Tuesday, 27 November 2012

Open Innovation (in Biotech/Pharma)



BIA breakfast meeting 28/11/12, BioCity, Nottingham

One of a series of  BIA Breakfast events around the UK; Chaired by BIA CEO Steve Bates, with panel members Clare O’Neil, Original Ventures and Nick Pope, BioSpring Ltd.

Supporting material for Nick’s contribution:

Definitions
Innovation is “using a novel approach to satisfy a real market need”, and so inherently requires commercialisation. OI tends to be thought of as the ideation and research end only, whereas the later stages are also important.

Open can mean one, or both, of:
1. Collaborative v’s competitive, trusting, operating with a “Win Win” ethos, or
2. Open to outside ideas (Big Pharma)

Open Innovation is generally more open, trusting, with networking at its core, and with True “win-win” working (not just pretending so!). Hence it needs personal and organisational alignment to succeed (see Success Factors).

On the surface, it’s fairly similar to what small co.’s often have done anyway, but to a much greater extent, enabled by the speed, ease and global reach of communications the digital age makes possible. Ownership of resources is no longer key, rather it’s the networks to be able to access the resources that is! (e.g. drug molecule screening in silico, now run in the cloud. Computers are not important, its algorithms & molecules that are).
  • Ideas, IP, Knowledge and knowhow can easily flow!
Open Innovation brings a New Paradigm and New ways of managing innovation:
  • fail quick and learn fast
  • innovation ecosystems rather than Assets,
  • “connectors” (access points) as well as the research itself.
  • An easy way to tap into other skill-sets when you need them.
Examples
There is a Spectrum of OI,
a.   Open access journals (e.g. nature’s web journal), Structural  Genomics Consortium making structure data freely available & GSK giving access to its trials data,
b.   Easy Access IP initiative, where Bristol, UCL & Glasgow Universities have opened their “difficult to commercialised” IP to everyone,
c.   Specific company initiatives using portals or agreements to
    1. access new molecules (Lilly’s OIDD portal, or Unilever) or
    2. new applications for (old / failed) molecules (AZ/MRC deal, & NCATS initiative),
d.   Sponsored challenges with funds and a problem, often posted on third party portals such as www.innoget.com, www.innocentive.com, www.kaggle.com
e.   True crowdsourced e.g. www.Zooniverse.org & mechanical turk (https://www.mturk.com/mturk/welcome).

Then there is Crowdfunding e.g.
  1. Seedrs (UKFSA regulated) www.seedrs.com
  2. Wiseed (F) www.wiseed.fr/
“First biotech seed crowdfunding” – Anabio (www.antabio.com/en)
  1. BIA Citizens Innovation Fund (citizens-innovation-funds-report/)
And where Big Pharma are opening up to early stage science through a variety of approaches, including incubatorse.g. GSK & Stevenage BioScience Catalyst, and Merck & not-for-profit Calibr.

IP
Same requirements as usual, but more pragmatic – they are only applied once a project gets to commercial/competitive phase. Not just for the sake of it. But, put clear agreements in place from the start, to deal with IP when it becomes relevant.

Avoid joint IP (it will be if no agreement is in place from start), as in the UK (not USA) jointly owned IP requires All owners to agree to the exploitation by any of the owners! (unless explicitly agreed otherwise).  This can cause big problems if not dealt with in advance.

Success factors
Clear understanding, alignment and agreement by all parties from the start.
·    Personal & organisational alignment – the “soft aspects” that often derail collaborations! - lessons can be learned from other industries, and techniques borrowed (networkedpharma).
·    A well-structured agreement Formal agreement embodying all of this, and incl.
·        Clear Mutual understanding of what each party wants out of it – objectives
·        Clear IP ownership and commercial exploitation rights agreement
·        Agreement project management structure and process aimed at Effective monitoring and management of projects
e.g. Lilly’s web based OI portal for sourcing new molecules establishes a master agreement with each new University/institution as a faculty member wants to submit ideas.  This is then in place for all subsequent members from same institution.
·    High level champion in each organisation
·    Clear open communications (co-location helps)
·    Focused approach
·    Willingness and system to “fail fast, learn quick”
·    Network with multiple connections


