Biotech start-ups turn to US for finance

Delivering the keynote speech at the conference, Innovation Commissioner Máire Geoghegan-Quinn said the health industry is a key sector of the EU economy and the Commission is committed to addressing "bottlenecks" in the innovation system.

She said developing more personalised and efficient products will help make European companies more competitive. Geoghegan-Quinn said SMEs are the "engines" of innovation but accepted that the escalating cost of clinical trials and long timeframe of product development make it difficult for smaller players to succeed.

Ludo Lauwers, senior vice-president at Johnson & Johnson Pharmaceuticals R&D, said the current model for developing new products is not sustainable. He advocates "open innovation" to help the pharma industry capitalise on new areas such as genomics and proteomics.

He said it took seven years to bring a product to market but it now takes 14 years to complete clinical trials and complete regulatory hurdles – "something no company, no biotech, no knowledge centre can do alone". 

"Most of our scientists need to open their minds too. We are working on a cultural change," Lauwers said.

Mutual trust will be central to the new open innovation model, he said, adding that incentives – such as market exclusivity – will be essential to attract investment.

Claes Post, senior business developer at Linköping University Innovation Office in Sweden, said the Swedish model of technology transfer had produced a vibrant biotech sector. Swedish university professors own their inventions and are entitled to commercialise new drugs and medical devices.

However, he said scientists should stick to science and leave entrepreneurs to bring innovations to market.

Michel Goldman, executive director of the Innovation Medicines Initiative, said the IMI has a unique intellectual property policy which promotes knowledge creation and facilitates disclosure.

To date, 24 SMEs are involved in the first 15 projects which have been announced under the initiative, he said.

"Companies tell us these projects offer a unique opportunity for networking and to make deals. However, they are also wary of the diffusion of commercially sensitive information and the administration burden," said Goldman.

The investment of public money will bring long-term rewards, he said, if new cancer diagnostics can be developed to help doctors prescribe more specific treatments. Goldman also pointed to projects examining adverse reactions to drugs – something which is a major burden on the taxpayer.

Ruxandra Draghia-Akli, director at the European Commission's health directorate, said investment in R&D in the health sector continues to fall at a time when the total cost of bringing a drug to market is around €1.3 billion.

She said around half of all small European biopharma companies feel under threat.

Personalised medicine, immunology, vaccines and epigenomics are among the more promising areas where investment is needed, according to Draghia-Akli, but these are areas where collaboration is needed.

"Health is not something that can be dealt with at a national level, the [H1N1 influenza] pandemic showed that problems can travel across borders," she said.

Jacques Viseur, managing director at Euro Top Cooperation Partners, said 93% of SMEs participating in framework programme projects deemed it to be a success. Participation can still be challenging, he said, but most small businesses go on to form lasting partnerships after the EU funding has ended.

"Typically, SMEs participating in FP7 are young businesses, largely supported by public funds and located in technology parks. Research shows that 43% are university spin-off companies," Viseur said.

Cristina Glad, executive vice-president of BioInvent International, said her firm had taken a coordinating role in an FP7 project which was successful because it was well structured. However, she warned SMEs against joining consortia simply to make up the numbers.

"Small companies are sometimes approached by a consortium just to have an SME on the application form. My advice would be only to get involved if it fits with your core business. Projects where SMEs take part for the wrong reasons are less likely to succeed," she said.

Speaking to EurActiv, Peter Trill, chief financial officer at TPP Global Development, a UK-based drug development company, said the success of biotech clusters have been an important part of the US industry's success.

TPP Global Development has raised £9.6 million (€11.8 million) to invest in turning promising new molecules into new medicines. Trill said scientific and regulatory knowledge are also key to choosing the right things to invest in.

However, raising funds has not been easy at a time of financial crisis. "This is undoubtedly one of the toughest environments for raising money in the last 25 years – but it's not impossible," said Trill.

He welcomed the efforts of governments to support companies, adding that EU funding – particularly FP7 – is more important than ever.