| As these words are being written down, the world is | | | | away and put their assets in sectors with none to |
| going through extraordinary times, with a financial | | | | low risks. However, exit routes also play an important |
| crisis not experienced since the world wars. Markets | | | | role. Unless there is a fast return, there is only one |
| are in turmoils and uncertainty is part of many | | | | way for a biotech/pharma company to be profitable: |
| businesses and industries. Several financial analysis are | | | | through acquisition by a larger biotech or |
| available for us to read, but the content often | | | | pharmaceutical company. Because of the way biotech |
| difficult to digest. The recession has badly affected | | | | and pharmaceutical companies usually grow, this is |
| many industries who are now desperately seeking | | | | highly likely to happen. In this scenario, smaller |
| help, such as the car industry. But what will be the | | | | companies, unable to sustain their finance could |
| specific impacts of the economic recession on the | | | | potentially ask bigger biotech/pharma company to |
| biotech and pharmaceutical industry. | | | | bankroll them, allowing the industry to survive and |
| The pharmaceutical and health-care industry have | | | | even grow. |
| historically been relatively immune to economic | | | | As a matter of fact, that second hypothesis has |
| turndowns, because illness doesn't take a vacation. | | | | already started to take place. With today's economic |
| Yet, with the ongoing recession, financial support will | | | | turndowns, big drug companies are on a shopping |
| be reduced. Therefore, like in other industries, it is | | | | spree. With the stock market prices tumbling, |
| expected that the most affected by the reduced | | | | acquisitions are becoming cheaper. Also, struggling to |
| availability in funding will be the early stage biotech | | | | find loans and capital, smaller companies are now |
| and pharmaceutical companies who need funding. But | | | | more enticed to turn to the bigger ones to survive. |
| is there more to come? | | | | Many big pharma companies, such as Bristol-Myers, |
| There are a few possible speculations. | | | | GlaxoSmithKline or Wyeth, have been staring down |
| 1.There is a possibility that things will get worst due | | | | billions worth of drug-patent expirations and many of |
| to the fact that the market will be so uncertain that | | | | them have few up-and-coming drugs to fill the blank. |
| no financial investors will be willing to back up any | | | | This economic crisis has given them exceptional |
| company with a risky profile, notably in regards to | | | | opportunities to find bargains amongst the |
| the early or short term investments. In the event of | | | | unfortunate small to medium companies in need for |
| this scenario, all industries will be affected. Companies | | | | funding. |
| with little cash will go one by one, until the economy | | | | Nonetheless, it is important to remember that |
| heals. | | | | although the recession has yield great merges and |
| 2.Investors are often reluctant to put their money | | | | acquisitions by the bigger biotech/pharma companies, |
| into biotech and pharmaceutical companies because | | | | the biotech and pharmaceutical industry is also very |
| of other very attractive industries such as buyouts | | | | affected by the economic slowdown, and many of |
| and investments in resources (mines, oil). As the | | | | them are cutting jobs and closing factories. The belief |
| economic crisis goes on, the opportunities for capital | | | | of pharmaceutical and the health-care industry |
| will decline further. Because of the known and well | | | | immunity to economic turndown is now on hold, and |
| recorded risk profile of the biotech and | | | | so is the hope for new medicine breakthrough. |
| pharmaceutical industry, investors are going to stay | | | | |