Sources:

  1. NetworkedPharma Funds & Fundability workshop June 2012 (report available Mid December).
  2. Above hyperlinks.



BioSpring Ltd is a member of Networked Pharma Partnership, a not for profit organisation dedicated to assisting development of a new paradigm for drug discover & development

Networked Pharma PartnershipBuilding Innovative Networks in Drug Discovery & Development

A series of workshops are being run to bringing together all stake-holders (Corporate Pharmas, SMEs, CROs, Universities, VCs, CVCs, Research Councils, Charities, Regulators & Government bodies etc.) to help formulate the new business model(s) for the future success of the industry.

Follow us:
Twitter @NWkPharma,      #NWkRx

Tuesday, 2 October 2012

Funding for Innovative Drug Discovery: UK 2012


Networked Pharma – Finance (NWkRx F8)

 Networked Pharma’s Workshop
Funds and Fundability, 28th June 2012

Executive Summary

Networked Pharma’s “Funds and Fundability” workshop examined the evolving funding ecosystem (equity, collaboration & grant) and the future role of open innovation (OI) for early stage drug discovery.
Key opinion leaders were joined by 60 participants from diverse stakeholder backgrounds, for presentations and facilitated discussions (report available on request).  Workshop website.

Key Findings
A.  Investor consensus surprisingly positive for biotech/pharma sector.
o There are hidden / ‘below the radar’ fundraisings occurring,
o Although the old investment model is dead in UK, and the public markets closed, there is now a new model of a single large investment sufficient to go all the way to achieve an exit by trade sale.
o Funds are emerging with “Patient” Capital (i.e. they are prepared to wait long enough for value creation to occur).  However, more are needed.
B.   UK is good at producing lean companies with 1 or 2 products that are sold-off too soon for early exit and financial return:
“You Brits are very good a creating ‘Veal’ ready for slaughter”
Participant quoting a USA colleague                           
Rather than being prepared to wait and build a self-sufficient multi-product company and so realise the full potential value. 
“We need the fodder to build ‘Beef’”     Serial biotech entrepreneur

More Patient capital is needed for this and probably the public markets.
“Are we prepared to be patient?”   VC

Sector needs
1.      A new / “better” way to capture information on fundraisings.  Many current investments are “under the radar” as different types of investor are now involved, and there is no need for publicity. This will enable us all to know what is actually happening and to recognise successes.
2.      A better way to recognise our UK pharma/biotech company successes, and new measures to assist with this (not just financial).
3.      Support for entrepreneurs to decide which of the funding sources to approach: i.e. Fill the information gap between funders (of all types including government/research bodies) and those looking for funding
  1. Which of the three “silos” of equity investor’s to approach, and who to contact therein? The three silos rarely interact: 1. VC/CVC, 2. Angels/regional funds, & 3. Public-listed funds.
  2. Which grant funding and other non-equity sources are applicable to given types/stages of projects/companies, and who to contact?
4.      More equity funds that straddle the three silos.
5.      The creation of some biotech/pharma Sector Champions (“Beef”) in UK, and more investors prepared to be “patient” (prepared to wait 10+ years to develop full value and achieve such champions).
6.      Engagement of the public markets with biotech.
7.      More specific information and better information sources on OI & Crowdsourcing within Drug discovery, and where entrepreneurs can go for advice.
8.      Support for entrepreneurs to establish effective collaborative relationships, utilising open innovation /crowdsourcing, collaborative projects and (open) networks.

Action
NetworkedPharma is now establishing collaborative networks to address the above, and welcomes approaches from those interested in the possibility of working together for the good of the sector.  As a not-for-profit organisation we are also interested in discussions with potential patrons / sponsors / supporters.                       

Our next workshop on Open Innovation& Crowd Sourcing will be in April 2013.


