Innovation is at the Heart of Human Health
This year is the 57th anniversary of the polio vaccine which was introduced in 1955. Why does this matter to people alive in 2012?
Innovation is at the heart of human health and the eradication of preventable disease. In 1916, the United States was in the midst of one of the worst polio epidemics in history. The disease came without warning and because of its mild flu-like symptoms many children died and/or were paralyzed overnight. Doctors and parents were horrified; feeling helpless in preventing such tragic outcomes. In that same year, Jonas Salk was two years old and living in New York City with his parents. Salk was born to Jewish parents of immigrants from Russia. He came from humble roots and had no social advantages.
Polio was considered to be the most serious public health problem in the post-war United States. In fact, the longest serving President of the United States, Franklin Delano Roosevelt, suffered from the debilitating effects of polio and this lead to the disease having a high profile as a research project. In 1955, as a result of Salk’s research work, the polio vaccine was first introduced.
Now that polio is eradicated in the United States, and throughout most of the world, the human population suffers from other diseases which have risen in prominence. Cancer, heart disease, diabetes are all new killers. These new killers are challenging society and governments to find new ways to improve human health. Innovation is essential to the eradication of these diseases and research is ongoing around the world with this purpose in mind.
What has changed from Salk’s day is that innovation has become a global activity and solutions are coming forward from unexpected places. New life science companies are being formed in the USA and Canada, Europe, Asia, Latin America and elsewhere, and each new company channels innovation and the fruits of research into a global marketplace.
In 1999, TVG developed C21 BioVentures™ (C21) conference in order to tap into the incredible innovation that happens in the northern California region. C21 was termed an “engine of innovation” best symbolized by a virtual place termed Silicon Valley. C21 continues to showcase innovation. Come to Napa, California and meet this year’s innovators. Experience how C21 taps into the breadth of skill, experience and knowledge found in Silicon Valley, and vested in universities such as Berkeley, Stanford and UCSF; venture capital companies on Sand Hill Road in Palo Alto and elsewhere in the Bay Area; young start-up companies and mature biotechs which have now become divisions of big pharma companies, such as Genentech/Roche and Chiron/Novartis.
The anniversary of the introduction of the polio vaccine is an important milestone, because it shows that disease can be eradicated by a concerted effort to solve a specific problem. We live in a world that has been created by the application of science and technology. Nearly everything we use in our daily lives is the product of scientific thinking. The computer I am writing on; the electricity that powers it; the internet that will deliver this blog; the lights overhead in my office; the automobile that brought me to work, and on and on. And yet, the great innovations and the scientists, inventors, entrepreneurs, and investors who have all created the technology that feeds, clothes and houses us, are almost invisible to the general public.
When innovation and action are combined, to solve specific social problems, it is amazing what can be done. The history of science has many examples. Salk left another legacy which is not widely known. His sole focus was to develop a safe and effective vaccine as quickly as possible, without any interest in personal profit. When Salk was asked in a television interview who owned the patent to the vaccine, Salk remarked “There is no patent. Could you patent the sun?”
Who do you think will be the next Jonas Salk? Where will he/or she, come from?
Dr. Robert Lee Kilpatrick
Partner, TVG
BioPartnering Europe Evolves: Structure Implies Function
The longest-running biopharma partnering event in Europe took place in London this past October, after 19 years of sustained success. BioPartnering Europe (BPE) was first produced in 1993 at a time when few business development professionals used email, or accessed websites, or used social networking sites. In 1993, most biopharma companies were in California, Massachusetts, and pockets of Western Europe. Hence the need for BioPartnering Europe, which brought US and European biopharma companies together to network and do deals. The event (structure) was created to facilitate partnering (function).
Let’s fast-forward to 2012, a full 20 years later, and the use of email, websites, online databases, and social networking sites is ubiquitous. In fact, as Nicholas Carr points out in his recent book, ‘The Shallows: How the Internet is Changing Our Brains’, this phenomenon is making a much bigger contribution to communication than Johannes Gutenberg’s use of movable type printing in 1439. In addition, biotech is no longer restricted to the west and east coast of the US, or Western Europe, but rather it has become both an industry and a global phenomenon.
Yet another development has occurred in this industry, which is that biotechnology has expanded into many areas of the economy, including human, animal and plant health, foods, energy materials, and industrial applications – what is termed the “Bioeconomy.” The driver of the economy is demographic. On the one hand, the population of the earth has now reached 7 billion and rising. As recently as 1927, within living memory, it was 2 billion. Plus, for the first time in history, over half of human beings live in cities. There has been a massive increase in the number of people making claims on global resources. Over 95% of this population growth is taking place in the so-called developing world. In Europe, North America, and Japan, the population is either stable or has been shrinking, and the percentage of these populations that is aged continues to rise. Most of the world’s people are young and poor and most of the world’s materially wealthy people are old or aging.
At the same time there is huge demand for materials to support a rapidly expanding population of young people, and to also support the health and wellbeing of an aging affluent group of people.
The bioeconomy is where all these forces come together. The technologically advanced economies are working closely with the emerging economies. Both have a stake in the success of solutions being developed to enhance the quality of human life, and doing so in a way that is sustainable – in a nutshell, to feed, clothe, heal and power the world. The issues that face governments, companies, investors, and entrepreneurs now are different from what they were in 1992 when BioPartnering Europe was envisioned. At that time, the need to network US and European biotech companies was stimulated by newly-elected Vice President Al Gore, Commerce Secretary Ron Brown, and officials at the US Commercial Service in the American Embassy in London. They rightly believed that biotechnology and information technology had the ability to transform economic life in fundamental ways. BioPartnering Europe was a first step in the direction towards what is happening now, in 2011, a networked world.
BioPartnering Europe was the solution to the problem of how to connect the leaders of the infant US and European biotech world. Now, looking ahead to 2012, BioPartnering Europe is evolving to meet new needs. The small club that was the biotech industry in 1993 is now large and growing. It has been estimated that the number of people directly involved in the biotech industry globally is 8 million. This is no longer a club, but rather a maturing industry. The need in 2012 is to create networks to link stakeholders in the life sciences industry on a global scale, employing conferences, face-to-face meetings, and web-based business networks to facilitate on-demand connections.
In 2012, BioPartnering Future EUROPE (BPFE) evolves from BioPartnering Europe (BPE). This change is much more than a re-branding exercise. BioPartnering Future EUROPE is the next step in networking the European life science industry – all of the European bioeconomy – starting with biopharmaceuticals. Phase I will take place in Brussels, 7-9 October, 2012, and the aim of the event is twofold: 1) to bring all of the stakeholders in European biopharmaceuticals together in one place for partnering; 2) to bring the world to Brussels to partner with European companies and institutions – from the US and Canada; China, India, Japan, Korea; Brazil, Chile, Argentina, and Uruguay; Australia and New Zealand; Russia; and other Asian and Middle Eastern regions. The next phases are focused on bringing all of the life sciences together.
