Tag Archives: Business Development

Investors Building Life Science Companies from the Ground Up

12 Dec

By Alejandro Zamorano, VP of Business Development, LSN

LSN tracks ten categories of life science investors around the globe. Recently, we have begun to follow and emerging trend of established investors creating and launching their own companies. These investors are cognizant of the critical importance of good management when it comes to asset commercialization. The school of thought behind this innovate approach is that emerging technologies stand more of a chance when strong leadership and organization is put around an asset from the get-go. So, why is this occurring and how exactly is this being executed?

From the firms LSN has spoken with, this approach is essentially an fusing two key elements – Access to capital and access to a network of experts, both of which help to make leaner, faster, and more efficient companies. It all starts with sourcing novel science from a translational researcher, and building a business structure around it.

Since the investor is starting the company, it is possible to structure the “perfect” company from the ground up. This goes beyond investor fit – it’s a custom tailored company to fill a portfolio need. This can create significant advantages early on in the company’s life cycle, as fundraising seed capital isn’t a problem. By avoiding this part of the process, the company can focus on moving the science forward. Moreover, the company can structure the management strategically from the get-go, by having a business-savvy CEO in place who has the sales experience required to turn innovative science into a company.

Add to this that the investor can shepherd multiple assets through the pipeline by outsourcing work to CROs, and you have a great lean model for building a portfolio of companies. This model is gaining traction, so stay tuned as LSN tracks this evolving trend.

CRO Trends in 2014

5 Dec

By Alejandro Zamorano, VP of Business Development, LSN

As we round out the final quarter of 2013, LSN looks towards the new year and what it holds for CROs (Contract Research Organizations) within the life sciences. LSN maintains regular dialogue with a broad spectrum of CROs – from top-tier full service organizations, to small niche-specialized research companies. Based on our market insight, here are the top behavior trends among CROs for 2013 as we continue to see strong growth in this critically important sector of our industry:

The Death of the Passive Business Development

The CRO space has become increasingly crowded over the past year, and with mounting pressure on biotech companies to achieve capital efficiency, the market is becoming increasingly competitive. CROs that rely on inbound leads and recurring revenues from longstanding partners will face serious challenges in an environment where only the hunters survive. Those organizations that iterate their business development tactics will be the winners, and outbound sales will rule the day. As the industry matures, we will begin to see more sophisticated marketing campaigns as sales organizations adapt to the new market dynamic.

Developing Therapeutics

Tempted by the success of their clients, and a wealth of in-house expertise, a handful of CROs are starting to leverage their proprietary technology platforms in the hopes of developing their own novel assets. This will cause a shift within the industry as the lines start to blur between a CRO and a biotech company. The biggest obstacle to success in 2014 will be the ability to raise the necessary funds needed to shepherd the asset through clinical development, especially when the focus of management will be split. However, considering the fact that CROs already have revenues from the service side of the business, they may require less outside capital for asset developments, making for an enticing investment opportunity.


Private equity groups are becoming a major play in the CRO space, providing much-needed capital for growth. Many of the PE players in the space are purchasing and consolidating mid-level players to create economies of scale and synergies of business. Buyouts will certainly provide some liquidity events, but more importantly, consolidation will be an important counterbalance to the growing number of CROs. Moreover, as private equity groups create more efficient players via M&A activity, the pressure is on for smaller players to stay competitive.

Investor Partnerships

Today, the growing trend among service providers is to team up with well-known investors that have a continuing demand for certain basic services such as clinical development and contract manufacturing. By building these alliances and by outlining a discounted rate, CROs can create a consistent supply of customers by providing investors with a price break. This is a win-win in both situations, where investors get increased control and cost efficiency for their portfolios, while CROs gain a powerful dealflow engine.

Investment Activity

LSN recently covered the trend of CROs making direct investments into life science companies. This trend is also likely to accelerate as CROs take advantage of the opportunity presented by early stage companies strapped for cash in the form of services-for-equity arrangements, or outright corporate venture activity.

2014 will be an interesting year for CROs, as the increasing competitive nature of the industry will leave only the most innovate companies to enjoy market growth. Be sure to stay tuned as LSN continues to track the key market dynamics affecting service providers going forward.

%d bloggers like this: