It’s been 10 years since a government taskforce set out a lofty plan to turbocharge the New Zealand biotech sector, including a fivefold increase in core biotech companies to 1,000 and lifting biotech export value to $1 billion a year. But has the industry managed to hit those targets? And if not, what's holding it back?
At yesterday’s NZBio conference, chief executive George Slim said the industry has had a “significant impact” (as Vincent Heeringa wrote a few months ago, the the New Zealand sector has more than doubled in size and tripled its profits). However, it’s fallen short on some of the measures, such as export value and cluster employment, and that hasn’t been helped by a dearth of data – for example, in 2007 Statistics New Zealand identified 1,119 organisations with an ‘involvement’ in biotech, but hasn’t followed up on that since. It has, however, expanded this to a wider 'bioscience' survey, which in 2011 found 474 organisations involved with bioscience, with income of $677 million.
Jeremy Cook, managing director of investment firm Bioscience Managers (which recently invested in New Zealand company Nexus6), says government has a role to play, and that money from funds like theirs won’t solve the problem if there isn’t enough money to be found from other sources.
Speaking as part of a panel addressing the current state of play for biotech, he said the 1990s scared off a number of institutional investors who made direct biotech investments without fully understanding what they were getting into. As a result, a lot of money was lost and those investors are now “very risk averse” and distrustful of the biotech sector as a whole.
But until large sums of money can be sourced from the likes of insurance and pension funds, he says, we can’t build the kinds of biotech businesses we should be building.
“Our challenge over the next 10 years is how to get investors to have confidence in what we do,” he said.
“We have a responsibility to tell the truth to those who wish to put money into the sector, and deliver returns.”
As for the thorny issue of selling up to an overseas buyer, he emphasised that that’s still a worthy result. The rest of the world shouldn’t necessarily try to emulate the US in creating flagship companies, but accept that they’re more likely to play a supporting role.
Cook also cautioned companies against going public simply for the sake of going public.
“The listing of a company should only be regarded as a step in its financing and not as a medal earned, as if that is in some way important,” he said in response to an audience question.
Running a listed company was an onerous position to be in, he said, with continuous disclosure requirements the trade-off for the opportunity to raise money.
“Ultimately one needs to think very carefully about the reason for listing.”