BioSpring Ltd is a member of Networked Pharma Partnership, a not for profit organisation dedicated to assisting development of a new paradigm for drug discover & development

Networked Pharma PartnershipBuilding Innovative Networks in Drug Discovery & Development

A series of workshops are being run during 2012, leading to an international congress in mid 2013, which will bring together all stake-holders (Corporate Pharmas, SMEs, CROs, Universities, VCs, CVCs, Research Councils, Charities, Regulators & Government bodies etc.) to formulate the new business model(s) for the future success of the industry.

Follow us:
Twitter @NWkPharma,      #NWkRx

Tuesday, 26 June 2012

The Changing Nature of investing in early Pharma / Biotech: Poll Result


Networked Pharma – Finance (NWkRx F7)

I ran the Linked In Poll below as a prelude to Thursday's Funds & Fundability workshop in London http://www.networkedpharma.com/funding,:

According to those that responded Open Innovation and Crowd-funding will have greatest impact on drug discovery,more than even Corporate VC investment, and perhaps most interesting VCs where seen as the least significant!

I await with anticipation the outcomes form the workshop itself! 

NB there will be some register on the day places available http://www.networkedpharma.com/funding



BioSpring Ltd is a member of Networked Pharma Partnership, a not for profit organisation dedicated to assisting development of a new paradigm for drug discover & development

Networked Pharma PartnershipBuilding Innovative Networks in Drug Discovery & Development

A series of workshops are being run during 2012, leading to an international congress in early 2013, which will bring together all stake-holders (Corporate Pharmas, SMEs, CROs, Universities, VCs, CVCs, Research Councils, Charities, Regulators & Government bodies etc.) to formulate the new business model(s) for the future success of the industry.

Follow us:
Twitter @NWkPharma,      #NWkRx

Wednesday, 20 June 2012

Future View of VC investing in early Pharma / Biotech: The CVC Perspective


Networked Pharma – Finance (NWkRx F6)

 I recently spoke with one of the more active Corporate VCs (CVC) regarding the existence 
of the funding gap in early pharma discovery, the reasons for it, and what the future holds.


There is a funding gap in early drug discovery - but not an insurmountable one!
Previously the investment model in Europe for general VCs assumed funding to a proof of principle and then floatation on a public market or trade sale to Pharma company.  However as the public markets do not understand biotech (nor do generalist VCs) share prices are highly volatile and single poor trial results are catastrophic for share prices.  Hence appetite for biotechs became poor in early 2000’s, and so VCs could see no exit that way.  Also Big Pharma have stringent requirements for in licensing and often VCs were not able (insufficient funds) or unwilling (required cost of capital by their investors necessitates shorter timescales) to continue funding sufficiently to achieve the proof needed by Pharma.

Part of the problem was “naive money” ie from general VC’s inexperienced in the sector.  There is now a gap in early funding as the general VCs have pulled out of the sector, although some still have portfolio company legacies.

Being a “Biotech VC is completely different from other VCs, including Tech.”

So what of the specialist funds?  There are (in the interviewees view) a small group of “tier one” specialist biotech VCs that are, or will be, active:
·       VC:
Abbingworth, Imperial Innovations, Index, MVM, Phase4ventures (ex.Nomura), Sofinova, SVLS (Shroders).
·      Corporate VC (CVC) – those that are wholly or largely independent from Pharma HQ influence:
Lundbeck, Novartis, Novo, Pfizer, SR One.

These generally have longer timescales and larger pots of money for investment.  However at present most of the Biotech VC have either run out of money, or are at 5yr+ stage of 10 year fund and so have to keep funds for follow-on investment.  So few are investing (e.g. Sofinova & SVLS who both have ~7 years left on their funds, and Imperial with its longer term approach).  The rest are actively fundraising early stage funds.  Hence the gap is [at least in part] temporary, awaiting fundraisings. The CVCs are actively investing and moving to earlier stage opportunities.

Another issue has been that companies spin-out too soon, with small investment from small funds, Angels etc and then have to find more money to develop further.  The incumbent investors have insufficient funds and as the technology is still not sufficiently demonstrated, so
1.      Larger VCs are not interested or only so with terms which dilute the existing shareholders so much that they will not agree,
2.      Pharma is not yet interested in licensing, or a very poor set of terms is achieved, and/or
3.      Company has to switch to a much lower-value service model to survive.
None of which is a desirable situation for anyone.

