Corporate financing is always an important subject. One badly managed corporation can bring down entire industries, and in some cases an economy.
Fortress Biotech is a biopharmaceuticals company that has developed a new approach to corporate finance. Let’s take a look at how this new type of corporate financing could spread risk and ensure the long-term future of the parent company.
How Fortress Biotech Operates in the Biopharmaceuticals Industry
We spoke to Lindsey A. Rosenwald, an American doctor, and entrepreneur, to find out more about this new type of financing.
First of all, we have to mention that the original company was known as Coronado Biosciences, which lasted until 2013 before it was rebranded into Fortress, when Dr. Rosenwald entered the picture.
Rosenwald says that the company is committed to building companies that have presented promising finances and scientific advancements. However, he says, Fortress only provides modest investments in line with its overall portfolio of companies. The company, according to Rosenwald, makes its money from annual consulting fees and the return of its investments.
Company Creation with a Twist
It’s all about risk in the biopharmaceuticals industry. There have been lots of arguments that companies, especially in the financial and banking sectors, take too many risks.
Fortress Biotech has a portfolio of ten companies, with five of them private and the other five public. As well as reducing risk to Fortress, these companies are positioned across multiple sectors, so they’re less exposed to downturns in specific industries.
What Does Fortress Biotech Cover?
Fortress Biotech’s companies aim to address a number of healthcare industry problems. Many of them are positioned in therapeutic areas, whereas others are working on new cancer drugs. Others are focused on rare diseases and hospital products. This gives Fortress Biotech a broader exposure to healthcare as a whole.
Rosenwald says that the ultimate endgame of Fortress Biotech is to move into manufacturing. Essentially, he’s saying that he expects the company to become self-sufficient and wouldn’t have to rely on outside providers. However, this is some way off and is, as of this writing, a part of the company’s larger plans.
Why Should You Care About Fortress Biotech?
Fortress Biotech is an interesting company not because of its market cap or share price. It’s the way that the company has been set up that should interest outsiders.
The business model is reminiscent in some ways of Vivek Ramaswamy’s Roivant Sciences Ltd., which also invests in overlooked science and establishes subsidiary companies that it retains an interest in. But if Roivant, the firm behind the most successful biotech IPO of 2016, Myovant Sciences Ltd., which raised $218 million and brought in a big pharma backer, Pfizer Inc., has made a cannon ball-sized biotech splash, Fortress is operating under the radar.
In the future, many followers of the company believe that the private Fortress subsidiaries companies will go public, which will only increase the attractiveness and competitiveness of Fortress Biotech.
Last Word – A Bold Approach to Company Creation
Fortress Biotech has taken a different approach to its competitors. The idea behind its philosophy, according to Rosenwald, is to spread risk and to give companies the tools they need to succeed. It’s not just about throwing money at the problem.
Do you believe this is a successful approach to company creation and success within the biopharmaceuticals industry?
Disclaimer: This content does not necessarily represent the views of IWB.