Currently, no partnering event in Europe is comprehensive in this way. BioPartnering Future EUROPE has strong support from the three regions of Belgium: Brussels, Wallonia and Flanders. Belgium is joined by many European life science regions, including the UK, The Netherlands, Germany, France, Switzerland, Sweden, Denmark, Finland, Spain, Italy, and Hungary, for example.
Various high-level pan-European groups are working closely with TVG to implement this strategic vision, including the European Commission, EuropaBio, European Biotechnology Network, and European Biopharmaceutical Enterprises. There is a huge need for such a networking and partnering event, such that many of the world’s leading pharma companies support it, including Novartis, Astra Zeneca, Roche, Merck, BMS, Pfizer, and GSK, for example.
A unique feature of BioPartnering Future Europe is that it is part of a global networking platform that includes BioPartnering North America in Vancouver; BioPartnering India in Bangalore; BioPartnering China in Shanghai; BioPartnering Latin America in Rio De Janeiro, plus specially focused events such as C21 Bioventures in the Napa Valley of California which showcase small private biotechs, and Ausbiotech, the annual national conference in Australia, recently held in Adelaide.
In summary, BioPartnering Europe (BPE) was created in 1993 to address specific industry needs at that time. Looking ahead to 2012, BioPartnering Future EUROPE (BPFE) is designed using a consortium approach to bring together Europe’s leaders: leading biopharma companies; leading C-level executives; leaders from the investment world, from government, and from scientific research. The use of the word “Future” in the name of the conference is deliberate. It reflects the way Europe is going, towards an advanced knowledge-based economy driven by the application of new technologies and new thinking. BioPartnering Future EUROPE is being inspired by European leaders themselves, to enable Europe to be more competitive in a rapidly changing global economy.
As I learned in an anatomy and physiology class at Berkeley: structure implies function. Hence, as the function changes, so does the structure and the structure of BPE is changing to BPFE to serve new and very exciting realities.
Dr. Robert Lee Kilpatrick
Partner, TVG
Growing Life Science Business in the Pacific Rim: BioPartnering North America
The Pacific Rim refers to places around the edge of the Pacific Ocean, the world’s largest. On the northeastern rim is the U.S. and Canada with their vast innovation capabilities, and natural resources. On the northwestern rim are the massive production capabilities and the expanding markets of Japan, Korea and China. These economies are also seeking to increase their global success through innovation, by harnessing science and technology, particularly the life sciences.
The southwestern rim is home to the “Asian Tigers” such as Malaysia, Singapore, Vietnam, and Indonesia, together with Australia and New Zealand – all major centers for the development of the life sciences. The southeastern rim is home to half of Latin America, where the life sciences are increasingly being used in agriculture and energy development.
This is a massive region and there is a lot going on. Asia is now the fastest growing region in the world. The west coast of the U.S. and Canada remain the most innovative region in the world. This is especially true for the life sciences, with large clusters in the San Francisco Bay Area, San Diego, Los Angeles/Orange County, Portland, Seattle, Vancouver and Alberta.
After 10 years’ of success, TVG is focusing its BioPartnering North America (BPN) on the Pacific Rim because this is where a lot of life science business will be taking place in the years to come. We plan to build on close ties with industry leaders in the Pacific Rim to create a unique opportunity for the U.S., Canada, and Europe to meet leading life science companies from Asia. In previous years, we have had delegations from Japan, Korea, China and India, which have greatly expanded networks, and it is our intention to expand this aspect of BioPartnering North America (BPN).
Vancouver is strategically placed to be able to play a three-pronged role in this plan: 1) as a gateway from North America to Asia; 2) as the top of the Pacific Biotech cluster in North America – Vancouver in the north to San Diego in the south – the largest concentration of life science institutions in the world; 3) tapping into Canada, which is the fourth largest biotech cluster in the world. Europeans, such as the Italian Trade Commission (ITC), UBI France and UKTI will be able to assist their client companies to greatly expand their business connections.
BioPartnering North America is scheduled for February 26-28, 2012, and sits in the calendar between the JP Morgan investor event in San Francisco in January, and the BIO CEO & Investor meeting in New York City in March. What makes BPN different is that delegates can have quality meetings with potential partners, from over 30 countries. Using TVG’s partnering software product, ‘biopartnering.com’, all delegates can pre-arrange meetings up to 2 months prior to the event, and during the event. Follow-up is possible using the system, after the event has concluded. TVG’s biopartnering.com software product is widely viewed as the “Gold Standard” of the industry, and is used with success by thousands of life science companies each year.
TVG acknowledges that a global life science industry is forming, and not just in the world of biopharmaceuticals, but also all areas of the economy, what is termed the “bioeconomy.” Wikipedia defines the bioeconomy as “all economic activity derived from scientific and research activity focused on understanding mechanisms and processes at the genetic and molecular levels and its application to industrial processes.” The next phase in the evolution of BioPartnering North America is to further develop the Pacific Rim network because all aspects of biotechnology is being advanced in this region. BPN will remain a biopharmaceutical event in 2012, and as our network expands, we will include other industry categories in future.
All events must serve a purpose. The purpose of any event changes over time. When BioPartnering North America was launched in 2003 many people were not aware that there was a vibrant biotech community in British Columbia. Now, B.C. has many leading institutions, including the CDRC, Genome BC, UBC, Simon Fraser University, plus large and small life science companies, which are world-renown. TVG and the stakeholders in BC have experienced how an event such as BPN can catalyze business growth and development. This is true for government institutions and well as private sector groups.
Dr. Robert Lee Kilpatrick
Partner, TVG
Revolution in drug discovery
There has been a revolution in drug discovery. No longer are the forces of medicinal chemistry, pharmacology, toxicology and formulation in the hands of a few powerful mega cap pharma companies and concentrated in enclaves of Europe and the USA. The touch-paper lit over a decade ago by the success of small biotech, adopting mega cap know-how to originate NCEs, has exploded by the restructuring of mega cap and the pouring out of its R&D talent, know-how and resources into the creation of new CRO service providers. These providers have evolved into an entrepreneurial network across the globe - connecting nodes such as Cambridge in the UK with Cambridge Mass, Lille, Hyderabad, Basle, Singapore, Vancouver, Shanghai, Dundee and La Jolla etc. This network can be accessed on a semi-virtual or wholly virtual basis by a fresh breed of drug discoverer for whom discovery was previously denied and only for the resource rich.
The revolution allows the new breed who have a deep insight into a novel disease causing biology to become drug discovery “avatars” and on a virtual basis to enter parts of the global provider network to convert their biology into a real disease impacting chemical asset.
For the new breed to be successful as ”avatars” they have to pick up and learn new know-how and tricks, surround themselves not only with project managers to regulate interaction with their provider network but also seasoned (even pre-revolutionary) experts that can advise, challenge, guide, set deliverables for the SAR, ADMET, SBDD, CMC etc. work of the providers.
