BIO’s Greenwood: The Traditional Venture Capital Model is Broken
Expect to see more “co-opetition,” and increased government and private foundation in early stages, he said.
By Agnes Shanley, Editor in Chief
At the New York Pharma Forum’s 23rd general assembly in New York City last Friday, James Greenwood, president and CEO of the Biotechnology Industry Organization (BIO) introduced the program with some stunning figures on venture investment in biotechnology. The pace of biomedical innovation is slowing, he said. It is getting tougher to get venture capital; drugs face a longer development time, with costlier, longer clinical trials; and lower levels of drug approvals.
Greenwood described a lack of transparency regarding FDA’s expectations for new drug candidates. “Only 1 in 10,000 new biotech drug candidates will make it, and less than 10% of candidates in pre-Phase II stage will ever reach the market,” he said. He later quoted a question that others have asked in the past, “Could aspirin be approved today?”
The title of this year’s program, Creative Investments and Partnerships to Stimulate Innovation, described the industry’s critical need. Speakers including Ann Li, Executive Vice President of Business Development for the New York City Economic Development Corporation and Alan Paau, Vice Provost of Cornell University and Executive Director of the Cornell Center for Technology Enterprise and Commercialization discussed issues
and programs that their organizations have developed to address the need for creativity.
Greenwood affirmed the need for more creative public policy as well, describing price controls as “misguided attempts to control costs while stifling research and innovation.” Where 2007 saw $5.7 billion in venture capital funding for biotech, this year, through November, the total was only $2.9 billion, he said. Compared with 37 deals in the third quarter of 2002 and 48 in the third quarter of 2007, there were 17 during the third quarter of 2012.
He mentioned the 21st Century FDA (TREAT) Act as an important step forward in empowering operational excellence within the Agency, calling for a Chief Innovation Director to enhance access to external scientific and medical expertise. He also mentioned efforts to modernize clinical development and make it more patient centered, by tying electronic health records more closely to clinical informatics, and also disclosing to drug sponsors the reasons why a new drug candidate does not meet approval.
For biopharmaceutical manufacturers, who also face the prospect of biosimilars, and a reduction in patent exclusivity, Greenwood described Co-opetition as the new model for R&D, citing examples such as a nonprofit group that Lilly, Merck and Pfizer have set up for cancer research, the Asian Cancer Research Group, targeting the most commonly diagnosed cancers in Asia. He summarized some of the academic discovery programs now going on with universities and biopharmaceutical manufacturers, as well as a coalition of 10 pharma companies that are working together to solve common drug development challenges and boost R&D efficiency.
The federal government will play a larger role in this tough new environment, he said, mentioning NIH programs such as the National Center for Advancing Translational Sciences (NCATS) and the Cures Acceleration Network (CAN), both of which are focusing on early-stage R&D. Greenwood also discussed the growing role of foundations such as the Bill and Melinda Gates foundation, and disease-focused groups such as the Alzheimer’s Foundation, in early R&D, allowing venture capital funding to move to later stages of R&D.