By the time economic storm clouds lift above the business landscape, CEOs must have done all they can to emerge stronger. Yet some may be overlooking one of their most influential levers for growth; playing to their strengths. That’s the view of Chris Hollowood, CEO of Syncona, a leading FTSE 250 life science investor focused on creating, building and scaling a portfolio of global leaders in life science.

For Hollowood, that means doubling down on your specialisms and sector expertise and resisting a rush to diversify or make hasty tech investments.

“The macroeconomic environment is very tough in our sector, where biotech is all innovation today for the hope of products that bring revenue tomorrow.”

And while one of those “tomorrows” is helping Syncona through the current turbulence, Hollowood is wary of complacency.

“We sold a business in December 2021 that meant entering this cycle we were as well capitalised as we could be,” he says. That deal saw the sale of portfolio company Gyroscope Therapeutics for $1.5bn, including an upfront cash payment of $800m.

“But you can't be complacent,” he says. “I’m very focused on making sure our companies stay strong, exercise financial discipline and extend their runways to ensure the products they're developing see the light of day. Because we know there is going to be a continuing need for innovation to drive better healthcare outcomes and we will create value as long as we're disciplined to be there when the sun comes out.”

However, organisations should be careful not to conflate discipline with inaction or resisting investment opportunities that happen uniquely in a downturn.

Opportunities to create value

“We see opportunities now in later stage assets at price points you could never have got three years ago,” says Hollowood.

Such activity still carries risk, but that risk is baked into the business plan.

“Biotech is a stream of crushing disappointments punctuated with amazing successes,” he says. “That's necessarily true because you are investing in a field where something's more likely to fail than succeed. But when it fails you only ever lose 1x and when it succeeds you can make 5x. So the investment model works very well.”

Well-invested, commercially successful biotech and life sciences sectors are critical to delivering advances in therapies and Hollowood is proud of significant breakthroughs by portfolio companies in areas ranging from the treatment of rare cancers to restoring sight by reversing retinal degeneration.

“The best way to unlock therapies that can have that greatest impact is through investing in cutting-edge innovation and working with people at the very cutting-edge of science.

Skills and innovation are critical to progress

Syncona is just over 10 years old and in that time Hollowood says the advancement in UK biotech and life sciences has been dramatic, due in large part to the quality of research and talent coming out of the UK’s world class universities.

Proximity to universities such as Oxford, Cambridge and University College London (UCL) are part of the reason Syncona’s business is largely focused on the UK.

“It’s very hard to build a company from London on the west coast of the US,” says Hollowood. “Because there's so much interaction required. It's so much more productive when you can walk across the street to UCL.”

But that domestic focus is also reflective of a belief in extracting maximum value from the expertise, knowledge and relationships you already have before looking to new horizons.

“There's a view that diversification takes out risk,” says Hollowood. “But it's not a one-way street, because diversification moves you away from your expertise.”

For Hollowood that also means drawing upon his background in science, with a degree in Natural Sciences and a PhD in Organic Chemistry from the University of Cambridge.

“That background helps me build rapport and trust and respect with a founding academic, helping them understand I will be a safe guardian for what is quite often their life’s work.”

The opportunities and limitations of technology

In terms of cutting-edge technologies, Hollowood says analytics and AI have a critical role in the early processing of ever larger volumes of data. He cites one Syncona portfolio company, Mosaic, which is using AI to analyse cancer samples in pursuit of therapies.

“Mosaic has a huge supply of human cancer samples and AI is enabling them to look at those cancer samples and test them across the entire genome.”

But technology investments must pass a strict test.

“We're bringing technology investments into the portfolio where it makes sense and where it really adds something. But we're not just collecting baubles,” he says. “If it doesn't make sense, you're not doing it because we pride ourselves on being fundamental investors.”

Hollowood says he’s seen too many examples of organisations investing in technology that doesn’t answer “the fundamental question” of whether it is solving a problem that needs to be solved. Being able to tell the difference comes back to the value of working within your wheelhouse.

He’s also wary of investments that are iterative rather than transformative.

“We don't want to do something incremental. Because if you do that, people with more resources can just erode your advantage,” he says.

“We want something that is a genuine digital switch.”