Evolving World of Pharma: A framework for funding innovation

Modern R&D models are being built on the integration of physical, chemical and computer sciences, and a commercial model that is increasingly played out within a framework of external funding for innovation. Under this model, new biotechs and other start-ups are increasingly taking advantage of ‘innovation accelerators’ to develop, test and grow new ideas.

Within the pharma sector, these accelerators are generally defined as public, private and not-for-profit entities that are designed to support the growth and development of start-up companies – usually biotech companies – with facilities, equipment and consultative services.

High-profile examples include the UK’s NHS Innovation Accelerator, a revolutionary programme that gives innovators the skills and guidance to support innovation in the healthcare sector, and Horizon 2020 (H2020), the main European funding programme for research and innovation. The Innovative Medicine Initiative (IMI) is one of the flagships of health research under H2020; in the period 2014-2024 its budget will reach €3.3 billion.

With a similar focus on providing investment to small and developing companies, earlier this month, India’s Department of Pharmaceuticals (DoP) announced the launch of ‘Pharma Bureau’ – a body of technical experts whose roles include facilitating foreign and domestic investment in the pharmaceutical and medical devices industry in India.

On a smaller – but still significant – scale, several large corporations from Big Pharma and medical supplies companies have recently begun to nurture start-ups with grants and awards that foster an entrepreneurial spirit. Examples include Johnson & Johnson, which in 2016 launched JABS, a “global network of open innovation ecosystems, enabling and empowering innovators to create and accelerate the delivery of life-saving, life-enhancing health and wellness solutions to patients around the world.” Similarly, Bayer founded Grants4Apps in 2013, originally to provide grants to innovative healthcare apps, but later expanded to assist more than 50 life science and health care start-ups in more than 13 countries.

As we have discussed previously, industry dynamics have created a profile in which smaller, creative companies end up funding innovation – at the early stages of drug development, at least. Once the research is more advanced, large pharma giants enter the fray, vying for the next new innovation, and either partnering with or acquiring the smaller innovator to fund expensive late-stage trials and large commercial marketing campaigns. Innovation accelerators – especially those provided by Big Pharma partners – could be seen as a prelude to that stage of partnership or acquisition, providing essential funding with controlled, limited risk and liability for the funding partner.

The model is also impacting the way in which CDMOs provide their services to biotech companies. Conventionally, the pharma industry has been a proponent of outsourcing, collaboration and partnership. However, as the biotech industry has evolved these interactions are changing, and the barriers between these three relationship types are blurring. This means that a lot of CDMOs and other service companies will now consider shared-risk models, making them more like partners than out-sourced providers.

Of course, the process for being accepted for funding by any entity is competitive – only a tiny proportion of applicants are accepted, but even an unsuccessful application procedure can be helpful. The application process itself can be viewed as a learning experience that may provide realistic insights into the likelihood of success, the need for a different approach, or important networking connections that might prove useful in the future. Meanwhile, the lucky few who are successful should benefit from intensive expert focus on development and progress, including networking with other industry support providers and further investors.

Innovators are generally advised to collaborate with larger entities as early as possible in their R&D process. While there is a need to protect intellectual property (IP), there is also a need to take any new technology forward as quickly as possible to increase its chances of getting to market. Even if the technology is not fully ‘ready’, this can be framed appropriately in early discussions, and the innovator can obtain great consultancy by engaging in the right way with a large pharma company or other experts at an early stage.

Author biography

Sarah Harding, PhD

Sarah Harding worked as a medical writer and consultant in the pharmaceutical industry for 15 years, for the last 10 years of which she owned and ran her own medical communications agency that provided a range of services to blue-chip Pharma companies. She subsequently began a new career in publishing as Editor of Speciality Chemicals Magazine, and then Editorial Director at Chemicals Knowledge. She now focusses on providing independent writing and consultancy services to the pharmaceutical and speciality chemicals industry.

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