In this interview, Steven Holtzman, co‑founder of Biogen Idec, provides a concise history of the company—its merger origins, flagship multiple sclerosis drugs, and its expanding pipeline targeting ALS, Parkinson’s, and Alzheimer’s. He reflects on the prevailing pessimism in biotech, attributing it to limited liquidity exits for investors, a stagnant IPO market, and poor VC returns over the past decade. Holtzman argues that sustainable biotech success requires visionary, mission‑driven entrepreneurs who combine equity financing with creative, non‑monetary partnerships with large pharmaceutical firms, preserving core technology while monetizing select assets. He explains the shift from traditional VC funding toward greater corporate (pharma) involvement, driven by economic downturns and a closed capital market. The conversation turns to emerging markets, which are increasingly important for R&D outsourcing and, as wealth rises, for future drug commercialization, though they remain a bridge too far for young biotechs today. Finally, Holtzman notes that European drug pricing pressures are reducing the continent’s market share, prompting companies to look beyond Europe for growth. The interview closes with a hopeful yet cautious outlook on the industry’s trajectory.
Chapters
Hello, Steve. Thank you very much for speaking with us.
Dan, it's a pleasure.
So perhaps if we could start things off just by introducing Biogen Idec.
Sure. Biogen Idec, as the name would seem to signify, came about through the merger of two companies, Biogen and Idec. Biogen, in Cambridge, Massachusetts, was one of the first few biotech companies, one of the founders of the industry. IDEC, which came along a little bit later, is most known for a drug called Rituxan, which is one of the largest-selling drugs in the world today, partnered with Genentech, or what was Genentech. Biogen itself is the world's largest producer and supplier of drugs for multiple sclerosis, and in addition to multiple sclerosis, has a number of drugs in its pipeline today for additional neurodegenerative disorders such as ALS, Parkinson's disease, and Alzheimer's disease.
And so what's brought you to BioBusiness? What are you most looking to get out of being here?
What brought me to BioBusiness is I was asked to be an advisor to it, and they asked me to give a talk. What I'm looking forward to and always enjoy doing is meeting young entrepreneurs from biotechnology companies, as well as the venture capitalists who in their portfolios have a number of young companies. Who are potential partners for Biogen Idec.
So I know in the first part of the day so far, you've been reasonably vocal, which is definitely encouraged in this forum. What's most stood out to you so far?
What's most stood out to me is the continued pessimism about the possibility of building great companies that are sustainable, as opposed to merely short-term plays which can make money for investors, and that's to me very disappointing.
What do you think's driving that?
What's driving it is that it has been very difficult for the investors over the last decade to realize liquidity exits other than through sales to pharmaceutical companies. Therefore, they want to limit the amount of investment that they make and get as quick an exit as possible.
So what do you feel needs to happen to really change things and bring some positivity back to some great companies, some longstanding companies?
I think that first and foremost, you need entrepreneurs who, in the words of Steve Jobs, want to put a dent in the universe, not simply make a bit of money, but rather are motivated by the fact that we are in the Halcyon days of the emergence of the life sciences offering vast potential to make innovative medicines that can make a difference in people's lives. And that's what should be driving people. You can do that. You can do it. And if you combine both equity capital at the right times with creative partnerships with large pharmaceutical companies, I have no doubt whatsoever that you can make sustainable sustainable, important new companies.
Well, this is it. And a few people mentioned things earlier on, the idea of a partnership being more than just money, and that what people want to get out of it is more than just money.
Right. So, first off, it's important to recognize that partnerships come in many different flavors, all right? And that the inherent tension always has been in our industry that it takes so long and so much money to develop products that the classical business paradigm of I make something, I sell it, and from the profits I reinvest is not something which is available to us, right? You're going to be— it's like if I said to you, have I got a deal for you, right? Give me $1 billion, come back in 12 to 15 years, and there's a 90% chance I will have failed. Sound like a good deal to you? That is the proposition in our industry. So consequently, you need to use equity capital, but you also need to use pharmaceutical partnerships where they are your near-term market. You're selling, as it were, things that are on the way to product, intermediaries or technology that they wish to access. Now the problem with that, of course, is the long-term value of your company comes from the products. So if you've sold all the rights to all of your products, you've effectively turned yourself into a contract research organization, and you will never become a sustainable, long-term pharmaceutical company. So what you need to have is a foundational technology which can, as it were, produce multiple different products, sell off some. It's Sophie's Choice, right? These are your children. You sell off some to keep some home to take care of you in your old age. It's just the way it is, and it's always been that way. And the creative use of partnerships with equity capital at the right time can get you there.
So why do you think there's been such a particular shift away from big, big pharma and much more from the VC side of things?
Well, as the VCs have had terrible returns over the last decade. We had an enormous bubble in the biotech industry in 2000, at the same time we had the internet bubble. And it has been a very closed IPO market since then. Consequently, the venture capitalists have not had liquidity exits, again, other than through sales to pharmaceutical companies. Their returns are depressed, so consequently there's less money flowing into venture capital, classical venture capital. And on top of that, we had the economic downturn of 2008, which has made everyone more conservative, whether it's from buying a house to where you'll put your money. So there's less emphasis to put it into high-risk, high-return venture funds. Corporates, that is pharmaceutical companies, have been more and more stepping into the void, if you will, funding venture operations.
So do you think we're now at a stage where things are starting to get better in terms of more investment and better companies coming out, or are we still watching things— are we trying to rescue a potentially sinking industry?
I don't think it's a sinking industry. I think at the moment we're at stasis, okay? And then until we emerge from the general economic malaise that we're in, it will be very difficult, okay? On the other hand, what we are seeing with some very large purchases of young companies by the pharmaceutical industry, that there seems to be a little more optimism for the early-stage investor that he or she can realize a return, even in the absence of an initial public offering or IPO market.
And how much of a role are the emerging markets now playing compared to how they were previously?
I think the emerging markets are playing a much larger role for the— in the strategic thinking of the pharmaceutical industry. For the young biotechs, that's still, for the most part, a bridge too far in terms of commercialization. So you're likely to enter into relationships for the commercialization. Where it does play a role is in further outsourcing of your R&D. And that's taking place more and more, even for the young biotechs.
How do you think that's going to develop then going forward?
Obviously, these emerging markets As they become wealthier, will crave access to Western healthcare. There will be initially, and there already is, an emerging middle to upper middle class who can pay for it themselves, and then there will be a greater demand by the people on their governments to provide greater levels of reimbursement, which will open the market for more premium-priced Western drugs.
Do you think this will result in a complete shift and things turning around so they almost take over? Are we thinking more— is it going to be more of a symbiotic relationship?
Well, I think that what's already emerging, certainly in the larger pharmaceutical companies' thinking, is that Europe as a market is becoming less and less important as we see prices becoming more and more constrained in Europe. It started in the UK with NICE, but we're now seeing it in Germany, which was always the most highest premium pricer, coming down with its own form of NICE. We're seeing a downward spiral in the pricing for drugs in Europe, and so most of us are planning for a future in which Europe is a much smaller piece of the pie than it was before.
Well, thank you very much for speaking with us, but we are pretty much out of time.
Okay.
So enjoy the rest of the conference, and I look forward to hearing much more from you later.