If you feel like you are one of the new breed and has what it takes to be an “avatar” then the Wellcome Trust’s Seeding Drug Discovery could be for you.
If successful you will be joining a new dispersed Seeding Drug Discovery enclave whose projects span the world’s time zones from Queensland to Bangalore, Leuven to Manchester, Edinburgh to San Fransisco. Importantly, partnerable NCEs have emerged from the existing semi-virtual projects in disease areas such as allergy and asthma, atrial fibrillation and memory loss which means the revolution continues!
Seeding Drug Discovery is just one of many funding initiatives from the Wellcome Trust. We are a global charitable foundation dedicated to achieving extraordinary improvements in health by supporting the brightest minds. Our vision.
Richard Seabrook
Head of Business Development
Technology Transfer, Wellcome Trust
For more information about Seeding Drug Discovery, email us at techtransfer@wellcome.ac.uk, call +44 (0)20 7611 8202 or visit www.wellcome.ac.uk/sdd.
Europe getting jiggy with it
All across Europe right now, as funding season opens for the main European Commission funding programme FP7, companies and researchers are experiencing the hitherto undiscovered experience of getting up close and personal, quite often with complete strangers.
The mating game of the Framework Programme Seven call is a strange one for many. Academics are used to the familiar faces and routines of a lifetime within the same small circle, in many ways the gentry of science – plenty of close marriages there to protect the bloodline. While small companies are the wide boys of the game – circling warily and nervously, looking for that elusive marriage that brings status and money that they can squander on some high risk turn of the card…. Finally, the large co.s, like enormous crocodiles basking in the sun, watching what’s going on, sometimes striking successfully and other times a little too slow off the mudbank.
Let’s leave out the big co.s, the machinations of internal workings needed to get permission to do anything within 6 months of initial request, usually counts them out of the FP7 tango. The academics and small companies provide enough entertainment to last the season. As Europe wonders where all the money went (a familiar lament within biotech for many years now, glad you could join us), the increasingly SME-oriented Framework Programme is financing marriages never seen before.
The game starts with a jolly good idea from a company or academic group. At the very start, the expectations are wildly different – the academic daydream is another 3 years of secured funding and a step in the right direction towards that Nobel prize, while the company will be watching the dwindling coffers, feeling the hot breath of investors on their necks and looking for the dreamy partnership of a large pharma and lots of lovely money (don’t worry dear readers, it is crushed early in the process).
The next step is to read the call for proposals fully and realise that it wasn’t written just for you – sometimes it has impertinence to suggest that you might not be able to do it all by yourself and that you may have to bring in one or two other people. Phooey say the applicants and they start eying up the contenders on the dance floor. Academic groups will be generally looking for other academic groups to start with – stay in your comfort zone, before realising that you have just allocated 99% of the budget to other academics and that call did mention 35% needing to go to SMEs. ‘What on earth do they need all that money for?’ is the lament and they start the messy business of trying to understand how on earth their brilliant research could actually leave the lab and fall into the grubby hands of the wide boys.
The wide boys, I mean small companies, on the other hand, have come up with a wizard way to spend the money all on themselves, even though they have a staff of 6, and that includes Chris who makes the tea and fills the pipette boxes. And surprisingly, for companies often borne of academic innovation, the view back into academia for partners is rather cloudy, particularly beyond the close academic group that may have provided the founding technology.
But the dance finally starts with a few contacts and the general idea that their various talents might contribute towards the topic of the EC call. It starts slowly, after all, it’s weeks until the deadline…with nicely phrased suggestions and plenty of pretending that you know what the hell one of the others is talking about. There will be a mad one – it’s the law – and your project idea will suddenly grow horns and charge off into the next field, scattering innocent victims left right and centre. If you are lucky, somebody will see sense and ask why a project aimed at developing a new therapy really needs a floating laboratory in the Med and technicians with see through labcoats or the need to smuggle snails out of Chile in your pockets.
While you are fitting in occasional project conversations around the edges of your usual full time job, time is ticking on – without realising it, the band has finished the drum solo and is moving on towards the grand finale. The deadline, once so far away is suddenly next week and people find themselves taking off all their clothes without even asking the surname of their partners.
Luckily, the terror of an imminent deadline overcomes all shyness (and madness) and the project idea rapidly finds a more sensible focus, especially after you realise that you forgot to add 60% overheads onto all your costs and have to cancel the order for the transparent yacht and coat with snail smuggling pockets.
One final night and day of frenzied activities, where children are forgotten, coffee is drunk cold and you have shouted (through the magic of Skype) at somebody with a Nobel prize for chemistry, the proposal is submitted. You emerge blinking into the sunlight (well, rain if in Brussels), realise you have just spent a torrid night with a group of semi-strangers and slowly put your clothes back on. You check what their surnames were from the project description (just to make it respectable), smile in an embarrassed fashion at each other and survey the scenes of devastation in your email box and waste basket.
Don’t worry, you’ll recover and you will do it again next time, you floozy.
Claire Skentelbery
Secretary General
European Biotechnology Network
The European Biotechnology Network is part of a charitable foundation with the mission to build partnerships across the biotechnology sector in Europe. As well as a directory with over 2400 R&D active company listings, the Network runs a Biotechnology Funding Hub which tracks research funding available to companies across the globe, including FP7 and NIH funding programmes. It works with partners all over the world to build the right partnerships for successful delivery of biotech to the market, field and clinic. Individual membership is free of charge so come an join the family!
It is time for Latin America
In 2009, Robert Kilpatrick and I decided to bring the BioPartnering events to Latin America. The main objective was to create business opportunities for local life sciences companies and to expand horizons for international companies into the region.
The decision proved to be right. Latin America is experiencing robust economic growth in comparison with other regions that were strongly affected by the 2008 financial crisis. Policies in several Latin American economies that help control deficits and keep inflation low, combined with strong international demand for commodities like iron ore, tin and gold, are encouraging investment and fueling much of the growth. The region’s economy is now growing at the rate of 4-5 percent.
In terms of life sciences, we also note a strong development in the last couple of years. Recognized competence in research areas, such as genomics and stem cells, together with recent developments in the areas of food production and bioenergy are some of the factors that are calling attention to Latin America. The results are becoming clear: international companies are expanding their scouting programs into the region, local corporations are starting to invest in innovative projects, new and dedicated life sciences venture capital funds are being created, the number of start-ups companies is growing and universities are establishing technology transfer offices.
It is also clear that there is still much to be done to include Latin America countries as major players in the life sciences and biotechnology worldwide. There are many challenges, including regulatory issues, access to biodiversity and infrastructure, especially for biological product scale up and manufacturing.
The first BioPartnering Latin America was held in Rio de Janeiro in September 2010. With 15 sponsors and 35 supporters, we were able to join together over 200 executives from 20 countries. A great success for our first meeting! For 2011, we decided to move the event to São Paulo, the main business city in the continent and one of the biggest in the world.
