Product Focus Takes Europe Back to Its Roots
More of Europe's VCs have found the product religion, abandoning platforms. Now they say they need two things to manage product risk: larger portfolios of drugs than most in-licensing companies can create and management teams which can both develop drugs and exercise commercial discipline in choosing programs to bring forward, alone or with a partner. Spin-outs, which provide both management and a relatively large group of projects, are increasingly the European start-up method of choice.
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The flotation of UK biotech Ark Therapeutics, likely followed closely by Switzerland's Basilea, suggest Europe's public markets are waking up. It's too early, as yet, to call the IPO window open, though. And the string of European hopefuls monitoring Ark's progress and hoping to follow in its wake will have to contend with investors who are far more discerning than during the last upturn. Late-stage products remain attractive, but there are few fixed rules.
The low-risk specialty pharmaceuticals model has never been more fashionable, in part thanks to the success of one of Europe's in-licensing pioneers, Shire. Shire's founder Harry Stratford is now having another go with Strakan, but incorporating R&D far earlier in Strakan's evolution than has been the case at Shire, thereby attempting to address the thorny question of long-term sustainability-one that Shire and other more mature in-licensing firms are currently grappling with.
Speedel Group sets itself apart from many in-licensing companies by offering partners a call-back option on development projects. This, plus its tight focus on renin inhibition and Big Pharma savvy management have allowed the group to build a pipeline. Critics say the model restricts Speedel's upside. But the success of its first project, Novartis' Phase III SPP100, and one of Europe's largest private financings of 2003 suggest the group has a strong chance of proving them wrong.