Matthew Engel

Science and Technology Advocate

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New Trends in the Healthcare M&A Landscape – Notes from the Prix Galien Forum

December 6th, 2011 · No Comments

Prix Galien USA

Alexandria Center for Life Science – New York City – September 27, 2011

The Galien Award is given out each year by the Prix Galien Committee, a distinguished body of scientists, including seven Nobel Prize laureates, in recognition of products and agents that improve the human condition. Awards are given for Best Pharmaceutical Agent (i.e. small molecule),  Best Biotechnology Product and Best Medical Technology approved by the FDA in the past ten years. Prix Galien was created in France and has been introduced all over Europe and North America. It is the most prestigious award of its kind in eleven countries.

This year I was privileged to attend the 2nd Annual Galien Forum at the Alexandria Center for Life Sciences in New York City on Sept. 27, 2011. At the forum, the session I attended was on Funding Innovation – New Trends in the Healthcare M&A Landscape. In addition, I assisted the panel during moderation and was able to speak with each of the distinguished panelists. Below I will share my notes from this panel, which covers the impact of FDA clinical trials on M&A, biomarker/therapeutic combinations, orphan drugs, the patent cliff, medical device deals, exit strategies and M&A deal structures.

The panel was moderated by Kimberly Ha, Global Editor of Biopharm Insight, part of the a Financial Times Group.

Panelists

Les Funtleyder, MPH, Healthcare Strategist and Portfolio Manager, Miller Tabak Health Care Transformation Fund
Hunt Henrie, Managing Director at Ferghana Partners, a specialist investment banking group
Paul I. Rachlin, Partner, Proskauer
Jonathan Silverstein, Partner, OrbiMed Advisors
Jide Zeitlan, CEO, Keffi Group

Abstract

Leading Life Science business executives, investors and advisors in the biomedicine field discuss trends and developments in the healthcare M&A landscape, including today’s best exit strategies and the pros and cons of partnership versus an M&A deal. What impact will these different strategies have on the continued development of company pipelines?

FDA Clinical Trials and Biomarkers

The panel began with the a discussion of FDA clinical trials and the necessity of working with the FDA to plan strategically and effectively. The panel agreed phase II trials have not been a reliable indicator of success. It’s not just a matter of the FDA being a bureaucratic agency, but from a M&A standpoint, trails often need to be redone for various reasons i.e. dosing issues. The speaker emphasized the importance of doing these trials correctly at the early stage to avoid penalties later on. This is a tremendous challenge for early-stage/VC backed companies. When doing diligence, investors have found that at least 1/3 of companies have cut corners to save cash i.e. trial not powered enough. On the sell side, when selling the company to big pharma, the investor risks pharma asking your company to start over and go back to square one in order to repeat the clinical trial. Those on the buy side are always skeptical that not all M&A points have been covered. One way to improve this process is by making trials more efficient, which had given rise to an explosion of biomarker deals. For example, the partnership of Qiagen with Pfizer on diagnostic-therapeutic combinations. One panelist expects to see a trend of big pharma acquiring diagnostic corporations. Roche also has history of pairing drugs with diagnostics (see 1, 2) which will help aid trial design as diseases can be monitored. Will this lead to a crossover of M&A transactions? Despite this biomarker perspective, another panelist remarked that we will not be seeing pharma buy diagnostic companies, but will be looking to partner instead. There is not shareholder support for these acquisitions. Regarding the big picture, I also wanted to point out that the panel remarked that emerging markets were looking good, while the EU and US were looking pretty bad. They were interested in Asia’s reimbursement strategies. I think these remarks have become especially prudent since September, as the European economies have been shuddering causing extreme market volatility which was just in it’s early stages when this panel convened. I would personally be slightly more optimistic on the US market, though it does seem our results are tied to the outcome of the EU debt crisis.

