For a capital-intensive industry that has never fully lived up to its job creation expectations, it is now focusing on running things on as few jobs as possible. Less is more.

Is this a sign of growing efficiency or growing desperation? In an uncertain and lean economy, biotechs are going lean too, outsourcing everything they can and trying to avoid the financial responsibilities of ‘bricks and mortar’ businesses. The industry’s drastic funding decline over the past two years has meant that undercapitalised biotech in Europe is adapting by going virtual and focusing on squeezing the talent to produce the goods. Overall development costs and timelines are being reduced through outsourcing parts of the process, taking the product from research to clinical trials to market.

This means biotech companies are increasing their capital efficiency, and it is also good news for biotech locations as the virtual companies tend to draw on the local ecosystem of clinical research organisations and academic and research institutes to speed their products on. Keeping it local allows them to build up trust and maintain control. This may help to reinforce the concentration of activity at particular areas of excellence, and with biotech still seen as an economy builder, it is good news for the politicians.

In these tough economic times biotech is going back to what matters most – focusing on its talent to innovate. While big pharma seems to be moving away from research and development and towards generics, it is good to know that the biotech sector is still fighting hard to bring us real advances from its virtuous virtual ways.

Douglas Clark is director of Techlocate, a site search and inward investment consultancy, which is part of RSM Tenon Ltd, a top 10 firm of accountants and business advisers.

E-mail: douglas.clark@rsmtenon.com