The CVC would prefer companies to be incubated longer in universities “until they are really ready”, perhaps with a £50-100k “investment” from a CVC to enable some critical proof of concept work (with a gentlemen’s agreement for first chance to discuss next steps assuming success), and then spin out with major investment by party(ies) with deep enough pockets to see it through to exit (trade sale).

So what are they looking to invest in?   Something really new, which may be a service business, but more likely a game changing innovation that has potential to satisfy unmet medical need, is likely a new mode of action, and most certainly is not only approvable but also reimbursable!  The latter needs a step change in clinical outcomes.  So no longer improvements on existing drugs e.g. new delivery methods or me-toos, as Big Pharma will do this themselves.  Regarding reprofiling: there is still a short window of opportunity, but eventually Big Pharma will be doing this. 

What Big Pharma ultimately want to acquire is the game changing new drug, and so that is what the VCs want to invest in.  This will be high value, with a high hurdle rate, necessitating large investment.  The VC has to consider all risk, not just the technological (R&D) risk that is mainly considered- including ability to exit, and shareholder dynamics risk (sufficient funds, dilution etc).  Hence there will be fewer investments, of great amounts, with funds being more focussed. 

Imperial, MVM and SR One are all speaking at Networked Pharma’s Funds & Fundability workshop on June 28th in London http://www.networkedpharma.com/funding, and will share the panel discussion with serial entrepreneurs Andy Richards and Julian Gilbert.


BioSpring Ltd is a member of Networked Pharma Partnership, a not for profit organisation dedicated to assisting development of a new paradigm for drug discover & development

Networked Pharma PartnershipBuilding Innovative Networks in Drug Discovery & Development

A series of workshops are being run during 2012, leading to an international congress in early 2013, which will bring together all stake-holders (Corporate Pharmas, SMEs, CROs, Universities, VCs, CVCs, Research Councils, Charities, Regulators & Government bodies etc.) to formulate the new business model(s) for the future success of the industry.

Follow us:
Twitter @NWkPharma,      #NWkRx

Tuesday, 19 June 2012

Open Innovation in early Pharma: #2



Networked Pharma – Finance (NWkRx F5)

I recently spoke with Harry Wilson of Innocentive’s UK office about Open Innovation & Crowdsourcing in Pharma discovery.

Innocentive originally spun out from Lilly, and their UK office was obtained by acquiring Omnicomplete (itself a spinout of LBS).  They operate as a platform where “seekers” can post their R&D “Challenges”, and solvers post their responses. The seeker often stays anonymous and the responses are held confidentially. Solvers are selected on a basis of submitted plans, with the financial reward only being paid out if solvers meet the pre-defined criteria. In this way, seekers only pay for results, not research time.

Most of their work so far has been pharmaceutical, although they are now diversifying.  Seekers are companies, charities, and other organisation. 

There are three levels of challenge available to a seeker (with increasing price for the service), Brainstorm (self-service using their platform), Premium (which involves their experts) and a Grand Challenge which is “transformative” in the world and is phased with intermediate challenges. The latter involves therapy area experts, and is typified by the recently successfully completed $1m Prize4Life which sought to identify a biomarker for ALS (needed to reduce timescale and costs of clinical trials).  See their case study blog.
Recent developments are;
  • Combining Crowsourcing with Crowdfunding, via the peer-to-peer philanthropy marketplace GlobalGiving, and the Rockefeller Foundation, to crowdsource solutions to problems facing vulnerable communities. Blog.
  • Discussing with VCs the possibility of combining activities in “Prize Venturing
Although neither of these are specifically pharmaceutical, they are interesting as new approaches worth considering.


Siobhan Gibney Gomis, Senior Director of Operations Grand Challenges, and Deputy Head of EMEA, InnoCentive, will be attending the Networked Pharma Funds & Fundability workshop on 28th June in London http://www.networkedpharma.com/funding.


