Life sciences is booming, with the UK in the top four most innovative countries in the world, according to the Global Innovation Index 2021. Behind much of this ingenuity and creativity are small biotechs and cutting-edge entrepreneurs. We take a closer look at what helps them forge ahead in the market.
The biotech approach to entrepreneurialism
The UK life sciences sector was worth £88.9 billion in 2020 and life science companies invested over £9.5 billion in 2020 and 2021. The global Covid-19 pandemic has, of course, highlighted the importance of this sector – with the biggest entrepreneurial success story being the development of the vaccines against SARS-CoV-2. Innovation breakthroughs came from research at Oxford University (Vaxzevria, with AstraZeneca), and from the biotechs BioNTech (Comirnaty, with Pfizer) and Moderna (Spikevax).
The BioNTech mRNA vaccine showed what can happen when biotechs take a risk. At the time of the pandemic, BioNTech was a cancer vaccine company. When the pandemic put trials on hold, it put much of its resources into taking four vaccine candidates into clinical trials, not choosing a final candidate until phase II. This, combined with its existing research, allowed it to move towards approval much more quickly. The big pharma companies were slower to move.
"Biotech companies will try things that large conservative companies will not,” says Don Drakeman, venture partner at Advent Venture Partners, co-founder and former CEO of biopharma Medarex. “GlaxoSmithKline researchers wanted to work on an mRNA vaccine based on in-house technology but could not get approval from within the company as it was felt that the technology wasn't ready," explains Drakeman, who is also co-author of 'From Breakthrough to Blockbuster: The Business of Biotechnology' with Lisa Drakeman. "In contrast, small biotechs said 'Why not?' and Moderna and BioNTech are now successful vaccine companies.”
Smaller companies can be more entrepreneurial and innovative because their size gives them agility and flexibility. "Biotech companies are generally small and more agile and can meet daily or even hourly to agree on changes," says Mike Davies, founder and CEO of Carocell Bio. "Big biopharma companies need more people to agree on a decision, so it takes longer. It can take six months just to decide on a clinical protocol."
Craig Donnelly, Senior Director, CMC and Regulatory Affairs at Scottish biotech NuCana, adds: "Biotechs have much more flexibility. There's less red tape, and it’s possible to have a direct line to the CEO. In big pharma, the CEO is so many steps away from the research."
Because biotechs operate with smaller budgets, they need to see whether a compound works within a short timescale, and equally need to decide quickly on a compound that doesn't work. "While there is no such thing as a typical pharma, big pharma succeeds through scale and can make more shots on goal," says Donnelly. "They can afford to work in a broad range of therapeutic areas, whereas small biotechs are often based on an individual's idea, so may only have one kind of molecule in a single therapeutic area."
The biotechs’ 'fail fast' mindset allows them to move rapidly to the next compound or project, whereas big pharmas’ larger budgets mean they can focus more on why a compound isn't working, but this slows down innovation. "The mindset of an entrepreneur is 'It's going to work, but if it doesn't, we learn and move on'," says Davies.
Entrepreneurs also bring a different perspective to a company and keep coming up with the ideas.
"Entrepreneurs can always see how to do something better," says Lisa Drakeman, co-founder and former CEO of biotech Genmab. "They are always willing to take anything on, no matter how big or small, and they always want to try something new."
Keeping entrepreneurialism as companies grow
As companies expand, processes become aligned, and their leaders become distanced from the everyday science. This can result in a company losing its entrepreneurial spirit. "People running biotech startups are at the coal face all of the time, but as the company grows, they move further away, and there are more people buffering them from the daily decisions that have to be made," says Davies.
One approach is to try to maintain the mindset of a biotech. Pharma giant Pfizer used the biotech model for its restructuring in 2018, creating three separate business units, each with its own group president. Each of the company's R&D centres specialise in different areas, such as biotechnology, vaccines, biotherapeutics and gene therapies.
"Pfizer had a very structured global model,” says Donnelly. “In order to boost the productivity in its discovery section, as measured by how many new molecules were being discovered in-house, the company went through several changes, beginning with the shuttering of a large number of functions at the Sandwich site and the spin-off of Zoetis [its subsidiary] in 2011.
“This process of change ultimately led to an internal reorganising to create a number of smaller business units. These units could be nimbler and more flexible, creating an atmosphere more akin to a biotech," explains Donnelly, whose 20-plus years' experience in pharma involved more than a decade with Pfizer, including at its Sandwich site.
Communication is also vital to keep people engaged throughout the company and ensure all staff see the bigger picture. "Biotech companies talk through everything, plan together and celebrate achievements,” says Davies. “Big companies can do this too, but it takes good managers and leaders. As companies grow, information can be kept in silos. It's important to make sure that communication moves side to side, as well as up and down, to make the silos more porous and trigger collaborations within the company.”
But trying to maintain an innovation mindset doesn't always work for big companies. "Even when large companies try to act like biotechs, decisions may still have to go through one committee,” says Don Drakeman. “This tends to weed out the interesting new ideas that could go on to become breakthroughs."
The alternative is for the big businesses to work to their strengths, such as their ability to run more extensive clinical trials, and their regulatory and marketing expertise, and rely on smaller companies for the innovation – through licensing, collaboration and acquisition. This combines the advantages of both small and large companies.
Fostering a culture of collaboration
The UK Government's Life Sciences Vision, put forward in 2021, is to “create an environment in which industry can grow and succeed in the UK, and patients and the NHS can receive a real benefit”. Its missions focus on vaccines, neurodegeneration and dementia, cancer, cardiovascular disease, respiratory disease, ageing and mental health.
Entrepreneurs are supported through a network of clusters, incubators and innovation hubs. These collaborative hubs provide dedicated facilities such as laboratory and office space, incubation support, workshops and accelerator programmes, and links with the commercial world. Life science companies are inherently innovative and entrepreneurial, but benefit from being part of the same physical cluster as leading clinicians and academic researchers.
"Clusters, where entrepreneurs, academics and clinicians are physically co-located, create success as they stimulate and facilitate collaboration," explains Deborah O'Neil, CEO of NovaBiotics and chair of the Opportunity North East (ONE) life sciences sector board.
One of the most recent examples is the £40 million BioHub on Aberdeen's Foresterhill Health Campus. This project, led by ONE, has secured capital funding from the UK and Scottish governments through the Aberdeen City Region Deal, a partnership between both governments, Aberdeen City Council and Aberdeenshire Council. Scottish Enterprise, the University of Aberdeen and NHS Grampian are also partners in BioHub, chaired by O'Neil.
"There's no lack of entrepreneurial potential in life sciences startups, but ensuring that entrepreneurs have the training, mentoring, funding, support and infrastructure required for their businesses to take off and become commercially successful is essential," says O'Neil. "Once these companies become more established, they also need additional skill sets in order to deliver growth and progress innovation towards the market. Opportunity North East provides support for life science companies at all stages of the journey, from pre-startups all the way through to growth companies, to ensure each has optimal chances of commercial success.”
O'Neil concludes: "An entrepreneurial approach is essential to maintain a culture of innovation, be responsive to changes in the science and the market, and stay ahead of the rest of the field."
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