By now, a strong group of companies, including six of the main international pharma, are sponsoring BPL 2011. Equally important, we will have the tech transfer offices of the main universities and research centers (for example the University of São Paulo which is the biggest university in Latin America) presenting their technologies and a group of prominent start ups in the region, coming from the Mercosul* and other countries.
*Mercosul: Argentina, Brazil, Chile and Uruguay
I look forward to seeing you in São Paulo this September!
Eduardo Soares
CEO & President, Biominas Brasil
Ola Brazil: Latin America’s BIGGEST Market Accelerates
Brazil is familiar territory to the pharmaceutical industry, which has been operating in the country for decades. Today, with its stronger economic outlook, political stability, and a public healthcare system that gives all residents access to basic treatment, Brazil offers great expansion opportunities to companies.
According to a report from Cutting Edge Information, Emerging Markets Clinical Development Series, Brazil is on the verge of emerging into a world power, perhpas even surpassing the other BRIC countries (Russia, India, and China). It is already the largest market in Latin America, representing 38% of the market compared with 21% for Mexico, 16% for Venezuela, and 9% for Argentina.
Brazil’s healthcare spending represents almost 8% of GDP, and of its population of nearly 200 million people, 20% have private insurance and make us both private and public-health services.
- Kim Ribbink
PharmaVoice Magazine, PharmaVoice
To read the full article, please click here:
http://www.pharmavoice.com/pdfs/2011/pv-0111/PV0111_OlaBrazil.pdf
About PharmaVoice
PharmaVOICE magazine, reaching more than 25,000 BPA-qualified life-sciences executives, is the forum that allows business leaders to engage in a candid dialogue on the challenges and trends impacting the industry. PharmaVOICE provides readers with insightful and thought-provoking commentary in a multiple-perspective format through forums, topics, and articles covering a range of issues from molecule through market. PharmaVOICE subscribers are also kept abreast of the latest trends and information through additional media resources, including WebLinx Interactive WebSeminars, Podcasts, Videocasts, White Papers, E-Surveys and e-Alerts. Additionally, PharmaVOICEMarketplace.com provides a comprehensive directory of products, services, and solutions for the life-sciences industry.
To Raise Your VOICE, contact feedback@pharmavoice.com.
Is the Venture Capital Model a Dead End for Early Stage Biotech?
Venture capital funding is considered to be the lifeblood of any promising biotech company but because of several years of recession and timid investing the industry has suffered. The recent PwC MoneyTree and Dow Jones VentureSource reports show some positive signs that investors are getting back in the game. While the number of deals continues to shrink, the amount of cash invested has actually increased. This means fewer but fatter deals for biotechs who can prove they are worth the risk. The data also reveals a trend of venture dollars moving away from early stage companies and into increasingly later stage deals that offer a bit more security and a faster turn around for investors.
“If you don’t have a clear pathway through the FDA, it’s tough to get funding these days. It clearly is raising the bar on what type of companies will get funded by the venture capitalists,” noted Tracy T. Lefteroff, global managing partner of the venture capital practice at PwC.
Related Event: C21 BioVentures 2011
May 24-26, 2011
The Meritage Resort
Napa, CA, USA
Find out more
First time deals are sharply down
During Q1 of 2011, 35 life science companies received venture capital funding for the first time, attracting $129 million. This data represents a sharp 40% decline in the number of companies and a 46% drop in dollars invested when compared to the Q1 of 2010.
“First-time funding is expected to remain challenging for the sector, with fewer deals and smaller deal size for fledgling companies,” Lefteroff observed. “Lengthy and costly R&D and uncertainty in the regulatory approval process continue to drive more investors toward follow-on and later-stage deals with companies that are closer to successful product launches or the exit market,” he continued.
So what does this mean for the early and mid stage, cash strapped biotech company? What impact will it have on innovation? Is this the beginning of larger changes in the way we discover, develop and commercialize tomorrow’s medicine?
Tell us what you think by leaving your comments below. Continue the conversation with us at C21 BioVentures on May 24-26 in Napa, California. C21 is the leading conference for early stage biotech investing and partnering. With an all-star advisory board of leading VCs, a world-class program of experts covering current issues and unparalleled access to meet face-to-face with top pharma and investors, C21 is a must attend for leaders serious about moving their business to the next level.
Looking for more? Related stories: VC Deal Terms: Double-Dipping in the Life Sciences - Forbes.com
2010 Venture Financing in Review — A Year of Slow Recovery - Cooley LLP
More VC But Fewer Deals Signal That Investors Are Becoming Even More Risk Averse - GEN
Biotechnology startups struggle as venture capitalists seek quick hits - SF Public Press
- Jonathan Inman
Marketing Manager, TVG
About TVG
Since 1992, TVG has been connecting innovators and leaders in the life science industry across the US, Canada, China, Europe, Australia, Latin America, India, and Asia. TVG enables a global network that supports life science companies as they build new relationships, enter new markets, and create new products. Our 19-year track record (1992-2011) of success is founded on our deep industry knowledge, our integrity in business, and our powerful network of valuable relationships. We are judged by the company we keep and have helped over 3,200 life science companies achieve their business goals. We continue to expand our network into new markets in Latin America, China, and India — fulfilling our vision to be Your Global Life Science Network.
Raising Capital in a Tight Market
The global financial crisis has made it challenging for the biotechnology industry to raise capital to fund innovation. Experts say venture capital money is still available, but often the VC community is looking for lower-risk, short-term projects.
As a result, biotech companies are increasingly looking to alternative sources of capital. Experts say this is a natural reaction to normal business cycles, and when venture funding dries up companies embark on other strategies to survive.
For example, in 2008 and 2009 industry leaders say alliance deal making and applications for grants increased.
At The National Cancer Institute, applications for the SBIR grant program increased by almost 70% between 2008 and 2009.
This increase was a direct reflection of funding drying up in the venture capital market,” says Michael Weingarten, director of the NCI’s SBIR program. “We became the only game in town for many companies and a lifeline for biotech companies looking to fund new innovation and new technologies in the cancer field.”
The funding markets continue to be very tough, which is not a big surprise given the macro environment, says Oliver Fetzer, Ph.D., president and CEO of Cerulean Pharma. “There continues to be a fair amount of uncertainty in terms of the direction both biotech and venture capital are going to go,” he says. “Society is expecting more innovative products at potentially lower prices rather than higher prices. This creates a pricing environment that makes it tougher for biotech companies to find a clear path to profitability.” At the same time, Dr. Fetzer says, the venture capital firms are finding themselves in an environment devoid of many big success stories.