BioSpring Ltd is a member of Networked Pharma Partnership, a not for profit organisation dedicated to assisting development of a new paradigm for drug discover & development

Networked Pharma PartnershipBuilding Innovative Networks in Drug Discovery & Development

A series of workshops are being run during 2012, leading to an international congress in early 2013, which will bring together all stake-holders (Corporate Pharmas, SMEs, CROs, Universities, VCs, CVCs, Research Councils, Charities, Regulators & Government bodies etc.) to formulate the new business model(s) for the future success of the industry.

Follow us:
Twitter @NWkPharma,      #NWkRx

Sunday, 17 June 2012

Open Innovation in early Pharma: #1


Networked Pharma – Finance (NWkRx F4)


I recently spoke with Jordi Rafols of Innoget, regarding open innovation and the Innoget platform. We began by Jordi  distinguished OI from crowdsourcing as follows:

Crowdsourcing:
  • Operates on a shared responses basis, with no confidentiality nor contractual agreements. Individuals post responses to a request and all can see all responses.
  • Good for ideas generation, consumer insights, marketing innovation.
Open innovation:
  • Operates on confidential response basis. Does not pool responses.
Innoget’s website http://www.innoget.com/ acts as a portal for open innovation, where technology requests or technology offerings can be posted, anonymously if desired, and responses are then made via the website.

Jordi will elaborate further on this approach and its application to pharma discovery during Networked Pharma’s Networked Pharma Funds & Fundability workshop at Holiday Inn, Regents Park, London, on 28th June.

The workshop will examine who is funding, what they are funding and what makes a fundable investment, as well as the rise of open innovation & crowdsourcing. Jordi will be joined by speakers from biotech, VC, CVC, Pharma, CROs, BBSRC, the Wellcome Trust, TSB/KTN and others. For more information and to register see www.networkedpharma.com/funding.



BioSpring Ltd is a member of Networked Pharma Partnership, a not for profit organisation dedicated to assisting development of a new paradigm for drug discover & development

Networked Pharma PartnershipBuilding Innovative Networks in Drug Discovery & Development

A series of workshops are being run during 2012, leading to an international congress in early 2013, which will bring together all stake-holders (Corporate Pharmas, SMEs, CROs, Universities, VCs, CVCs, Research Councils, Charities, Regulators & Government bodies etc.) to formulate the new business model(s) for the future success of the industry.

Follow us:
Twitter @NWkPharma,      #NWkRx

Friday, 15 June 2012

The Changing Nature of investing in early Pharma / Biotech: Serial Entrepreneurs' Perspective


Networked Pharma – Finance (NWkRx F3)

I spoke with Andy Richards earlier today (15th June 2012) regarding the perceived funding gap for drug discovery.

Andy’s view is that although there is a gap, it is not as large as generally perceived.  There is much more money available, people interested in investing, and [equity] funding going on, than is generally thought.  It’s just that it is coming from alternative (non-VC) sources which are not recorded in the generally used statistics, such as High Net Worth individuals, CVCs, sovereign wealth funds and pension funds.

Also such investment is being used to grow assets/products for selling off, rather than to build big companies (a point also made by Julian Gilbert in a recent discussion). Consequently there is little infrastructure building or PR activities undertaken, and so such companies and investment deals are much less visible than in previous times!

Both Andy and Julian will elaborate on their perspectives during the Networked Pharma Funds & Fundability workshop at Holiday Inn, Regents Park, London, on 28th June.

The workshop will examine who is funding, what they are funding and what makes a fundable investment, as well as the rise of open innovation & crowdsourcing. Andy & Julian will be joined by speakers from VC and CVC, Pharma, CROs, BBSRC, the Wellcome Trust, TSB/KTN and others. For more information and to register see www.networkedpharma.com/funding.


BioSpring Ltd is a member of Networked Pharma Partnership, a not for profit organisation dedicated to assisting development of a new paradigm for drug discover & development

Networked Pharma PartnershipBuilding Innovative Networks in Drug Discovery & Development

A series of workshops are being run during 2012, leading to an international congress in early 2013, which will bring together all stake-holders (Corporate Pharmas, SMEs, CROs, Universities, VCs, CVCs, Research Councils, Charities, Regulators & Government bodies etc.) to formulate the new business model(s) for the future success of the industry.

