Deutsche VP weighs in on M&A debate

The vice-president at Deutsche Bank Global Corporate Finance in Australia has called on Australian biotech companies to seriously consider collaborations and M&A activity with other biotechs if they want to be viable.

Dr Andrew O'Brien told this morning's RMIT business lecture series in Melbourne that "there are too many biotech companies and not enough mergers."

But one of the biggest barriers to successful M&A activity in the biotech sector is management hubris, he said. "Founding technologists buy into the concept they are bringing to market, they don't always believe that other concepts or technologies can complement their business," said O'Brien. "It's not unique to Australia."

The relatively large number of small companies, both public and private, in the Australian biotech sector means that the available capital is spread pretty thin, according to O'Brien, and may restrict Australian companies from picking up late-stage products and IP being offloaded by pharmaceutical companies and big biotech companies as they streamline and rationalise their R&D programs.

O'Brien likened the current state of the industry to a "land grab", saying that companies needed to be well funded in order to take advantage of opportunities and trends in the industry. He warned that Australia risked being left behind with little or no biotech sector if it failed to build the industry with sufficient capital.

O'Brien is hopeful that success by a few companies will help strengthen the industry. "We need an Australian champion in the sector that takes a strong lead through the clinic to market," he said.