- Denise Myshko
PharmaVoice Magazine, PharmaVoice
To read the full article, please click here: http://bit.ly/Raising_Capital_ina_TightMarket
About PharmaVoice
PharmaVOICE magazine, reaching more than 25,000 BPA-qualified life-sciences executives, is the forum that allows business leaders to engage in a candid dialogue on the challenges and trends impacting the industry. PharmaVOICE provides readers with insightful and thought-provoking commentary in a multiple-perspective format through forums, topics, and articles covering a range of issues from molecule through market. PharmaVOICE subscribers are also kept abreast of the latest trends and information through additional media resources, including WebLinx Interactive WebSeminars, Podcasts, Videocasts, White Papers, E-Surveys and e-Alerts. Additionally, PharmaVOICEMarketplace.com provides a comprehensive directory of products, services, and solutions for the life-sciences industry.
To Raise Your VOICE, contact feedback@pharmavoice.com.
Get it ($$), while the getting is good | Partnering is on the upswing, so start now for success
Have you heard? We’re on the upswing! Venture capital, according to PWC MoneyTree, is already higher in 2010 Q3 than it was in all of 2009. And, as we recently reported in the California Biomedical Industry 2011 Report, 53 percent of surveyed California biotech CEOs plan to add workforce to their operations this year. Another 48 percent of the respondents believe that a merger/acquisition is possible in the next year.
What’s the significance of this? That you had better get out there and find a partner, an investor, or a new source of capital before someone else does. And increasingly, the action is global. Just look at the recent deal flow: Daiichi Sankyo’s acquisition of Plexxikon, Servier’s partnership on XOMA’s anti-inflammatory agent, Galderma’s expansion of its collaboration with NovaBay Pharmaceuticals. That’s why we are bringing the world to your doorstep at BayBio2011 | Powering Global Innovation. We’ve expanded our conference to a two-day format with global reach.
No other region in the world boasts the economic vitality, intellectual superiority and entrepreneurial go-get ‘em than Northern California. BayBio2011 | Powering Global Innovation is dedicated to increaseour region’s connectivity to the global community. Here’s how we’re doing it this year:
- Top notch speakers, including Dr. Jorg Reinhardt, Chairman of Bayer HealthCare and Myrtle Potter, renowned author and healthcare expert, formerly president and COO of Genentech from 2000-2005
- Eight tracks and 32 best practice sessions dedicated to financing, emerging markets, business development and more
- Company presentations from Stanford, Berkeley and UCSF’s best start-ups and emerging companies to world class investors
- Partnering Forum to collaborate with Merck, Genentech, Abbott, Elan, Baxter and more. (Partnering Forum powered by TVG’s biopartnering.com)
- Career Fair anchored by Bayside Solutions, Codexis, Fibrogen, Gilead, Johnson & Johnson, MedImmune and Solazyme
- Inaugural Bay Area BioGENEius Challenge for high school students to identify the scientific leaders of tomorrow
Come share ideas, learn best practices for doing business globally, connect with global leaders, present to investors and meet with potential partners. There are opportunities once again!
- Gail Maderis
President and CEO, BayBio
About BayBio
BayBio is Northern California’s life science association. We support the regional bioscience community through advocacy, enterprise support, and enhancement of research collaboration. We maintain Northern California’s leadership in life science innovation by supporting entrepreneurship, science education and life science career development through the BayBio Institute. Our members include organizations engagedin, or supportive of, research, development and commercialization of life science technologies. For more information, please visit: http://www.baybio.org
Pharma-biotech partnerships: creative approaches to doing the deal
Research and development partnerships between big pharma and the biotech sector are now a vital component in bringing new medicines to the market - so much so that securing the best molecules for the best price has become a core competency for big pharma companies.
The relationship between pharma and “biotech” (i.e. small, start up drug discovery companies) is now mature, and mutually dependent. Declining productivity from in-house R&D operations means big pharma is becoming more and more reliant on external alliances to produce the medicines of tomorrow. Conversely, small pharma and biotech companies with limited cash reserves need to find big pharma partners to help them develop and bring their drug to market.
Around $25 billion was spent by big pharma in licensing deals and other R&D alliances in 2010, a figure which looks set to continue growing over the long term.
The dynamics are clear when pharma and biotech start to negotiate on licensing; big pharma won’t have to pay as much if it buys into a molecule at phase I or earlier, and will face less competition from other big pharma companies looking to do a deal. But the chances of the molecule being a failure are high.
The alternative is to sign a deal only once a drug has shown proof of concept in phase II or later - but prices are higher, and competition for the deal is greater. Even then, its success is far from guaranteed.
Figures suggest that the trend for pharma is for a greater proportion of deals to be done in phase III. Statistics compiled by Deloitte in 2009 showed 35% of deals were done in late stages, though early stage deals were still more common, accounting for 41 per cent.
Meetings and molecules
Partnering conferences are one of the prime means for pharma and biotech to meet and exchange information, TVG’s recent BioPartnering Europe being one of them.
Speaking at the event, Dr Chris Brown, director of International and Primary Care, Pfizer, explained how his company goes about finding partners.
“Our collaborations span every area of development. We recognise that some of the most exciting science happens outside the walls of Pfizer.”
Dr Brown says Pfizer uses a number of means to identify promising molecules - by attending partnering conferences, using pipeline databases, venture capital intelligence and company visits. Promising ideasgo through an initial screening (answering the basic question of whether or not it aligns with the company’s strategy) followed by analysis and due diligence, with assessment from the science, manufacturing, commercial and finance side of Pfizer. Then the company’s business development committee will follow through negotiations with the various deal structure options on the table.
Pfizer is interested in local, regional and global opportunities to partner. “We are looking for late stage compounds with a broad geographical scope. A deal with Pfizer can provide a company with sales and marketing know-how,” Brown says.
Dr Robert Kilpatrick is founder and partner of TVG, which runs the BioPartnering conference. He says that because biotechnology is now a global industry, partnering needs to take place in a variety of ways- between large and small companies; Western and non-Western; established and new; and virtual and bricks and mortar. “Openness to new thinking is combined with access to new markets and novel deal structures, so what is taking place is now termed ‘creative partnering’,” he says.
TVG launched BioPartnering Europe in 1993 as one of the first life science partnering conferences. This year we have held high profile events in three emerging markets - BioPartnering India in Bangalore, BioPartnering Latin America in Rio de Janeiro and BioPartnering China in Shanghai.
“Partnering is just being adopted in these markets and there is a learning curve involved. TVG has also learned a lot about partnering around the world because we have worked with over 5,000 companies overa 20 year period,” he explained.
This year’s BioPartnering Europe event brought together more than 450 companies from 30 countries, including many biotech companies eager to talk to pharma licensing executives and persuade them that theirmolecule or technology was worth investing in.
One company was Swiss firm Telormedix, a biopharmaceutical company focused on targeted immunity in the treatment of cancer. Their lead product TMX-101 is moving towards clinical trials in bladder cancer and the company is now looking for partners. Johanna Holldeck, Ph.D., chief executive, who has worked with many big pharma companies, including Roche, Aventis, Schering and Johnson & Johnson, said: “For biotech companies, it is important to have core operations in place for licensing. Investors need external validation and if big pharma is interested, then the investor will be too. Co-operation with big pharma also allows access to their expertise and know-how,” she added.