Follow us:
Twitter @NWkPharma,      #NWkR
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Monday, 27 February 2012

Future View of VC investing in early Pharma / Biotech: Imperial Innovations


Networked Pharma – Finance (NWkRx F2)

I recently spoke with Nigel Pitchford,  Managing Director of Healthcare, for Imperial Innovations (www.imperialinnovations.co.uk), one of a new breed of early stage Biotech VC investors, regarding the future funding model and open innovation for Pharma innovation / Biotech start-ups.  Before joining Imperial in 2011, Nigel was a traditional venture capitalist in the biotech space, at 3i Cambridge and latterly DFJ Esprit.

Below is a summary of our discussion.  The take-home messages are;
  • Early stage funding model for biotech’s needs to change
  • “Patient Capital” (as in prepared to wait) is necessary for successful “biotech” investment.
  • Tax incentives for investors and more translational funding are required.
  • A new approach to translational project funding in universities is needed, that avoids excessive overheads or the need to spin-out.
  • Open innovation is generally a good idea, and would be greatly facilitated by a new form of marketing exclusivity for first exploiters of products arising from such initiatives.

Funding models
Nigel agreed that the early funding model [for biotechs] needs to change. Without access to public markets VCs are left with the dilemma of funding biotech companies for longer and with ever increasing amounts of capital, hopefully towards a trade sale exit. This continued funding model is directly at odds with what most of their Limited Partners want to see – creating a problem for VCs themselves when it comes to both fundraising, and then later in deploying that capital.  

There is a fundamental mismatch, of both timescales and quantity of money needed, between the needs of early stage biotech’s to discover and develop drugs and so build a company to a reasonable business/valuation; and the requirements of  the VC’s Limited Partners. Hence once new companies were established, insufficient funds were available for follow-on funding rounds (resulting in dilution or fire-sales) and exit was required too soon, so that decent companies with good critical mass could not be built and “the buyers got a good deal”! 

One reason why Nigel joined Imperial Innovations, is it is an evergreen fund with
“Patient Capital” (i.e. willing to wait)
They invest off of their own balance sheet, and have investors that are patient (willing to wait), so that sufficient time is available to develop the drugs, and sufficient funds available for later funding rounds, allowing a solid company to be grown, and “with size comes value”.

Similarly, the Major Pharma Corporate VCs (“CVC”), who are funded by corporate parents, and invest with alignment with their strategic imperatives, have both
“Patient & Plentiful Capital”
And so are more open to funding early stage innovation.

Regarding future funding of early stage innovation, Nigel made several observations;
  • Further tax incentives for early-stage investors would assist with bringing vital start-up capital to fledgling biotech companies.
  • More translational funding is required for the gap between the scientific discovery and sufficient proof of concept for either spin-out or licensing to take place.  Previously there has been tendency to spin-out too soon, but trend is now to keep in-house (university etc) longer, which is good thing.
  • However, if VC or CVC wants to fund some translational or earlier work, it costs more than twice what a research council would pay, because of FEC (full economic costing) and/or start-up costs for spin-out including legal fees etc.  [This is nonsensical, given the risk profile and dearth of risk capital, as money is wasted that could have been used for another opportunity].  A new approach to project funding with a sensible [equitable] costing structure is needed.

Open Innovation
Nigel believes open innovation to be a good idea, not competitive to VCs, and that the sharing of failures would be very beneficial - e.g. avoiding a company repeating another’s mistake (with a drug etc) [or showing up a profiling opportunity].

However, IPR ownership is of course key.  Or rather, it’s the ability to exploit exclusively that is necessary (to get ROI).  Traditionally this is via ownership of IPR, but increasingly there are now mechanisms for marketing exclusivity other than IPR ownership - namely Patent term extension and orphan drug legislations which provide for marketing exclusivity.  Nigel’s suggestion is for the government to introduce a form of market exclusivity for products / services arising from open innovation [where IP ownership is complex or unclear, or IPR absent] – perhaps a form of first to exploit protection.



