In any business, a collapse in stock price tends to stimulate soul-searching. Biotech companies have suffered, along with almost everyone else, a painful loss of value in the current bear market. Investments in R&D are risky, in a time when risk hasn’t been paying well. And the financial crisis has pretty much dried up equity offerings for biotechs or anyone else.
So the In ViVo blog, an offshoot of the business-of-medicine magazine of the same name, has been fretting lately about the state of biopharma companies. Today, the In Vivo blog noted that biotech industry leaders – like the Big Three auto companies’ CEOs – recently went hat in hand to Congress to beg for financial aid. The carmakers got a tougher reception, however, as Congress demanded the execs go back to Detroit and work out plans to revive their businesses.
Says In Vivo:
What’s odd to us is that BIO didn’t get the same assignment from Congress. We’ve never gone so far as Socrates in suggesting that the unexamined life isn’t worth living. But we do go so far as saying that the unexamined business plan sure isn’t worth funding. We’re all for biotech investors getting some additional incentives for funding the industry, but we’d also – for the good of investors, patients and taxpayers – like to see some ideas for how biotechs ever plan to make back the money they’re asking for.
The issue isn’t innovating scientifically. Or even clinically. The challenge is getting products approved and paid for.
And at the moment, biotechs aren’t doing that well enough to justify their funding.
Lurking in that exhortation for biotechs is advice that makes sense for all: Let’s go back to the business plan. Be sure we understand the path our companies are charting to achieve future sales and profitability. Let’s not focus so much on the minutiae of this quarter’s issues that we overlook the fundamental strategies to create value.
Especially in tough times, surviving and thriving – for companies and shareholders alike – is all about basics. So is investor relations.