The Federal Reserve's usual approach to stimulating the economy by lowering the fed fund rates has clearly been ineffective. No surprise. They decided months ago it would be necessary to move to what is termed quantitative easing – expanding the money supply literally by printing money- and have reportedly printed upwards of 1 trillion dollars. So with every industry lining up for it's share what can biotech expect? BIO has been lobbying heavily and reports 1/3 of biotechs will run out of money by mid 2009. But does this fragmented and highly competitive industry have the political clout to command a piece of the pie? Will there be support for a bailout to avoid the loss of multiple drug programs, billions of dollars of potential drug profits and the potential benefit to millions of patients with unmet or under met medical needs? On the 'No' side- no union pull or traditional democratic constituency to support, a secretive industry providing uncertain results that are years away from commercial viability, and one that is concentrated in just a couple of states. On the 'Yes' side - companies are heavily concentrated in CA and Nancy Pelosi is Speaker of the House, there is the allure of 'high tech' jobs providing clean, sophisticated growth opportunities, and with states experiencing loss in traditional manufacturing biotech is attractive as a platform on which to build other knowledge based industries.
How to construct a deal? Besides CA , NJ, MA and PA, I'd suggest getting the representatives and senators of some other large states with fledgling biotech industries committed - specifically FL, TX, NC , NY and MI. Get existing biotech support organizations, technology incubators, venture capitalists and university tech transfer involved and lobbying. And don't forget pulling in Canada with its own significant biotech industry in Ontario and Quebec. Canada contributed their own multi-billion dollar bailout for the auto industry and should be a partner in a biotech bailout as well. Biotech needs to become much more vocal about what it can do for the economy and about building the future for America. The funds have to be quickly and directly available- no long partnership and courtships, no grant applications that would normally take months to process. Perhaps supplying large amounts of cash through existing biotech focused banks to lend at zero of very low rates and due back only following successful outcomes, perhaps direct grants and support for existing R&D, perhaps taking stakes in biotechs that are currently beginning to struggle, perhaps direct support to tech transfer and incubator programs. The point is to make funding freely and readily available to existing companies as well as to new ones. This is an opportunity for biotech to move to the front burner of the bailout along with green technology and energy- let's turn up the heat !
Steven Levy MD
President / Head Healthcare & Life Sciences
The Acoma Group LLC
Business Development, Executive Coaching and Executive Search
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