Orphan Drugs

The conversation quickly turned to orphan drugs, and companies which market products in this space have rapidly been on the rise this decade for several of reasons. One company that garnered considerable mention was Alexion, which rose to profitability in one year. Since the panel, Alexion obtained drug approval in the EU (see 3) for the treatment of atypical hemolytic uremic syndrome (aHUS), though recently its share have been down (see 4,5) perhaps making it a good buy for 2012 if you like the company. Alexion was mentioned especially in reference to the discussion on clinical trials design, and the trend towards smaller trials for early stage drug candidates, as Alexion published a study of 37 patients. This is leading doctors and scientists to find additional indications for their orphan drugs – a very critical business move, as once a drug is approved by the FDA for one indication, it is more more straightforward to get approval for additional indications (since the drug has already been demonstrated as safe). Several deals which were mentioned at this point included Sanofi’s acquisition of Genzyme, Endo buying AMS, and Varian acquiring Calypso. The Sanofi deal is the second largest biotech deal ever, which was consummated for $20.1b in order to gain access to Genzyme’s Enzyme Replacement Therapy. The deal was reached at $74 per share cash and hinged on the offer of a tradable contingent value right (CVR) whose value will depend on Genzyme’s experimental multiple sclerosis drug Lemtrada. The CVR was a critical tool in bridging the difference in value perceived by the two companies and will essentially trade like an option. Genzyme was one of the first specialty pharmaceutical manufacturers who demonstrated that profits could be made in the orphan disease space. In the past year Endo has acquired HealthTronics (urology), Penwest (nervous system disorders), Qualitest (OTC products) and American Medical Systems (AMS, pelvic health) poising themselves for long term growth. Their purchase of AMS for $2.9b cash, or $30 a share, is intended to diversify Endo’s therapeutic health areas and products includings drugs, devices and services (2011 Credit Suisse Healthcare Conference Transcript). Finally, the $10m Varian deal for Calypso stirred some mutters on the panel. Just in January Calypso had taken in $6.4m in funding, though I’m not sure what the company was valued at that time. It was my interpretation from the panelist’s discussion that investors had believed Calypso to be worth alot more not too long ago and that this was a good deal for Varian. Calypso System features GPS for the Body technology and Beacon electromagnetic transponders that continuously track tumor location to improve precision of prostate cancer treatments. The transponders are implanted into the prostate tracked with the 4D localization so that beams can be precisely delivered during radiotherapy and radiosurgery (see Calypso website). In summary, these types of deals for mature technologies indicate a general lack of innovation in the healthcare field, or at least the lack of innovative technologies making it to market.

 

Patent Cliff

Over the next 2-3 years, the greatest number of patents critical to the pharmaceutical industry are expiring. Lipitor, made by Pfizer, the number one and two selling drug in 2009-2010 was bringing in $5 billion a year in sales went off patent on Nov. 30, 2011 giving rise to a fury of generics from abroad. In preparation, Pfizer has been slashing costs saving $1-2b a year and laying off 20-30k people, resulting in a 5% increase in stock price. One may wonder why Pfizer’s stock rose after such announcements. The logic is that investors want Pfizer and other big pharma to buy their way out of the patent cliff by acquiring approved products. In general large pharma is not getting any credit for innovation. Some deals which were noted included Johnson & Johnson’s agreement to purchase Synthes for $21.3B, the largest purchase of the 125-year old company’s history. Synthes, a device, spine and biomaterials company based in West Chester , PA and trades on the Swiss stock exchange specializing in bone fractures and trauma, will provide J&J with a leading device company and has caused its shares to rise 8% since April when the deal was first announced. This is a deal which has nothing to do with innovation. Another deal mentioned involved Cordis. Cordis was bought in 1996 by J&J but retained its name and specializes in catheters, haemostasic values, percutaneous transluminal coronary angioplasty (PTCA) guiding catheters and PTCA balloons using nylon material.