Innovative molecules, innovative deals
Partnering deals between biotech and pharma come in all shapes and sizes. Damian Marron, Ph.D., chief executive at Marseille-based Trophos described an interesting deal it struck with Swiss specialist pharma firm Actelion earlier this year.
Trophos is developing a number of therapies in neurology and cardiology. Its lead compound TRO19622, a novel oxime, is in phase III for amyotrophic lateral sclerosis. Actelion’s Tracleer, is licensed for the treatment of pulmonary arterial hypertension, a life-threatening disorder and a $1.3 billion market.
Trophos needed to refinance and to maintain its clinical programme. Under the agreement, Actelion has paid $10 million for an option to acquire Trophos for $125 million plus two milestones for a further $70 million - US approval of its drug and progress on other programmes. The two companies have set-up a research collaboration in which Actelion compounds are screened in the Trophos screening programme.
“This deal buys Actelion a new approach to neurology research,” Marron pointed out. “It is a good fit for both companies. This deal is not unique, but there are very few like it and they are mainly in the US,” says Marron, citing a deal between Novartis and Cephalon as an example. “This is a win-win deal which brings us the support of a much bigger organisation, but one that knows what it is like to be a smallcompany.”
Immutep (Orsay, France) specialises in targeted protein-based immunotherapeutics and has recently announced encouraging phase I/II clinical trial (one of seven trials) results for IMP321 combined with paclitaxel in metastatic breast cancer. Dr Frederic Triebel, scientific and medical director, says that the immunostimulation with first line chemotherapy is a new approach in oncology. “We are hoping to get a partner because clinical trials are very expensive and take a long time,” he said.
Another company with an innovative product on offer is Genticel (formerly BT Pharma, Labge-Innopole, France). Their cervical cancer vaccine, ProCervix, can be offered to women already infected with HPV and has recently been approved for phase I clinical trials. Dr Benedikt Timmerman, Genticel’s chief executive explained: “We want to cure the infection before cancer sets in. Our product compliments the prophylactic vaccines currently on the market.” Genticel hopes that their “first in class” platform will attract a pharma partner. “We have the capability to bring this therapeutic vaccine to market on a global and regional basis. It is going to be a market of similar value and size as Gardasil so we need a big partner. The type of deal we are interested in would involve licensing with co-development or purchasing the whole HPV franchise. We are very open to different types of deal.”
Each major pharma company applies their own unique approach to partnering. Dr Axel Maibuecher, head of Search and Evaluation for Integrated Hospital Care at Novartis, says his company has a “three-dimensional” pathway involving stage of development, deal stage, and therapeutic area which “ensures that an opportunity gets the right expertise”.
Novartis has several different franchises and business units, including cardiovascular and metabolism, neurology and ophthalmology, respiratory and oncology. Novartis is therefore looking for opportunitiesin type II diabetes, obesity, dyslipidemia and antihypertensives.
Neurodegeneration is another strategic focus and Novartis also has an “opportunistic eye open” in old age psychiatry and mood and anxiety drugs with a new mode of action. In ophthalmology, they are interested in wet AMD, from the strategic perspective, and in dry eye from the opportunistic side. Novartis has a long track record in transplantation drugs and is interested in biomarkers in this area. “We are very flexible in the type of deal we will do,” said Maibuecher. So these will include mergers and acquisitions, research collaborations and licensing.
Merck Sharp & Dohme
Meanwhile, Merck relies heavily on the activities of its scientific scouts in partnering, said Dr Barbara Yanni, VP and chief licensing officer.
In 2009, the company signed 51 licensing and partnership deals. “Merck led the field in biotech partnering between 2005 and 2009,” she said.
We expect to do a lot of deal making in the future. The scouts operate worldwide, each taking responsibility for their own area. Also presenting at the conference was Dr Margaret Beer, senior director forexternal scientific affairs, worldwide licensing at Merck Sharp & Dohme. She said: “This is simply the best job in the world.” There are 17 scouts in Merck’s worldwide network, all of them senior scientists. “Scouting and licensing and the science are so important that we will take scientists from the bench to do it,” Beer added.
Merck is interested in all stages of the drug development process. The scouts build close relationships with the local science community including companies, VCs and academics, and they look in all therapeutic areas. “The most important part of my job is relationship building.”
Beer adds: “We are as much dependent on our partners as they are on us, however small the company. I like to think of myself as the friendly face of Merck in the region.”
What is Merck looking for? The company’s areas of interest are published twice a year, and they are interested mainly in phase III and beyond in all therapeutic areas. Dr Manfred Horst is the Merck scout for France and Germany. He gave the example the development of their deal with ElexoPharm, which is a spin-off from Saarland University in southern Germany. ElexoPharm’s synthase inhibitors were on Merck’s list but were originally too early stage to be of real interest. But scientific meetings were held between the two companies and when ElexoPharm published a milestone paper in the Journal of Medicinal Chemistry, the deal was completed in April 2010. This deal covers development and commercialisation of drug candidates targeting aldosterone synthase, a novel target, in cardiovascular disease.
Dr Jeroen Tonnaer, the Merck scout in Benelux, Israel and South Africa said they always look to see how opportunities in the outside world might fit with the Merck development pipeline. “We are looking fordrug candidates in unmet medical need, for novel validated targets which are first in class or best in class, and solid IP on the target.”
They are also interested in new synthetic routes and polymorphs of drug compounds. A biomarker strategy is a plus because it offers the possibility of companion diagnostics. The company is also interested in any technology that helps do things faster, better and cheaper. “More significantly, any technology that will help us identify or validate novel targets is very welcome,” Tonnaer added.
Another interest area is formulation and delivery technologies, as well as improved manufacturing approaches and new therapeutics modalities like RNAi.
“Emerging markets are an important part of our strategy,” added Tonnaer, listing Turkey, Brazil, India, Russia, China and Korea as examples. They are also interested in Asia Pacific, Latin America, EasternEurope, the Middle East, and Africa.
Kilpatrick concludes by saying there is a definite skillset required in deal making, whichever side of the fence you are on.
“It requires persistence, patience, clarity, communication, access to the right people - and a little bit of luck.”
SIGNING THE DEAL
The importance of the legal agreement between firms means that lawyers play a vital role in the process, usually representing biotech firms.
John Wilkinson, partner at London law firm Reed Smith says setting up a partnership is a painstaking process which typically takes six to nine months. First, the company with the asset will decide on a deal structure, then start looking for a partner, making partnering events like BPE extremely important. When a certain level of interest is generated, the details of the deal will be crystallised in order to define the Net Present Value of the asset.
