Celtic Pharma Sees a Role for Private Equity in Biotech

If you're after novelty in drug development, suggests Stephen Evans-Freke, of late the managing general partner of the recently launched private equity group Celtic Pharma, gloss over Big Pharma pipelines and direct your attention to the biotech sector. Given the pharmaceutical sector can ill afford to attempt to make up for significant revenue losses from patent expiries with life-cycle management products in today's economic climate, this should be good news for the biotech industry. But the bad news: for the vast majority of biotechnology firms that are not profitable, even those with mid- or late-stage clinical projects, financing R&D to the point where the most value can be extracted from these projects is increasingly difficult.

For the subset of these companies that have floated, raising capital remains difficult; most have no institutional research coverage—an unintended artifact of the post-Enron world in which institutions can no...