Medical Device Companies

As mentioned, J&J has been branching into devices and diagnostics. The panelists were not holding their breath for device companies to begin expanding into pharma. Instead, medical device companies have been looking M&A for innovation, and pharma will take over this role. One deal which generated discussion was the acquisition of Ardian by Medtronic. Ardian is known for their catheters for treating chronic drug resistant hypertension. The Symplicity HTN-2 clinical trial was an international, multi-center, prospective, randomized, controlled study of the safety and effectiveness of renal denervation in patients with uncontrolled hypertension. Ardian was bought for $800m cash upfront and had the single best exit for a medical device company with a 20x multiple, according to the panel. A study of the Medtronic annual report shows a focus on drug/device combinations. It will be easier for pharma to move into the device sector, and harder for device companies to take on the traditional pharma role. In general, the panel agreed on shorting Medtronic as they are not known for quality deals. For example, the Infuse BMP (Bone Morphogenic Protein) product was used off label inappropriately and in the wrong physiological location – off label usage  in the cervical spine had inflammatory side effects while the drug was only approved for lumbar spine procedures (FDA Alert can be found here). That being said, analysts at seeking alpha as of October rated Medtronic as a long term buy for its solid 3% yield and new management.

Exits

The panels conversation on exits proved to be one of the most insightful and interesting discussions of the afternoon. Several main points were laid out as fundamentals: Always have enough cash on hand, and never have a milestone event scheduled within 6 months of exiting. Investors do not like binaries. At this time, buyers are in the stronger position, putting down only 10% followed with up to 50% when milestones are passed. One panelist remarked that you are “selling dreams, and son’t want to wake up too soon”. Always advise clients on the following points things: 1) Be realistic on timing, sometimes the process takes very long. Avoid interim data. 2) Educate yourself on deal structures, many various possibilities. For example, while it may be nice to get a large slump sum up front, it may not be possible, so have contingencies. 3) Be flexible in terms of expectations- structure, amount and timing. 4) There are buyers everywhere – go far and wide to find the best buyer for you i.e. India, Asia, Scandinavia. Every good deal was born from alternatives. It is critical to make sure you are well financed. Many companies try to run right down to their cash limit, while buyers are looking for ways to push off commitment. What would provoke a buyer to do a deal now? It is so much easier to sell when two companies are bidding for you. Make sure you have professional advisers, who are focused on executing the plan. Don’t rely on a M&A transaction – show investors you have choices. “Lack of choices are the death knell for companies”. Contingent value rights have been playing an increasingly important role, for example in the Sanofi/Genzyme deal. Essentially, at specific milestones the company gets an earnout – its similar to a basic royalty transaction.

Deal Structures

The panel agreed that they have been seeing M&A at much lower valuations. Deals have been more structured, with earnouts based on contingencies to shore the risk in some fashion. Companies aren’t going to be forced into deals now, they are pushing clients to do deals where the company stays involved and not just throwing the company ‘over the wall’ to pharma. It has been becoming harder and harder to make a complete exit – this is leading to a collapsed tail which is affecting buyers. One of the panelists was a major holder of Genzyme. Those involved in the deal thought the price was too low or too high depending on whose side you were on. In all, he felt the price was good and they were really paying a fair value and that the deal seemed to have a nice balance. In the pharma sector the percentage of upfront money gas gone down by 1/3 with a large increase in future payments. Several deals were cited here, as lessons learned. The big one was the acquisition of Protez by Novartis, in which Novartis paid $100m upfront then dropped the Protez product program entirely. The decision to halt PZ-601, an experimental antibiotic, due to high rate of adverse events in patients with skin infections, costing Novartis a pret-tax charge of $152m. Another deal mentioned which saved a company money was an Eli Lilly deal that only paid post-approval. The drug was rejected by the FDA and Lilly saved a few hundred million dollars. There was also mention of the inevitable law suits, and the inability to hold back money in escrow if you are sued. Larger device companies have decided not to move as fast on these types of transactions. Small companies are now taking exits at 2.5x instead of 5x since they can’t generate enough leverage over the buyer. 50% of M&A is taking place in marketed products. Pharma is spinning off to VC with buyback rights. Another trend is waiting for a company to fail at marketing their product, then buying the company for 10x the price, then throwing 1,000 sales reps behind the product. CVRs again became a big part of the conversation, in terms or deal structure as well as independent securities. Milestones were at one point described as “just a future litigation because so few of them come true”. I found these remarks quite shocking and interesting. In the biotech industry, you are often left with milestone payments that are essentially worthless, as there are just do many factors that can affect a company’s success. Recently, one of the speakers closed on a $600m fund for structured finance and royalties. People are getting more conservative. There is less and less money available, especially in the venture business. One panelist predicted that alot of VC funds would go out of business in the next 2-3 years, though I am not sure why he reasoned that- perhaps it would follow a collapse of the markets, loss of institutional investors or dearth of successful prospects on the sell side? M&A is leaning towards more defensive acquisitions. For example, Amgen had considered strategic purchases to acquire companies which own patents that may infringe on their blockbuster product Epogen. In addition, there are royalty streams on Epogen, and companies can pool their royalties to leverage against that very drug.