The next stage is to generate a Term Sheet, a non-binding agreement which sets out the draft terms of the deal. This is where firms like Reed Smith often get involved, acting for biotech companies and typically negotiating with a pharma company’s in-house legal department.
“We help our clients draft a detailed agreement with specific definitions tailored for agreement,” said Wilkinson, adding that it is important to be aware of the very specialised language of life science at this stage.
- Susan Aldridge Ph.D.
European News Reporter
Exciting year ahead as Canadian Biotech leads the way
As I visited many companies throughout the past year I was struck by their dedication and candor having moved through recent economic difficulties. Used to set backs, whether regarding delays for approvals or dealing with daily regulation matters our companies are nimble and effective. It is a fact that if you invested $1 in biotech at the end of 2008, today you would have $1.60, compare that with the TSX composite where $1 invested earned $1.48 in return.
Today I feel our industry is proud and receiving great enthusiasm from investors, and partners alike for a strong year ahead. As our Olympic athletes took to the international stage and owned the podium last year at this time the torch can now certainly be passed along to leaders within our bio-economy. This is our time to shine. The platform is wide open for us to share our story with others, and attracting capital in return. Member companies Acquinox received $25M venture financing, Bioniche experienced a $17M share offering, Protox received $35M in private equity investment, WEX Pharmaceuticals earned a $35M share offering, while Oncolytics enjoyed a $29M share offering, and Cardiome celebrated a $30M milestone payment.
Recently I appeared on CBC Newsworld’s Lang & O’Leary Exchange where we discussed the challenge for the industry in raising capital. It is critical for business to understand that over the recent economic recovery period Canada’s largest publicly traded biotech companies have outperformed the broader market, providing investors a 60% return over the last two years. Quite simply these entrepreneurs are asking for a level playing field when seeking investments.
A recent PwC / BIOTECanada industry forecast confirmed what I have been hearing from member companies for quite some time. 84% of respondents indicated the ability to access capital is the key challenge for the industry to become a stronger global competitor. The industry considers a variety of short-term, market-oriented incentives from government to be most helpful. 78% believe government must create incentives for risk capital. Canada’s flow through shares (FTS) program enacted in 1954 has successfully encouraged investment in high-risk natural resource exploration. Similar to junior mining companies, Canada’s junior biotechnology companies require a tremendous amount of time and risk capital to reach profitability. We know that permitting such biotechnology companies to issue FTS would stimulate more research investment, jobs, and commercialization of high-tech goods and services in Canada.
Canadian companies continue to build their operations and perform the majority of their R&D here. Nearly 25% of non-revenue earning companies believe it will take over five years for their companies to earn revenue (similar to 2009 and 2007). 74% of respondents indicate their next financing round will be spent primarily on R&D. The opportunity for Canada is to create the operating environment incentives to ensure the research is conducted primarily in Canada. Refundable research tax credits such as those currently under review by the federal Expert Panel will be key to Canada’s competitiveness. BIOTECanada encourages removing the CCPC restriction from the SR&ED tax credit program.
This will be a banner year for the many biotech companies as we continue to push the envelope on a number of possibilities. I look forward to meeting many of you at BioPartnering North America this is an opportunity to seize upon our success to date. The bragging rights are ours for the taking.
- Peter Brenders
President and CEO, BIOTECanada
About BIOTECanada
BIOTECanada is the national non-profit association dedicated to building the bio-based economy in Canada. From cleaner energy to sustainable agriculture; from greener manufacturing to life-saving health therapies, Canadian biotech firms are discovering ways to revolutionize the economy and improve our lives, everyday.. For more information, please visit: http://www.biotech.ca/
British Columbia’s Life Sciences Sector: Leading the Great White North?
The perception of Canada on the international stage is often tied to its proximity to the US, its rich natural resources, and less than desirable climate. Although this may be true at least in part - the global recession has forced many countries to re-examine their competitive positions and in this regard, Canada has chosen to pursue a path which will strengthen its knowledge-based economy and enhances its capacity in the areas of therapeutic development, energy, agriculture and the environment.The objective of this blog entry and my three subsequent entries is to provide some insight into the knowledge-based economy of this country with a particular focus on life sciences.
Private sector biotechnology within Canada is comprised of about 670 companies generating a direct economic impact of about $1.1 billion CAD annually. The segments encompassed within the sector include (in order of size): - industry/environment, therapeutics, agriculture, and genomics.- The historical epicentre of life sciences within Canada has been in Quebec albeit one-third of all Canadian biotechnology companies now reside in British Columbia (BC).
A recent economic impact study undertaken by LifeSciences BC suggests the provincial sector accounts for $500 million in direct expenditures and employs approximately 7,500 people. It should be stressed that these national and provincial figures represent a fraction of the total market which would take in to consideration direct, indirect, and induced impacts.
What makes BC so attractive to life sciences companies?
The BC Progress Board recently released its Tenth Annual Benchmark Report, noting several of these factors which include but by no means are limited to:
- Health outcomes in BC are better than anywhere else in Canada, pointing to the expertise resident within its medical system. The Province has one of the most diverse ethnic populations, the highest life expectancy, and the lowest cancer mortality rates.
- Access to healthcare and a centralized database in areas such as oncology and pharmaceutical prescriptions make Canada’s most westerly Province an ideal “living laboratory” in which to conduct research, particularly for specialized populations or even post-marketing and surveillance studies.
- Environmental quality in BC is second to none. Protected areas, government policies, and a strong social sensitivity lends itself to a comprehensive approach to ecosystem management, which amongst other initiatives, is strongly supportive of alternative energy sources such as biofuels.
- A vast expanse rich in resources means biofuel and bioproduct organizations can be in close proximity to relatively secure sources of feedstock originating from forestry, agriculture and even municipal waste.
- Insofar as human capital, the percentage of BC’s population possessing a university degree is only second to that of Ontario.
Having provided some context insofar as Canadian and BC life sciences, the next three blog entries in this series will delve further in to a number of critical success factors for the sector; namely capital, collaboration and convergence. It is my hope that such information will serve as a catalyst for you to attend BioPartnering North America 2011 and explore the numerous opportunities that exist for you and your organization.
- Don Enns
President, Life Sciences British Columbia
About Life Sciences British Columbia
LifeSciences British Columbia supports and represents the biopharmaceutical, medical device, bioproducts & bioenergy, and greater life sciences community of British Columbia through leadership, advocacy and promotion of our world-class science and industry.. For more information, please visit http://www.lifesciencesbc.ca
China Blog Series Part 4: Questions Still Remain
This is part 4 of a 4 part blog series featuring growth, challenges and predictions for China’s emerging life science industry:
Will Novartis’ USD 1 billion investment finally shame domestic Chinese pharmaceutical companies into making real commitments to innovative R&D?
