In addition to the “green” sector, which I outlined a few weeks ago, I see biotech as one of the places where startups can always go for real opportunities.
Recession-proof products with innovation continue to come from the biotechnology industry. Plus, it was the top industry attracting VC money in the most recent quarter of 2010, with a total of $944 million.
In its most general sense, biotech is used to refer to any sort of technology that uses biology or other medical technology to accomplish its end. It includes the use of microbes, or life processes, to produce materials and products that are useful to mankind.
Two top-notch analysts in this area, Eric Schmidt and Ross Muken say in Forbes “True innovation and products with a more durable revenue stream are coming from the biotechnology side of the industry,” They argue that biotech drugs treat life-threatening diseases – so recessions barely dent sales growth.
The hot areas of research today are cancer, AIDS, diabetes, heart disease, neurological diseases, immunological diseases, viral infections and tissue regeneration, where there is a high degree of incidence in the population.
Success in these areas will ensure a faster return on investment in R&D and licensing efforts. An alternative is to start a niche company with an orphan drug that, if successful, is protected from competition for several years. There is always money around for the right team and the right plan, and I believe biotech is a good area to start from.
If you are looking for the ideas on top of the list, I recommend you start with one of the following hot areas of biotech. Each one has the potential of annual sales more than $1 billion, which puts it in the new “blockbuster” drugs category:
- Metabolic disorders. “Metabolic syndrome” is the politically correct term for patients who are obese, diabetic, and face increased risk of heart disease. Now that half of the U.S. population is technically obese or overweight, an effective diet pill has become the Holy Grail of drugs.
- Vaccines. With new products to prevent cervical cancer, avian flu, and the common cold, vaccines are back in vogue. There are many other novel vaccines now on the table for development, ready for entrepreneurs who can licence and commercialize them.
- Infectious diseases. Now that HIV has been transformed from a death sentence to a chronic disease has turned the infectious-disease-drug market into a multi-billion-dollar industry. The next frontier is an effective treatment for Hepatitis C. Current drugs have terrible side effects and only “cure” 50% of patients.
- Lowering blood cholesterol. Drugs in this category are commonly called “statins.” They not only control blood cholesterol, but also stabilise plaque and prevent strokes through anti-inflammatory and other mechanisms. This is a huge need as the population ages.
Another biotech subcategory with opportunity is new medical devices. A friend of mine, a distinguished physician and surgeon, happens to manage a small private investment fund seeking early stage companies with new medical devices that have an established market. If you know a hot new startup in this area, I’m interested.
There’s never been a more exciting time to be a biotech startup. People tell me that “Big Pharma” companies have nearly $100 billion in cash that will keep buyout offers large. There are plenty of Holy Grail areas to focus on. How can you argue with this logic? Now is the time to jump in.
Martin Zwilling is CEO & Founder of Startup Professionals, Inc.; he also serves as Board Member and Executive in Residence at Callaman Ventures and is an advisory board member for multiple startups.This post was originally published on his blog, and it is republished here with permission.
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