Reflections for dealmakers from Swiss Biotech Day 2023

Viewpoints
April 27, 2023
4 minutes

As delegates return home from the 25th Swiss Biotech Day this week, there are a number of key takeaways for anyone working in life sciences. There are also some specific learnings for the UK as it tries to renew focus on the sector post-Brexit, as we will discuss in a separate post.

The Swiss rightly have a lot to be positive about, they regularly top global rankings of innovation and outperform all other countries on a per capita basis. (Although there is an expectation that Switzerland may drop, at least in terms of comparative growth, in the upcoming McKinsey rankings for 2023.) 

It was the largest and most international conference to date, reflecting the desire to collaborate with and access Swiss scientific discoveries.

Importance of government support (and pricing)governments (and universities) can play in supporting risky, early stage science. This can help to de-risk important science, allowing new biotechs to emerge. On the flipside, several panellists discussed the globally increasing pressure on drug pricing, whether that is from the IRA in the US, German commissioning bodies, or the NHS in the UK. While there was an appreciation of affordability issues and political pressures, many expressed a concern that this environment may dampen perceived exit valuations and so have a consequential impact on the ability to fundraise.

: Several panellists highlighted the role that

Shift back to “venture” As the financing environment continues to tighten, many VC investors encouraged biotechs to focus on their cap table and plan their anticipated rounds of financing / dilution. One specific Swiss issue discussed was that the strong family office network in Switzerland had made some Swiss start-ups relatively “lazy” in terms of fundraising discipline, at least compared to their peers in the UK and US. Relatedly, several biotechs were struggling with lengthy / complicated cap tables, and a failure to build consortium who would see a company through each of its key milestones. Consortium composition is an issue many biotechs are struggling with as non-specialist investors are pivoting away from the sector.

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Focus on the pipelineLicensing deals and appropriate milestone payments may help bridge to an exit. It may still be possible to develop all indications in due course, but not necessarily right away or at the same time.

: Similarly, there was a feeling that some biotechs (established in the last few years when the sector was well financed) were not as focused on their cash flow as they should. In recent years, lots of money had been thrown at drug discovery with little consideration of the route to market, based on the assumption that further financing would follow. However, as part of the return to venture, biotechs should plan their key staging posts and fundraising accordingly.

Opportunities in pharma newcosbefore, many pharma are looking to re-priotritise their strategies and part of this may include divesting assets that are high quality, but not on strategy.

: Several panels discussed the promising opportunities in big pharma spinning out patents, assets and teams into “newcos”. There was a view that these companies tend to perform well compared to all biotechs, and this was seen to be due the high quality of pre-clinical work and rigorous standards adopted by many big pharma. As discussed

Managing stakeholdersprevious posts, the sector is becoming increasingly concerned to ensure that all relevant stakeholders are bought into a biotech’s mission. A theoretical unmet medical need is no longer seen as enough of a basis on which to build a company. Instead companies are expected to consider the route to commercialisation from a much earlier stage, as well as how their proposed product will impact the needs of all stakeholders already involved in an indication.

: As we noted in

New technologiesother conferences, there continues to be much excitement about the applications of new technologies that turn the body into its own factory, whether in RNA, Car-T or cell and gene therapy generally. Competition is rising, but there remains a sense that there are still more opportunities to develop, provided it is accompanied by a focus on appropriate indications. However, capacity restraints are still an issue.

: As at

Competition for talentGolden Triangle in the UK. However, despite this, the growing number of new companies (combined with salary pressure from the US) can make it difficult for new companies to hire the skills that they need. Instead, many are having to buy in short term consultants.

: Accessing high quality talent remains an issue for many Swiss biotechs, and this was a common topic of discussion in and out of the panel sessions. The Basel area benefits from a hub effect, as does the

Data strategiescyber security issues. However, following a number of high profile breaches, biotechs are also realising their potential vulnerabilities and are investing. That said, data is not only a risk. Instead, many companies recognise the importance of capturing their own, high quality data. This will be relevant in terms of regulatory submissions, but also from a monetising perspective and identifying market trends.

: Over the past few years, investors now expect biotechs to have “data strategies”. Previously it was mainly big pharma which were focused on data protection and

In conclusion, many of the issues faced by Swiss biotechs are consistent with the trends we are seeing in the market generally. Swiss companies benefited from a particularly generous funding environment as the science was developed. However, there was a general feeling that as a result there was not a culture of strong financial and fundraising discipline, which many will need to learn to survive (and thrive) in the current environment.