The Chinese government, via funding programs such as the 863 National High Technology Research and Development Program, the 973 Major State Basic Research Development Program of China, and the “Torch” technology development program, has committed significant resources to developing basic and applied research germane to innovative drug discovery and development (among other areas). In spite of this support, China remains sluggish in producing innovative (Western) drugs. Part of the blame for this surely lies at the feet of China’s domestic pharmaceutical industry, which, as a whole, has failed to substantially nourish or reward local drug development and, in particular, commercialization efforts. To be sure, the new healthcare reforms will likely reward China’s larger drugmakers with no increased R&D efforts on their part; but, as foreign big pharma steps up R&D in China and lures an increasingly large portion of the nation’s scientific drug discovery and pharmaceutics talent, will local drug companies be content to be passed by and play the generics game indefinitely? Novartis’ announcement may compel local Chinese pharmas (and their government stakeholders) to answer this question sooner rather than later.
What is the real significance of the Novartis announcement?
Regardless of whether the CNIBR yields significant returns in years to come, the magnitude of Novartis’ commitment constitutes a statement which cannot be ignored. At the very least, it is an affirmation of the importance of the Chinese pharmaceutical market to Novartis ��� and by extension the global pharmaceutical industry ��� going forward. While it is perhaps too early to judge, the investment may also mark a watershed moment for the pharmaceutical R&D space in China ��� an indicator that it has reached the next stage in its evolution. Does Novartis believe that new, innovative drugs will come from China? One billion dollars is a lot to spend if they don’t.
- Dr. Jon Zifferblatt
Managing Director, General Biologic
About General Biologic
GBI is an information and professional services firm founded in China in 2002. With more than 30 professionals in Shanghai, our business is providing critical data and advice covering China’s pharmaceutical, biotechnology, and healthcare industries. Our goal is to create a transparent operating environment for our clients, and provide the insights into the competitive landscape they need in order to capitalize on the tremendous opportunities available in China. Our clients depend on the news, data, and analytics we provide to make informed decisions every day. GBI’s clients include most multinational pharmaceutical companies and a leading group of biotechnology companies, healthcare companies, investors, consultants, law firms and financial analysts. For more information, please visit http://www.gbipharma.com/.
China Blog Series Part 3: One billion reasons why pharma R&D in China has reached the big leagues?
This is part 3 of a 4 part blog series featuring growth, challenges and predictions for China’s emerging life science industry:
Subject to the same questions as other R&D commitments
One year later, the CNIBR expansion is still unfolding. Details of exactly where and how the funding will be spent have yet to be released. As with many of the MNC R&D center efforts that have come before, it remains possible that the amount of cash earmarked for innovative drug R&D may be allocated over a long period of time and be only a fraction of the total commitment. (Even a fraction of one billion dollars, however, is still no small sum.)
Motivations, collateral benefits
Presence in an increasingly important market: Novartis is of course buying much more than a just research facility with its investment. With a pharmaceutical market that is poised to become the world’s second largest over the next decade (worth USD 109.5 billion by 2020), China is a focus of increasingly intense interest for all multinational drugmakers. Having a major presence — a presence which extends beyond commercial/sales/regulatory functions to include manufacturing and now, R&D — is becoming increasingly important. (The black box of distribution will likely remain outside company walls for the near- and mid-term, unless centralized procurement is able to engender significant transparency.)
Goodwill: Like other such investments by MNC pharma, Novartis’ CNIBR commitment is also motivated by a desire for governmental goodwill. With new national and regional pricing and reimbursement lists, expansion of government health insurance and community healthcare, and increased oversight of hospitals, tendering, and prescribing- it is clear that China’s healthcare sector will remain a highly regulated one, and issues of market access will be critical for any company seeking to enjoy the fruits of China’s expanding pharmaceutical market.
Recruiting: The CNIBR, now headed by Dr. En Li, will also allow Novartis to extend a sizable taproot into China’s PhD and pharmaceutical research scientist talent pool. While this pool has undoubtedly grown larger in recent years, new R&D centers built by multinational pharmas and the expanding presence of CROs has rendered competition for skilled research staff increasingly stiff. A marquis investment such as the CNIBR will likely give Novartis an extra edge, beyond simple compensation, in attracting top talent.
Implications for the sector as a whole
Novartis’ headline-grabbing CNIBR announcement will likely accelerate a number of (already occurring) trends in the pharmaceutical research sector: Outsourcing activity moves west (or at least out of Shanghai and Beijing): As mentioned above, the Novartis investment, and others like it, will serve to raise the stakes in luring skilled scientists and increase salary expectations across the board. Contract research shops and as well as MNC pharma functions depending on lower-cost R&D manpower will be forced to move to markets where wages remain at lower levels. This phenomenon is already occurring. Excel PharmaStudies’ (now part of PPD) selected Taizhou City for its new biometrics center and several notable deals have been signed involving Wuhan’s Biolake including WuXi PharmaTech’s USD 100 million commitment to build a 40,000 square meter CRO facility and Pfizer’s newly opened radiation biology facility (with current staff number of 40 which is expected to reach 200 over the next two years). Nanjing has also become a locus of increasing amounts of CRO activity.
Number and quality of students studying pharmaceutical-related sciences will rise: Like the westward shift of CRO bases, this phenomenon is already underway; for example, the number of students enrolled at the Shanghai Institute of Biological Sciences (SIBS), a leading center of postgraduate training in fields related to pharma R&D, has more than doubled over the past decade from 723 students (including 394 PhD candidates) in the year 2000, to 1467 (973 PhD) in 2008. Novartis’ high-profile investment will likely give an added boost to the growing amount of young talent choosing the pharmaceutical R&D-related fields.
Follow-on commitments for more infrastructure/acquisitions, both R&D and otherwise: While most research-based MNC pharmas have likely already planned spending increases for China in the future, the CNIBR announcement may have galvanized boards and CEOs to consider the timeframe of their China strategies. Novartis has made a major play on a key area of the global pharmaceutical chessboard, the rest of big pharma will need to consider if it will respond in kind. Some have already done so — Sanofi-Aventis announced in April that it will establish an Asia-Pacific R&D center in Shanghai; others have made non-infrastructure investments that can still provide access to Chinese talent and novel compounds, such as Lilly’s planned venture capital fund to provide financial aid to early-stage research programs in Chinese universities.)
- Dr. Jon Zifferblatt
Managing Director, General Biologic
About General Biologic
GBI is an information and professional services firm founded in China in 2002. With more than 30 professionals in Shanghai, our business is providing critical data and advice covering China’s pharmaceutical, biotechnology, and healthcare industries. Our goal is to create a transparent operating environment for our clients, and provide the insights into the competitive landscape they need in order to capitalize on the tremendous opportunities available in China. Our clients depend on the news, data, and analytics we provide to make informed decisions every day. GBI’s clients include most multinational pharmaceutical companies and a leading group of biotechnology companies, healthcare companies, investors, consultants, law firms and financial analysts. For more information, please visit http://www.gbipharma.com/.
