The prospect of investing in biotechnology is still daunting. In the early 2000s the sector was plagued with clinical failures which often meant investors lost out. Confidence in the sector paled, and small innovative companies - often listed on junior markets - struggled to drum up much-needed funds. Perverse as it may seem, the onset of the financial crisis actually improved prospects for the biotechnology sector. For one, their relationship with their big pharma cousins became much closer. With global drugs giants forced to streamline their in-house research and development (R&D) divisions, management teams were forced to look beyond their in-house resources to find the next big blockbuster drug. In healthcare, product portfolios are a key indicator of a company's value, and biotechnology companies offered big pharma a cost-efficient way to build a stack of future medicines. The benefits of these R&D tie-ups flowed both ways. Biotechnology companies that established effective patented technology platforms were able to strike up lucrative licence or royalty deals with big pharma partners, or were occasionally bought out at a hefty premium. Renewed confidence As this changing relationship evolved, confidence in the sector started to build. Over the last 18 months, there's been a veritable … Continue reading →