Tag Archives: mergers and acquisitions

Developing Opportunities in the Life Sciences: A Birds-Eye Review

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Bald Eagle Soaring

Keeping a Birds-Eye view of the opportunities shaping the life sciences will allow you to develop effective strategies while keeping your head out of the clouds.

By:  Michael Kaiser

A brief preface: although the developing opportunities listed below refer to the life sciences, they can be adapted to the specific needs of other industrial sectors as well.

1. New Frontier: Stem Cells, Bioinformatics, Genomics, and Proteomics

a)  Stem Cells
b)  Bioinformatics
c)  Genomics
d)  Proteomics

(See descriptions of a), b), c) and d) under “General References and Additional Reading”)

The high R&D cost of these “New Frontier” opportunities demands exposure and experience in dealing with academia, scientific personnel and the highest levels of corporate savvy and investment sources; their ultimate value more than merits the effort.

2. Biomaterials
Biomaterials include implant prosthesis, biochips, nanotechnology, fiber optics for minimally invasive implant or corrective surgery and biochemical suturing. They represent a valuable business opportunity for improving human health and a significant contribution in reducing healthcare costs.

3. Intellectual Property
This is a critical solution in protecting nascent opportunities in high-technology sectors. When the topic of intellectual property is discussed, one cannot but bring to mind the title that Kevin Rivette and David Kline came up for their book on the subject: “The Rembrandts in the Attic. Unlocking the Hidden Value of Patents”.

The potential legal implications of violating a patent requires the assistance of expert counsel in areas such as innovation, field of use, royalties, head-of-agreement terms, etc. Although being an expensive process that can negatively impact the financial resources of a biotechnology start-up, legal IP expertise also serves the purpose of prosecuting copy-cats.

4. Competitive Advantage
Competitive advantage: the key challenge and opportunity in commercial transactions and outcomes; its success lies in the axiom “Understand your competition as well, if not better than thyself”.

No company, be that a startup or established corporation, can afford the absence of competitive strategies. Skills in knowledge management and data mining are useful in the planning of corporate strategies in addition to the regular update of marketing e-commerce and social media tools used in the competitive analysis that precedes a successful commercialization. A clear understanding of information transfer technologies, e-commerce and sales and marketing tools is now an essential requirement in competitive analysis.

5. Entrepreneurship and Structure
Ideally, the entrepreneur enjoys and thrives while working in an innovative, fast-paced environment. However, the reality of the economic marketplace suggests that equal attention should be given to the role of ‘intrapreneurs‘, those executives who implement a formal corporate-like structure to reflect the vision of the entrepreneur’s initiative in a manner that conveys a more established and organized company image to investment sources.

6. Globalization
This one is the quintessential opportunity for any business sector and not just for a selected few because it implies an in-depth knowledge and understanding of the socioeconomic and political factors affecting the conduct of business in different regions. Just like we refer to startup companies, we can also refer to growing national economies, e.g., the BRIC countries.

The liberalization of world trade and the integration of regional markets such as the EU, NAFTA and ASEAN dovetail with organizations such as the WTO and GATT. Paradoxically, in the process of lowering trade barriers the pendulum has swung too far and we see an increase in protectionism by both industrial countries and newly industrialized ones. Furthermore, the fact that the Internet became an effective communications facilitator in no way replaces the unique value of face-to-face personal contact in all endeavors of business, sciences and humanities.

7. Mergers and Acquisition; Strategy and Technology Evaluation
The impact of IT has accelerated the process of consolidation and integration in the life sciences, particularly in those cases where a large pharmaceutical concern and a biotechnology company with a valuable technology platform are concerned. Shareholders, institutional investors and venture capital companies have much higher expectations, with a short time horizon, for a return of their investments.

Therefore, the cost of M & A’s requires a thorough analysis of corporate synergies, innovative financial instruments and fundamentals, experienced investment bankers and financial institutions, assessment of net present valuation and internal rate of revenue, evaluation of technology and future corporate strategy, top management succession, and ability to transfer technologies across corporate and international boundaries.

