by Dr. Shawn Watson, Chief Executive Officer at Senescence Life Sciences
Healthcare companies typically face tougher challenges in their start-up years than those faced by their counterparts in other sectors, due to heavy up-front capital and, at times, lengthy high risk research. These trends usually mean that the founders of the company end up with lower amounts of equity and a more complex system of corporate governance when compared to other industries.
While inherently more difficult to start and more complex to manage, the rewards can far outweigh the risks, with blockbuster drugs capable of reaching yearly revenues of USD $12 billion. The industry continues to hold exceptional potential, with many major diseases and conditions such as cancer, diabetes and Alzheimer’s still lacking substantive treatment strategies. Moreover, with aging global populations, increasing average lifespans, and rising healthcare costs, the industry remains a lucrative prospect for entrepreneurs.
The sector is, however, undergoing a paradigm shift in innovation, particularly with regards to drugs designed for age-related neurological pathologies like Alzheimer’s disease. In 2012 a number of prominent pharmaceutical companies began restructuring or downsizing their R&D investment in neuroscience due to the large number of failed drugs. Over 100 Alzheimer drugs have failed in the past 13 years, whose development costs ranged anywhere from the tens of millions to upwards of USD $5 billion per drug.
This worrying and unsustainable trend is changing the industry, as pharmaceutical companies look at newer methods of drug discovery, including innovative biotech start-ups, to fill the gaps in their own R&D departments. This has opened the doors for healthcare start-ups to commercialize discoveries and set themselves up for a lucrative exit. However, due to the upfront research costs we will likely see more and more university spin-offs, where the initial work is completed in publicly funded labs before attempting to go to market.
As a university spin-off ourselves, Senescence Life Sciences is in the midst of this journey, but we’ve quickly learned that it isn’t just about the science or the innovation. In the beginning it is essential to establish a trusted network, leverage research partnerships and bring on experienced individuals with industry know-how. The fact is that significant accomplishments and breakthrough discoveries in the lab do not necessarily equate to running a successful business – and that is what investors need to see. Great ideas may survive, but only those flexible to the industry’s changing tides will thrive.
We have found Singapore to be a great choice to plant our roots as it balances an excellent venture capital environment and legal system with a small but growing biotech community. While the government has traditionally focused on attracting big pharma, in the last 2 years we have noticed increasing attention given to smaller healthcare start-ups. There are also a growing number of government led initiatives and assistant programs that can help kick-start your company. However, always be mindful that while government grants are a fantastic way of getting things off the ground, private sector capital is the final stamp of approval for the commercial potential of your innovation.
So three tips from me, the CEO of a Singapore-based biotech start-up:
– A good idea speaks for itself, investors won’t take the time to speak with you if they think you have a bad idea. If you get their attention, focus instead on convincing them that you are capable of successfully taking your idea to market.
– Experience is king. Make sure to build a strong network and welcome industry leaders to your board – and don’t be shy about asking for mentorship. The worse thing that can happen is they say no.
– Go for government grants and assistance programs but never stop looking for private sector funding – it validates your commercial potential and helps open future doors.
Dr. Shawn Watson is the Chief Executive Officer at Senescence Life Sciences – a company founded on the belief that brain aging is reversible. Having experienced firsthand the devastating effects of dementia on his family, Dr. Watson dedicated his research to uncovering a new approach to prevent age-related cognitive decline. Built on a network spanning North America and Asia, Senescence Life Sciences researches, develops and delivers safe, effective and scientifically-proven neuroprotective compounds to prevent and restore cognitive function.