BFF Wargame Results Press ReleaseBFF Wargame Highlights the Shortcomings of the UK Biotech
Industry Compared to its US Counterpart
UK Environment Needs Significant Change to Generate Global
Biotech Successes
London, UK – July 25th 2008 – The UK Biotech Business Development Wargame which took place on the 14th-15th July, 2008 to examine funding issues surrounding the biotechnology sector, has clearly demonstrated that the UK Biotech industry lags significantly behind its US counterpart in delivering value creation and business success. These results from the wargame, which was commissioned by the Bioscience Futures Forum (BFF) and was run by the wargame specialist company Simulstrat, are now set to prompt a compelling agenda for change that is needed to strengthen the biotechnology industry in the UK.
Using a wargame enabled a direct comparison between biotech business building in the US and the UK. The game simulated two biotechnology companies, Sim BioPharma from the UK and Sam BioPharma from the US as they competed against each other in a bid to become a biopharmaceutical company with a market capitalisation in excess of £1 billion / $2 billion. Both companies were given exactly the same parameters at all stages of the game.
Dr. Nigel Burns, Chairman of Cell Medica, who played on the UK team commented:
“The wargame created a very realistic environment in which other participants could actually view the decisions and debates that typically happen between biotech companies and various stakeholders such as VCs, institutional investors and the media. These activities usually take place behind closed doors and without the wargame would have remained obscure and mysterious to many who attended. Being able to access and test the real opinions of key players in the industry was not only incredibly interesting but invaluable for all who attended the game.”
The key findings from the game show that there are a number of crucial factors that limit the development of biotech businesses in the UK from their initial formation through to life as a public company. Key factors which the game was able analyse from a near life perspective and which were seen as clearly limiting the success of UK biotech were:
- The limited ambition of UK biotech management which was compounded by UK investors’ much lower risk appetite. This contrasted with US management who were focused on higher investment returns and building a more sustainable business from Day 1
- The limited size of the UK market for biotech products meant that to generate significant returns access to and success in the US markets were crucial. Not surprisingly the experienced US executives participating in the game were able to deliver this much more effectively than their UK based counterparts
- The over-arching issue of pre-emption rights which was shown to limit investor interest from both US and UK private investors in the UK biotech space. The inability of UK biotech companies to access the significant funds that are available globally because of pre-emption rights was seen as a major drag on success
- The failure of AIM. The wargame also highlighted the major limitations of listing on AIM. This market, while creating a public value for companies, did not provide biotech companies with the ability to raise adequate follow on finance and did not provide the liquidity needed to attract a broad base of interested investors.
Dr. Clive Meanwell, Chairman and Chief Executive Officer of The Medicines Company and Board of Director of BB Biotech AG, who played on the US team, commented:
“The wargame was important for highlighting the crucial differences between conditions affecting the progression of US and UK biotechnology companies. Clearly, different operating environments, in particular tax structure, regulations and different decision making approaches, have major impact on corporate development.”
The wargame also sought to develop solutions to the outlined failings of the industry in the UK which would provide a base for building an agenda for change. As UK biotech requires funding beyond what UK investors are currently willing to commit, then more needs to be done to diversify the range of funding options available. It was clear that, in the short-term, significant reform of pre-emption rights would need to take place to attract outside investors into the sector. Added to this, the assessors of the wargame propose the creation of specialist collective investment funds that would be tax incentivised and encourage longer term investment. For the long-term, the general view held would be to see significant adjustments made to the listing requirements of AIM that would see stronger, more advanced asset rich biotech companies come to the market.
Air Vice-Marshal Steve Chisnall, the wargame’s Director and COO of Simulstrat commented:
“The UK Biotech Business Development wargame was a great success and we are confident that these conclusions provide the foundation for an innovative agenda for change for the industry. I believe that the results of the game are proof positive of the application of wargames to solve strategic problems within business and across many different sectors.”
Notes to Editors
In the opinion of the assessors the UK Biotech team could not achieve the objective of the game which was to create a biopharmaceutical company with a market capitalisation of over £1 billion. In comparison to the US team, the UK:
· Attracted significantly lower investment at each stage of business development.
· Never pursued indications from more than one molecule in clinical trials.
· Was overly dependent on clinical trials data from the lead indication.
· Was forced to develop a business that aimed to sell out to pharma.
· Was in a position to build liquidity by having a prospect to go it alone.
· Sold out early at lower value.
· Was less able to survive a setback with its lead candidate.
· Relied on outsource suppliers and did not develop an independent organisation.
The BFF Wargame
In order to provide a comparison to the UK biotech sector, in the game two simulated biotechnology companies, Sim BioPharma from the UK and Sam BioPharma from the US, competed against each other in a bid to become a biopharmaceutical company with a market capitalisation in excess of £1 billion / $2 billion. Both companies were given exactly the same parameters at all stages of the game; both began as University spin outs with a primary focus in oncology whose lead product was a potent, selective, specific and orally administered treatment for solid tumours. Each team comprised three leading members of the industry who made up the management team of the company. The teams were also accompanied by corresponding teams of investors representing both sides of the Atlantic and also a team of other key stakeholders in the industry such as analysts, journalists and Government.
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About the BFF
The BFF was launched by the Department for Business, Enterprise and Regulatory Reform (BERR, formerly the DTI); following the Bioscience Innovation and Growth Team report that advocated the creation of an expert group to represent the views and interests of the UK biotech sector and encourage a more supportive environment for biotech development. The BFF identifies issues in the sector and brings them to the attention of the Government, politicians and senior civil servants in a way that establishes a basis for change. The results from the BFF Wargame will be submitted through the Biotechnology Innovation Growth Team (BIGT) Review in the second half of this year.
About Simulstrat
Simulstrat is a leading wargame specialist company that focuses on the use of war-gaming strategy to test, explore and solve key business strategies and problems. Simulstrat is led by the some of the world’s most prominent academics and strategists with an unparalleled range of experience and specialist knowledge including conflict strategy, risk management, science and technology, biochemistry and international crisis strategy. For this wargame, Simulstrat was supported by Avige which supplied specialist domain knowledge on biotechnology funding. Simulstrat is a spin-out from King’s College London. Simulstrat was founded by Professor Sir Lawrence Freedman and Professor Ragnar Löftstedt of King’s College London, and Professor Michael Clarke, Director of the Royal United Services Institute.
For further information please contact:
Amber Bielecka
Citigate Dewe Rogerson
+44 (0) 207 216 4710
amber.bielecka@citigatedr.co.uk
BFF- UK Biotech Business Development WargameIn university research and start-ups the UK leads Europe and is second only to the US in terms of biotechnology patents registered and businesses launched. Yet compared to the US, there are no large, successful UK biotechnology companies. The Bioscience Futures Forum (BFF) was launched by the DTI (now BERR) as an expert group to represent the views and interest of the UK Biotech sector, and to encourage a more supportive environment for biotech science development.
The BFF has commissioned strategy experts from Simulstrat to run a business Wargame on the Biotech environment. In a two day event (July 14/15), a drug development Biotech start up will be simulated in a UK and a US fund raising environment with the objective of creating a billion dollar business. High profile representatives from UK and US biotech companies, investors, government, pharmaceutical industry, procurement, patient groups, medical research and media will participate in order to create an agenda for change for the benefit of the entire UK biotech industry.
For more information please look at:
Download The official brochure of the event here: 
The official BFF War-game website: www.bff-wargame.com