The Future and Final Comments

These remarks are a loose collection of the panelists final thoughts. As the assistant moderator, I handled the microphone during the Q&A session, so was just about finishing up my note taking. These are the final words of the panelists, which proved to be some of the most interesting remarks. The future will see a plethora of biomarker/companion diagnostics. Alliances will form around the drug. There will be a reduction in the pool of VC money available. There is a need to be creative in seeking financing. VC’s risks are spiraling out of control. Many of these technologies do not have a clear pathway. Venture capital will undergo Darwinian selection, though there has been some positive trends for VC. The economic situation in the US and abroad is making things difficult, and it is clear the economy has an impact on healthcare. No one was particularly optimistic about the next 3-4 Quarters. It is not clear how personalized medicine will work in the EU. Companies in Texas have been getting substantial money. If possible, it is advantageous to avoid going to capital markets to raise money. Companies are becoming more focused, efficient and virtual. There are less companies moving in the diabetes, cardiovascular and obesity space – the traditionally largest markets. While one panelist sees several hundred companies a year, only 2-3 are in the diabetes, cardio or obesity space. Corporate investors have finally become interesting in the vaccine space – even stem cells. Two to three years ago these were viewed as the devil, “dreamy”, now they are finally gaining attention. A recently ophthalmology company had only 2-3 buyers when it went for sale – you rather have 28 buyers. The financing model they used to see was $5m pre, $5m post, $10m series A and $10m Series B. Now Series A is only attracting $8m,5m, sometimes only $3m.

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Published paper in journal Biochemistry in collaboration with Labcyte, Inc.

June 16th, 2011 · 1 Comment

This May I published a paper in the journal Biochemistry with my previous lab group at Brookhaven National Laboratory. The publication is about the development of a new platform technology for high-throughput protein crystallography which has potential to greatly accelerate the field of structure-based drug discovery. We analyzed protein crystals using x-ray diffraction at the National Synchrotron Light Source (NSLS) and Advanced Photon Source at Argonne National Laboratory. X-ray crystallography is important because it can reveal the atomic three-dimensional structure of proteins, which allows scientists to visualize where drugs bind and how they work on the molecular level. This is even helpful for discovering new drugs and understanding how things like proteins function in the body.

Front-page of the Biochemistry website featuring our article

What was unique about our experiment, was that we transported very tiny protein crystals (microcrystals) through the air using sound waves. To do this I went to California and used a special instrument called the Echo Liquid Handler, manufactured by Labcyte, Inc., which uses acoustic drop ejection to rapidly dispense nanoliter droplets of fluid.

The Department of Energy is currently building a new light source where I work at Brookhaven National Laboratory called NSLS-II for $912m which will come online in 2014. This technology we developed in this paper should help speed up the process for data collection at the new NSLS-II.

A key figure in our paper showing nanoliter droplets of fluid being dispensed (A). The droplets we created contained microcrystals, which were then shot onto the Kapton mesh (B). These samples can be diffracted at the beamline (C) and used to solve the structure of proteins.

