Many of the problems outlined in the United Nations 17 Sustainable Development Goals can be solved through the use of biotechnology but few will be achieved without sufficient finance for research and development. Here we look at the interface of biotechnology and finance in global problem-solving.

Role of Finance in Biotechnology

The biotechnology sector depends on financial investment for bringing new drugs and products to market, and it’s an attractive sector for investors, offering substantial returns – the personalised health market, for example, has a projected growth rate of 11% and a potential return of trillion by 2025. And in the second quarter of 2023 trillion was invested in at least 200 funding deals. Effective finance is, therefore, vital to support growth and development within the industry.

How does finance support biotechnology research and development?

finance-business-meeting

Developing a new product or drug takes extensive time and substantial amounts of money and the process can be long and complex – taking 12 years on average and requiring investment throughout all the stages. It’s estimated that it takes around billion to design and develop a new drug – so it’s easy to see that effective financial strategies are required.

The role of financial strategies in biotech startups and established companies

Because of the need for investment throughout the process effective financial strategies are vital, both for biotech startups as well as established companies. Creating a preclinical prototype alone requires a fully-fitted laboratory, precision equipment, raw materials, as well as highly qualified and -experienced staff. Then there is the process of going through pre-clinical trials, followed by the approval process, after which launch marketing takes place, and continual safety protocols must be followed. Funding for these steps can come from a variety of sources including venture capitalists or angel investors, as well as through governments or universities.

The impact of financial decisions on biotech innovation

The impact that financial decisions can have on biotech innovation can be huge. If a potentially life-saving drug, life-enhancing device or planet-saving initiative falls by the wayside due to lack of investment the effect it can have on global problem-solving such as food production, pollution control, alternative energy production or simple recycling can be devastating.

Challenges at the Interface of Biotechnology and Finance

Among the multiple challenges at the interface of biotechnology and finance are how to maximise cost-effectiveness, effective planning for future projects, pressures to restrict pricing, attracting investors, and, perhaps most importantly, having people with the right skills and experience on board, in an age of a severe skills shortage – something that Panda can assist with.

Funding constraints for biotech research and development

bio research

Biotechnology organisations also face constraints such as increased competition, economic pressures, constraints on recruitment finance and regulatory changes on their funding for research and development. According to a recent report by HSBC new investments in the healthcare market fell by 28% in 2023, with a 42% reduction in investment in healthtech specifically. This has led to a decrease in the amount that biotech organisations can invest in research and development and has a potential knock-on effect on innovation in the future.

Risk management in biotech investments

When investing in biotechnology companies risk can be mitigated and managed. Typical risks include cyber attacks, hiccups in the supply chain, theft of physical or intellectual property, quality assurance and control, regulatory concerns, and the effective recruitment and retention of suitably-qualified and -experienced staff. Biotech firms must make efforts to identify, analyse and mitigate risk in order to attract investment.

Regulatory challenges and their financial implications

Biotechnology organisations face particularly stringent regulatory challenges in order to protect patients and the environment including a complex international regulatory framework, demanding clinical trials, novel ethical concerns, and the correct use of emerging technology. All of these considerations have a financial impact and must be factored into how companies integrate regulatory concerns into their day-to-day processes and procedures.

Future Opportunities for Biotechnology and Finance in Global Problem Solving

Biotechnology has the potential to improve not only people’s health and wellbeing but also provide a healthier and more prosperous planet for us all to live on. However, global problems such as climate change cannot be dealt with in isolation and require not only collaboration but investment. Agricultural and environmental innovations can provide real and practical solutions to food insecurity, the spread of infectious diseases and protecting the environment, but require enhanced financial support to achieve these aims.

In conclusion

Biotechnology has the potential to vastly improve the lives of billions of people around the world, as well as the environment in which they live. However, for these improvements to be brought to fruition sound financial strategies must be in place to support manufacturers, both start-ups and established organisations alike. If you’re a biotech company that’s looking for experienced and ambitious financial specialists or if you’re looking to develop and further your career in this exciting area call us on +31 (0)20 2044 502, email us at [email protected] or fill in the contact form here.

Leave a Comment