The pharma industry is operating under a new model, says life sciences investor Steve Burrill

steven-burrill.jpgThe structure of the life sciences industry is changing, says G. Steven Burrill, CEO of Burrill and Company, a life sciences investment firm based in San Francisco. Burrill spoke to a group of university researchers, students and life sciences industry executives at the UW-Madison on Feb. 21. His presentation was titled Biotech 2008: A Global Transformation.

Among the transformations Burrill forsees is a shift away from firms operating in the traditional model that he calls FIPCO, short for fully integrated pharma company. In that model, everything involved in creating a new drug, from research and development, clinical trials and FDA approval, and manufacturing through marketing and distribution, is done by a single pharmaceutical megafirm.

Burrill says that model is giving way to a what he calls VIPCO, a virtually integrated pharma company, which is actually a partnership between many players. Under this scenario, each of the key phases may be handed by different actors. For example, research and development may be the purview of academia and other scientific institutions. Each of the phases that follow – preclinical development, clinical testing, manufacturing and sales and distribution – might be handled by a different independent contractor.

Although new life sciences ventures will have more trouble getting financing in 2008 than they did in 2007, Burrill makes the following predictions for the year to come:

  • U.S. biotechnology firms will go beyond local capital sources to find financing overseas.
  • There will be 30 initial public offerings — IPOs — of life sciences firms.
  • U.S. life sciences firms will raise $50 billion in capital in 2008.
  • Total capitalization in such firms will reach $500 billion.
  • Most of the 60 IPOs completed in the past three years will be trading above their market prices by year end.

Burrill’s powerpoint presentation can be downloaded at