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Organized Event, Investment in Biotech and Pharma @ JPMorgan Chase: May 3, 2011

April 29th, 2011 · No Comments

This year I organized a very exciting panel discussion on private and public equity investment in the biotech and pharmaceutical industries. After discussing the idea with several friends and colleagues, we were able to invite several very interesting speakers with diverse backgrounds and experience in consulting, venture capital, investment banking, business development, and management. Both Bryan Czyzewski and Peter Shapiro helped me brainstorm and conceptualize the event. Eric Vieira also gave alot of constructive feedback during the planning process and offered both much needed advice and support. I would like to especially thank Connecticut Innovations for generously sponsoring the networking reception following our panel discussion. Connecticut Innovations is an evergreen fund which was started by the State of Connecticut initially with $65 million in capital. Their far-reaching investments include drug development companies, medical devices, e-commerce companies, wind turbine developers and other IT and software designers. The event will be held at 1 Chase Manhattan Plaza on the 60th floor at JPMorgan Chase. Hope to see you there!

The FOBIP Alumni Network Executive Committee, New York State Center for Biotechnology, JPMorgan Chase & Co., and Connecticut Innovations Present:

Financing Biotech in 2021

Date: Tuesday, May 3rd, 2011 at 6:30PM
Location: 1 Chase Manhattan Plaza, The 60th Floor, Boardroom
Agenda: 6:30 – 8:00PM Introductions & Panel Discussion
8:00 – 9:00PM Networking ReceptionSponsored by Connecticut Innovations
RSVP Online
Required:
Click Here (A $10 donation is suggested to support future events)
Must RSVP 24hrs in advance to be admitted

 

  • Moderator
    Stephen Davis Partner, Goodwin Procter, LLC
  • Panelists
    Milena Adamian Director, Life Sciences Angel Network
    Noah Kroloff Partner, NGN Capital
    Jennifer Friel Goldstein Director, Pfizer Venture Investments
    Philip Ross Executive Director, JPMorgan Healthcare Investment Banking Group
    Daniel Wagner Director, Investments, Connecticut Innovations

Executive Summary

The goal of this event is to discuss some of the various sources of capital available to emerging pharma and biotech companies and the current trends affecting the market. We have established a panel of investors ranging from angels to investment bankers who will explain their role in financing companies in the healthcare sector. The panel discussion will touch on current technologies attracting investment, promising new sectors, selection mechanisms for targeting companies for investment, factors contributing to successful exits, and upcoming challenges facing the industry in the future. Click Here for Speaker’s Bios

Thank You to Our Sponsors and Supporters!
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About the Organizers: The FOBIP Alumni Network is an established, non-profit, all volunteer, industry focused biotech club. It is exclusively composed of young professionals and graduate students from the biomedical sciences who have completed the Fundamentals of the Bioscience Industry Program (FOBIP). The program is taught by industry executives focusing on intellectual property, entrepreneurship, FDA regulations, finance and venture capital in the healthcare sector. The goal of our Alumni Network is to provide educational seminars, industry outreach, and networking opportunities for our members, guests, and followers.

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Stony Brook University Wind Ensemble Concert: Winds of Revolution

April 5th, 2011 · No Comments

April 6, 2011 @ 8PM – Stony Brook University Staller Center, Main Stage

Tickets Prices: $10 General Admission, $5 for Students and Senior Citizens
Conducted by Bruce Engel, Music Director

 

Program:
The Star Spangled Banner by Francis Scott Key
Chester Overture for Band by William Howard Schumann
Semiramide Overture by Gioachino Rossini
Lawrence of Arabia by Maurice Jarre
Selections from Les Misérables by Claude-Michel Schönberg
1812 Overture by Pyotr Ilyich Tchaikovsky

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Social Media in Healthcare – FOBIP Seminar Series

January 19th, 2011 · No Comments

The FOBIP Alumni Network Executive Committee, Center for Biotechnology at Stony Brook University, and Mount Sinai School of Medicine Present:

Medicine

Social Media in Healthcare

Date: Monday, January 31st, 2011 at 6:30PM
Location: Mount Sinai School of Medicine, Icahn Medical Institute – 1425 Madison Avenue (@ 98th St.), 1st Floor Seminar room
Agenda: 6:30 pm – 8:00 pm Panel Discussion
(networking reception to follow)

Click Here to RSVP

($10 suggested donation)

Abstract

Social media is emerging as an effective tool for attracting business opportunities. Healthcare providers and patients are building online communities to help manage disease and sort through medical information. In the quest to improve outcomes, hospitals and clinics are using online social networks to discuss their medical practices and for patient outreach. The FDA is considering guidelines for the drug industry’s use of social media for drug marketing.

Dr. Michelle Hoffmann, of Deloitte Research, will be presenting a summary of a recent industry study she co-authored on the practical applications of social networks in the Life Sciences industry. Results from the study are based on interviews with executives in pharmaceutical and biotechnology companies as well as experts in the social media community. Her presentation will be followed by a panel discussion. The panel, composed of individuals experienced in the use of social media and communications, will share their thoughts on the opportunities, challenges, best practices, and value of social media for healthcare.

  • Presentation
    “To friend or not? New insights about social networks in the life sciences industry”
  • Michelle Hoffmann, PhD, Senior Research Manager, Deloitte Research.
  • Panelists
    • Bradley Jobling, MBA, Social Media Consultant, Dept. of Surgery, Columbia University Medical Center.
    • Louise Clemens, JD, Consultant on Digital Strategy for the Healthcare Industry.
    • Sandra Holtzman, President and Founder, Holtzman Communications.
    • Diane Zuckerman, RPh, CEO, Evidence-Based Solutions.
  • Moderator
    • Sarah Webb, PhD, Journalist, Science Writer and Editor, Webb of Science.

    Speaker’s Bios

    Moderator

    Sarah Webb, PhD, is a science writer and editor based in Brooklyn. Her work has appeared in Discover, Science News, ScientificAmerican.com, Science Careers, Nature Biotechnology, The Scientist, Weekly Reader’s Current Health titles, and many other publications. She has a B.S. in chemistry and a B.A. in German from Furman University (Greenville, SC). After a Fulbright fellowship studying organic chemistry in Gieβen, Germany, she completed a Ph.D. in bioorganic chemistry at Indiana University in Bloomington. Committed to communicating science to the public, she shifted her focus from laboratory research to writing, editing, and informal science education. In 2004, she launched her writing career in New York City with internships at Discover magazine and as an AAAS Mass Media Fellow at WNBC-TV. Learn more at webbofscience.com.

    Guest Speakers

    Michelle Hoffmann, PhD, is a Senior Research Manager in Deloitte Research specializing in the life sciences sector. As part of Deloitte Research, Michelle keeps abreast of emerging trends and drivers that impact the rapidly changing drug and device industry. Michelle recently co-authored an industry study on the practical applications of social networks in the Life Sciences industry. Results from the study are based on interviews with executives in pharmaceutical and biotechnology companies as well as experts in Health 2.0. Prior to joining Deloitte Research, Michelle was a consultant in the Strategic Advisory group at Leerink Swann, a boutique health care investment bank where she helped clients understand how to value and leverage new therapies and technologies. She led projects on a diverse range of topics that include cell therapy opportunities, the diagnostics landscape, oncology clinical strategies, next generation sequencing, as well as numerous opportunity assessments. Her clients included start ups as well as top 5 biopharma companies. Michelle holds a Ph.D. in molecular and cell biology from the University of California at Berkeley and a B.S. in biology from Cornell.

    Bradley Jobling, MBA, created the social media program for the Columbia University Medical Center Department of Surgery. He has 15 years of experience on Internet strategy and online marketing projects. His work has involved the advertising, media and health care industries. Bradley’s additional interests include online video and entrepreneurial businesses.