BioSpring Ltd is a member of Networked Pharma Partnership, a not for profit organisation dedicated to assisting development of a new paradigm for drug discover & development

Networked Pharma Partnership; Building Innovative Networks in Drug Discovery & Development

A series of workshops are being run during 2012, leading to an international congress in early 2013, which will bring together all stake-holders (Corporate Pharmas, SMEs, CROs, Universities, VCs, CVCs, Research Councils, Charities, Regulators & Government bodies etc.) to formulate the new business model(s) for the future success of the industry.

Follow us:
Twitter @NWkPharma,      #NWkRx

Thursday, 23 February 2012

Future View of VC investing in Pharma / Biotech Innovation: MVM Life Science Partners LLP


Networked Pharma – Finance (NWkRx F1)

I recently spoke with Hugo Harrod, partner of MVM Life Science Partners LLP (www.mvmlifescience.com), one of the established biotech VC investors, about the current state of investing into and sourcing innovation / novel drugs within the Pharma / Biotech sector.

Below is a summary of our discussion.  The take-home messages are;
  • Future demand side (market) fundamentals for therapies are strong.
  • Successful VCs need to invest in non-traditional approaches to drive returns. These will encompass personalised medicines, novel biologics, medical devices, healthcare IT and creatively de-risked pharma programmes.
  • Replicating big pharma drug discovery is a difficult model for venture capital.
  • There is a shrinking pool of traditional venture capital but limited funding is also available from other sources. Some of these sources are less focused on financial return but VCs bring the discipline to grow value.


Future view for Pharma /Biotech Sector?

In general, the future for the industry is positive because of the need to innovate to improve the efficiency of healthcare;
  • Shrinking healthcare resources in the West will force adoption of innovative cost-saving technologies (eg Cheetah Medical’s fluid management technology and Accuvein’s vein location device).
  • The rise of the emerging markets is particularly relevant to biotech. This is because people throughout the world are increasingly suffering from Western diseases and demand the same products. These products are protected by global (and widely upheld) IP rights. Suddenly biotech is looking at markets of 3bn people versus 600m in the traditional USA + Europe+ Japan Pharma geographic reach.  

What is the future of VC Investment in biotech?

The old model of funding novel targets from discovery through to clinical proof of principle (PoP, phase 2a) has driven mixed returns for VCs. In retrospect this is not surprising given the success rate in drug development over the last few years. In part this is because the easier to treat diseases have now been addressed and there is generic competition, so that we are left with more challenging indications e.g. cancer, Alzheimer’s.

So what is the future for VCs that address this sector?  The sector will be slimmed down, with survivors adapted to survive; looking at non-traditional creative approaches in which pharma is less strong (eg BioVex’s oncolytic viruses). We are going to see innovation come from some unlikely sources. For example, medical device based approaches are appearing in previous bastions of pharmaceutical therapy such as renal denervation in hypertension and deep brain stimulation in Parkinson’s. 

Innovation / discovery Funding in the Future

The supply of venture capital is shrinking, and Big Pharma is downsizing, outsourcing innovation, and reducing discovery funding. 

So, where is all this drug innovation and the funding for it going to come from?
Some of the slack will be picked up by non-traditional ventures investors, such as corporate VCs and disease-focused charities. Governments have had a poor track record of stimulating discovery but they could do a better job through tax incentives and other tools that incentivize investors.

What is clear is that product demand in emerging markets and cost-cutting imperatives in established ones will create terrific opportunities for new technology. Those VCs that survive will thrive in the new world order.

                                                                                                 


Networked PharmaBuilding Innovative Networks in Drug Discovery & Development

BioSpring Ltd is a member of Networked Pharma, a not for profit organisation dedicated to assisting development of a new paradigm for drug discover & development

A series of workshops are being run during 2012, leading to an international congress in early 2013, which will bring together all stake-holders (Corporate Pharmas, SMEs, CROs, Universities, VCs, CVCs, Research Councils, Charities, Regulators & Government bodies etc.) to formulate the new business model(s) for the future success of the industry.

Follow us:
Twitter @NWkPharma,      #NWkRx