more financially viable? Whenever talent -or other key resource- available? B) How: entering the market alone? With one/several partners? Linked with pharma/others? Own Affiliate? Working from home and just visits with local representative? C) When: many forget about this basic question; before/after your product/company has a product to offer to US market? Timing of product life cycle? D) How much: cost and time? Federal/state/county aid/exemptions? Time for profitability? E) What: intro in US for additional research, funding, registration, marketing? What is the specific purpose for entering the US market? Many times the very basic questions are forgotten and/or are taken for granted. Ask yourself and clarify the main basic purpose for entering the US market: If we do not have clear the goal, it will be very hard to achieve it.
- Soft issues are the hardest: technical, regulatory, legal, financial and tax purposes are always in top of the agenda. But, when entering such a big country many times we do not realize some other issues are very relevant than in my home country and/or they are in the US nut not a home. Big/small: after 14 home moves (and teaching and consulting in Global Business for 20 years) I tend to have clear that small countries focus abroad and very large ones basically look inwards; that represent a complete different perspective; either you adapt or you die trying to work like home. Language: only when you master a language you realize than language was not the problem, it is the culture. And the large US also has several cultures (East Coast, Mid West, California; Florida, the South, etc.) People: always the most difficult “resource”. US has been living already for several years a shortage of talent. It is an “employee” driven market; they fix the working conditions. Either you adapt, or you are out of the game. Many other countries live the opposite situation. Adapt or die.
- Money, money: There are plenty of opportunities in USA for biotech firms. But small biotech companies need to have a mind-resetting to evaluate the opportunities, possibilities and keys for success in that particular market. Quite often, biotech CEOs go to venture firms in San Francisco, NYC or Boston asking for 1-5 US$ Million and they are immediately rejected; it is a clear sign of not knowing the cost of doing business in USA. But if they do the proper “due diligence” of evaluating well the USA market and entry expenses and strategic alliances possibilities they could have “easily” raised US$25-35 million.
US is the land of opportunities, go for them!! But, as the US national anthem says, it is “the land of the free and the home of the brave” Are you brave? We are here to help you to enter the business opportunities US represents.
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