    Sandra Holtzman, President and Founder of Holtzman Communications, is an award-winning creative director and marketing strategist. She has over 20 years of expertise in all areas of pharmaceutical advertising (ethical, OTC, DTC), nanotech, biotech, and chemical as well as emerging and converging technologies. Her experience includes business-to-business, medical communications, and international marketing, as well as consumer marketing.

    Diane Zuckerman, RPh, is the CEO of Evidence-Based Solutions, a company focused on making medical data actionable, by collecting, organizing, and turning medical information into useful solutions for healthcare providers, patients, systems and payers. Diane is an entrepreneur with 20+ years of experience building successful medical education and technology-driven companies, including PROmedica Communications and the Foundation for Better Healthcare.

    Louise Clemens, JD, is currently working as a consultant on digital strategy for healthcare agencies, hospitals, non-profits, to create online community for healthcare constituents using social media platforms that provide metrics and ROI. With more than 20 years of experience in solution selling, Louise’s most recent experience was VP of Business Development for Within3, a company that builds and sustains secure online communities for formal and informal networks of healthcare professionals. Prior to joining Within3, Louise was with a medical publishing company, where she headed a multi-million dollar biomedical device magazine and quadrupled its revenue within a two-year span. In addition, to her extensive sales background, Louise has her JD from Cleveland-Marshall School of Law at Cleveland State University ensuring that the custom community solutions she develops with each customer meet the stringent regulatory and legal requirements necessary to be successful.

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    The Best Industries for Starting a Business Right Now

    December 15th, 2010 · 1 Comment

    In the New York Times on Monday, there was a very important article on young entrepreneurs entitled: No Jobs? Young Graduates Make Their Own. With the lack of traditional jobs on the market, young people are blazing a path to success by creating their own companies. These organic businesses, started from the ground up are what the U.S. needs to revitalize it’s economy. One must never forget about the roots of companies such as Facebook and Google, which of both started in a college dorm room or one bedroom apartment. And in 2010 you could look to Groupon, for example, which started in 2008 and recently refused a $6 billion bid by Google. Granted, most of us will not be forming the next multinational enterprise, but with a vision, tenacity, and good business acumen there are always possibilities available to the budding entrepreneur.

    The NYT article describes the failures and success of a NYU film student, Scott Gerber, who used nothing but his passion and the last $700 in his pocket to start an internet company. While there are many opportunities for forming novel businesses online, I think the biggest game changers will be in the energy sector. Since starting his business, Gerber has also founded the Young Entrepreneur Council which mentors early stage entrepreneurs primarily through web forums, Q&A articles and video conferences. Scott also writes prolifically for several websites, such as this article on how to raise capital for your business based on first hand experience from various new entrepreneurs on youngentrepreneur.com.

    energy industry, alternative energy

    While there is still room for virtual businesses to grow, a truly sustainable company should focus on solving unmet needs. In the U.S., the primary unmet needs are in the energy sector. Therefore, many investors and serial entrepreneurs are moving into this arena trying to bring new products to market and bridge the cap between new technologies that are challenged by consumer adaptation and habit.

    The Best Industries for Starting a Business Right Now

    Recently, Inc.com published an article describing the 18 best industries to pursue for starting a new business. One of those was energy, and their take on this field can be found below:

    The energy industry is full of start-up opportunities, so it’s no surprise that it was the fastest-growing category among privately-held companies on the 2008 Inc. 500 | 5000 list — with a median four-year growth rate of 287.5 percent among 79 companies on the list. These companies run the gamut from dealing in solar energy to alternative fuels. Due to growing consumer demand to save on energy costs, companies that install efficient lighting systems or cut down on heating costs by installing solar panels are well positioned for future growth. In addition, economic stimulus funds for energy projects nationwide amount to $43 billion, creating opportunities for entrepreneurs with a scientific background to break into areas such as biofuel and wind power. – Jason Del Rey and Tamara Schweitzer

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