The class of 2004: Human capital in biotechnology
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Keywords: FIDDCO, SME, life science, non-executive director, interim management, serial entrepreneur, virtual organisation, CEO
The class of 2004: Human capital in biotechnology David Collingham Date received (in revised form): 8th March, 2004
Abstract This paper assesses growth models for biotechnology organisations, comparing the dynamics of company evolution in the previous decade with circumstances pertinent to the more recent market downturn and financial constraints. Using anecdotal evidence gained from senior executives in biotechnology companies in the USA, Australia and Europe, the author demonstrates how the utilisation of human talent has evolved over the past decade. The creative use of human capital for companies with limited financial means is discussed, in the context of the differing needs of organisations as they progress along the biotechnology life cycle.
INTRODUCTION
David Collingham Executive Chairman, Ruston Poole International, Cording House, 34 St James’s Street, London SW1A 1HD, UK Tel: +44 (0) 20 7930 3001 Fax: +44 (0) 20 7930 3002 E-mail: david.collingham@ rustonpoole.com
Over the past decade the global biotechnology landscape has seen huge shifts in availability of funding, which has, in turn, had an impact on the way that biotechnology companies have had to be resourced. Different models for business structure, financing, partnering, operating and people resourcing have evolved. By the early 1990s the early wave of biotech companies was growing using the fully integrated drug discovery company (FIDDCO) organisational model. With sufficient finance and the availability of suitable management, companies such as Celltech, Centocor and Amgen grew to become integrated biopharmaceutical firms. Compare this with biotechnology corporate life in 2004 for small and medium-sized enterprises (SMEs): in 2003 Europe employed around 80,000 people in biotechnology, losing some 7,000 compared with 2002 to the ravages of mergers or company failures.1 The outlook for 2004 is no better: early stage companies are starved of finance; at midlevel they are running out of cash and larger companies are consolidating or merging. As a result of such merger activity there is a reservoir of executive talent available but fewer sustainable organisations for them to join. The
paradigm for human capital resourcing has changed in Europe, as well as the USA, Canada and Australia. The life science industry is striving to attain key milestones with limited human resources and reduced budgets. To respond to these constraints greater use has been made of human capital resources such as interim management, nonexecutive directors (NEDs), supervisory board members and part-time executive or non-executive chairs. The serial entrepreneur and serial functional specialist have become key to the success of life science companies of the future.
THE OLD WAY The accepted growth model in the first half of the 1990s meant that companies could build their management teams, raise more funding as required and steer the company toward
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