Jim Mellon and Al Chalabi: Cracking the Code

Abstract

I am sure that the authors did not intend to compete with Bryson’s 300,000 copies of ‘‘A Short History of Nearly Everything’’, the best recent science book written for non-scientists, but these financiers have made a very bold attempt with a unique analytical approach to the pharmaceutical industry. Their stated intention is to ‘‘understand and profit from the biotech revolution that will transform our lives and generate fortunes’’. The understanding part is more than fulfilled and they succeed to a remarkable degree in describing the potential of the technology. Gaining an investor profit is ambitious, only time will determine the reality. The approach used is as logical as it is refreshing and contains: evolution, statistics, analysis, demographics, financial risks, robotics, the influence of life style and finally a list of the companies likely to succeed. They thoroughly immerse themselves in the overwhelming enthusiasm of the scientists involved in what can only be described as a remarkable futuristic prospectus for the ‘biotech revolution’. The most common question posed by financiers (anxious to make major profit with least possible effort) has been ‘‘how do we choose the winners from the myriads of the start-up companies that frequent the biotech frontiers?’’ As a long-time practitioner in the industry the answer has been ‘‘You provide the list and I will provide the pin to make the selection’’, such is the degree of uncertainty of outcomes. These authors have now considerably shortened the odds, whilst simultaneously acknowledging the very high risk nature of the industry. Even the success rate of 0.4 % from preliminary development to commercial viability does not curb their enthusiasm for the technology. The analysis is considered, thorough, accurate and hence very convincing. The demographic statistics also make interesting reading, with predictions that should (but won’t) give politicians nightmares. The effect of immigration in various countries (including the UK) is also given. As a purely statistical exercise the authors very prudently refrain from adding any superfluous commentary to this contentious area. The life-blood of the industry is the acquisition of seed capital to be followed by ever increasing amounts of development capital as a function of results. Had investors not been prepared to invest and continue to take huge risks then the industry would have been still born. As already very successful and influential financiers the authors used their leverage to access leading company executives from whom they gleaned the ‘‘inside story’’, a story rarely, if ever, available to others. The result is a unique glimpse of how the industry works, its strengths, its limitations, its difficulties, but above all (as a collective) how its future might develop. What was not revealed to the authors is the Bibliography Cracking the Code Jim Mellon and Al Chalabi John Wiley & Sons, Chichester, UK, 2012, pp 340 ISBN 978-1-119-96318-9 EUR 21.90, GBP 16.99