GENERAL REFERENCES AND ADDITIONAL READING (Links)

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Startups and the Role of the “Other” Development

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Business people

There IS a difference between Business Development and Corporate Development

By: Michael Kaiser

It is an accepted fact that Business Development is not the same as Corporate Development, although they may (or can) intertwine. Even today, business development stands as a euphemism for sales and marketing, but especially in the case of high technology that definition is less acceptable and more complex. Whereas business development is an organic growth, corporate development’s inorganic role is the opposite, with its emphasis on mergers and acquisitions, alliances and joint ventures.

What is Corporate Development?
There are several definitions of Corporate Development but the following ones address the essence of this subject:

A) Corporate Development applies to planning and strategies that assist a company to achieve its goals (Wise Geek -1)

B) Corporate Development refers to the planning and execution of a wide range of strategies to meet specific organizational objectives (Wikipedia – 2)

C) Corporate Development encompasses the various facets of the corporate portfolio, growth, and strategy. (Boston Consulting Group – 3)

Does a startup need a Corporate Development team?
The answer could be “No and Yes”.

“No” because the entrepreneur(s) behind the birth of a new company based on their vision, initiative, creativity, technology, personal values, trade connections, etc. are building their product and/or service offering on the premise that the growth of their business is dependent on sales and marketing. At the onset of a startup, its actions will resemble more those of guerrilla warfare than those of a strategic military operation. And therefore…

“Yes” because a lack of growth, or inversely, an unexpected growth demand requires the help of seasoned experts for corrective advice to prevent mistakes and steer the company towards success. And that’s where the professional corporate colonels and generals devise the client’s strategies.

More importantly, a primary reason a startup has to deal with a corporate development team is the need for investment sources, such as venture capital and crowd funding described as the “the collective effort of individuals who network and pool their money …to support efforts initiated by other people or organizations… in support of a wide variety of activities, startup company funding, inventions development, scientific research…  Crowd funding can also refer to the funding of a company by selling small amounts of equity to many investors.” (Wikipedia – 2)

Corporate development strategies
The strengths, weaknesses, opportunities and threats (SWOT) analyses of startups, mid-sized or large companies is just one basic tool used by corporate development professionals in order to objectively determine and address the challenges and opportunities of new technologies, products and services. Here is a brief example provided by a consulting firm on the subject of some critical questions for an alliance or joint venture case  (Boston Consulting Group – 3):

  • In which areas—geographies, product lines, or functions—might an alliance or joint venture make sense? Is it better than an outright acquisition?
  • For a given opportunity, who are the right potential partners?
  • How can we prepare for alliance or joint venture negotiations—for example, for value capture and split?
  • How can we ensure constructive management and decision making in the alliance?
    • How can we set up an active joint-venture-and-alliance portfolio-management process for evaluating strategic options?

Another consulting firm defines corporate development as a function with three features of excellence (Ernst & Young – 4):

  • Strategic alignment with broader business goals
  • Well-documented transaction processes
  • Close relationships between corporate development and the rest of the organization

The bottom line
As social media, software and hardware applications, local and global connections and narrower opportunity and time horizons emerge due to advanced technologies, startup companies in the life sciences and other high technology sectors have to increasingly depend much earlier on the role of professional corporate development working in unison with a company’s organic business development in order to sustain their financial and market viability.

References

  1. Wise Geek (http://www.wisegeek.com/what-is-corporate-development.htm)
  2. Wikipedia  (http://en.wikipedia.org/wiki/Corporate_development)
  3. Boston Consulting Group (http://www.bcg.com/expertise_impact/capabilities/corporate_development/default.aspx)
  4. Ernst & Young (http://www.ey.com/GL/en/Services/Transactions/Toward-transaction-excellence–The-DNA-of-the-corporate-development-function)

Suggested reading

  1. Deloitte (http://www.deloitte.com/view/en_US/us/Services/Financial-Advisory-Services/Corporate-Development/696435131bc16310VgnVCM1000001a56f00aRCRD.htm)
  2. Forbes Magazine: (http://www.forbes.com/sites/scottpollack/2012/03/21/what-exactly-is-business-development/)

