If you're a serial entrepreneur looking for your next big ticket challenge, you may want to take a peek at the biotech industry - specifically, the anti-aging niche. Our parent's generation is moving into retirement. The kids have gone through college. The mortgage is paid, and they're finally in a position to spend their hard-earned cash -- on themselves.
Ask any successful business owner and they'll tell you, being an entrepreneur isn't always about inventing the wackiest, most original idea on the market. It's about offering a product that fulfills a need. And if it fulfills it, surpasses expectations and leaves customers coming back for more, you've got a recipe for success. But what is it that's making the anti-aging niche so attractive right now? Let's take a look at the current trends.
Real estate values are nearing all-time highs
As the Baby Boomer generation begins to worry about their wrinkles and invest in their health, some other interesting trends are starting to occur. Real estate and stock market values are near all-time highs. Why is this good news for the anti-aging market? Because as retirement portfolios are ballooning, so is the demand for quality-of-life improving products and services. A new wave of retirees with money to spend are looking to invest it on themselves.
Increasing life expectancy
Life expectancy in the U.S. has now reached 78.8 years. "Life expectancy has been increasing pretty steadily for the last 50 years or so," explains Robert Anderson, chief of Mortality Statistics Branch at the CDC's National Center for Health Statistics. Improvements in medicine and a greater awareness about our health have helped to fuel this trend.
So, if your only focus is on upwardly mobile, young Millennials, you could be missing a trick. An important slice of the market with a disposable income -- a growing cohort of older Americans with money to spend on their health. In an industry that's increasingly catching the eyes of investors who can't dispute the numbers that are speaking for themselves.
Rise in demand for anti-aging products
Dietary supplements are becoming increasingly popular in the anti-aging market. Take nicotinamide riboside ("NR"), for example, a natural compound found in milk that helps prevent aging-related decay. There are 90 scientific studies of NR currently underway funded with an estimated $40-50 million of research dollars. Small human clinical trials at 400-700mg daily have proved its safety and some anti-aging properties.
What type of valuation could an entrepreneur or investor expect for an anti-aging vitamin company? Standard NR pills at 500mg/day dosage are sold by Pretiva whose valuation is not publicly available. For an estimate, consider Pretiva's competitor Elysium Health, which just this month raised a staggering $20 million for a 250mg/day NR pill subscription company -- roughly half the dosage studied in human clinical trials.
With some skillful marketing, even a relatively new startup can raise $20 million by offering a product to fulfill the demands of wealthy retirees. For about $50 per month, companies like Pretiva and Elysium Health offer their clients anti-aging remedies to help them feel better about themselves. Of course, what they're actually selling is a nicely packaged pill bottle with an extract of milk that has been availble since 2012. What's most interesting about their products (and many anti-aging products) is the fact that they're not new at all.
So even a repackaged ingredient that has been on vitamin store shelves for years can drive huge sales numbers in a hot market like anti-aging. With a little bit of funding and a light makeover, NR has gone from wallflower to runway star.
What this clearly demonstrates is a rising demand for anti-aging products and services. Smart entrepreneurs can tap into a generation's desire to slow the aging process by repackaging existing ingredients and services in ways that appeal to an older demographic. Even a startup that uses another company's ingredients can raise $20 million because it is considered an anti-aging startup. Simple as that.
Big returns for anti-aging investors
Companies like Pretiva are attracted to the enormous gains available to young biotech companies. The past three years have seen the largest amount of private biotech funding since the start of data collection in 1995. Over the past decade, the median upfront payment to acquire a VC-backed biotech company has nearly doubled ($63 million to $115 million). Late-stage biotech companies are also doing well. There will be approximately 30 biotech IPOs this year-a top-quartile year for new public companies.
With so much going for the biotech industry, it comes as no surprise that more and more entrepreneurs are jumping on the bandwagon. Baby Boomers are entering retirement. The stock market and real estate are nearing all-time highs. Demand is outstripping supply -- it's kind of a no-brainer. If you're an entrepreneur or a trend-following investor looking for a niche, the smart money's on biotech.