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Life Sciences in 2013: Startup Opportunities and Challenges

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girl on beach at sunrise

Use these Life Sciences market insights from 2012 to maximize your opportunities in 2013

By:  Michael Kaiser

The New Frontier: Bioinformatics, Genomics and Proteomics
The Human Genome Project opened the floodgates for three closely intertwined disciplines:

  • Bioinformatics provide new database methods to store genomic information, evaluation of experimental data and improvement of molecular techniques.
  • It incorporates data from multiple departments within pharma/biotech companies and it is a critical tool for the design and management of smart databases.
  • Genomics is an area that is the vehicle for a dramatic increase in therapeutic and diagnostic pipelines, with a worldwide market potential in the billions of dollars. Genomics is divided into structural and functional areas, the former involving the use of genetic and molecular methods to develop genome maps, the latter aims to discover the biological function of particular genes in health and disease, primarily through high-throughput screening techniques.
  • Proteomics has been described as the link between genetics and pharmaceuticals. The fulcrum of this discipline lies in the proteome, the complement of proteins that are key to the discovery and development of new drugs and this fact explains its scientific and commercial importance for the biopharma sector.

The foregoing demands exposure and experience in dealing with academia, scientific personnel and the highest levels of corporate decision marketing.

Healthcare
The analysis of epidemiological trends allows biotech and pharmaceutical companies to direct their drug discovery and/or marketing efforts. Significant business opportunities exist for development and licensing. For instance, biomaterials may include implant prosthesis, fiber optics for minimally invasive implant or corrective surgery, and biochemical suturing, a significant business opportunity in improving healthcare and a significant contribution in reducing healthcare costs.

Home work
An essential component of the life sciences, it covers areas such as intellectual property, field of use, royalties, head-of-agreement terms, etc. Complex negotiations require the expert advice of specialized legal counsel, experience in business and corporate development, inclusive of technology evaluation (licenses, patents, time-to-market) and last but definitely not least, investor relations.

Competition
Here the key is: “Understand your competition as well, if not better than thyself“.
To that end the development of net-centric skills in knowledge management and data mining proved to be very useful to start-up and established life sciences companies in the planning of their corporate strategies. A clear understanding of e-commerce and sales and marketing tools is now an essential requirement in competitive analysis.

Entrepreneurship
To be one is to understand one. A background in multinational corporations and start-up companies is a plus. Ideally, the entrepreneur will thrive by working in an innovative, fast-paced environment. However, the reality of the economic marketplace dictates that equal attention be given to the ‘intrapreneurs’, those individuals who, from within a formalized corporate structure, implement effectively the vision of the entrepreneur. This is a truly symbiotic relationship.

Globalization
The liberalization of world trade and the integration of regional markets such as the EU, NAFTA and ASEAN dovetail with organizations such as the WTO and GATT. Paradoxically, in the process of lowering trade barriers the pendulum has swung too far and we see an increase in protectionism by both industrial countries and newly industrialized ones. The fact that the Internet has become an effective business facilitator has not replaced the personal contact in science and humanities. In a global economy, dealing with diverse cultures is a clear and professional success marker.

Mergers and Acquisitions; Strategy; Technology Evaluation
The impact of IT on the life sciences has accelerated the process of consolidation and integration in the life sciences, particularly in those cases where a large pharmaceutical concern and a biotechnology company with a valuable technology platform are concerned. Shareholders, institutional investors and venture capitalists have much higher expectations, with a short time horizon, for a return on their investment.

To meet this challenge, due diligence and expert advice in investor relations, marketing and corporate development will allow start-ups to identify and execute the driving forces of this process. The cost of mergers and acquisitions requires careful analysis of corporate synergies, innovative financial instruments and fundamentals, experienced investment bankers and financial institutions, assessment of net present valuation and internal rate of revenue, evaluation of technology and future corporate strategy, top management succession, and ability to transfer technology across corporate and international boundaries.

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