Category Archives: Technologies

Medicines, devices, information

Into the valley of death rode … no-one? Where are Europe’s entrepreneurial investors?

Binoculars portrait (dscn4659_mod_vign_sm)

Looking for Investors

Considerable public funding goes into research.  To the dismay, though, of many, European countries in the main are very poor at commercialising this research, and thus return of this public investment is often zero euros.

Reasons lie in at least two places:

  • EU member states (outside of the ‘anglo’ tradition) tend to ‘own’ their own research facilities, and
  • These countries also tend to classify researchers as civil servant.

This means in the main that the intellectual property becomes publicly owned and very hard to get out of government hands and into that of entrepreneurs.  The European Commission has noted the very positive impact of the US Bayh-Dole act of some years ago, which removed state ownership of intellectual property and resulted in a step-change improvement in commercialisation in the US from the 1980s on and which continues to contribute to US leadership.  European commentators have lamented the inability of European States to compete, but intergovernmental initiatives around competitiveness have failed to address much simpler and more basic remedies from innovative start-ups.

What we have in Europe instead are:

  • weak access to venture capital/private equity across the industry,
  • difficulty knowing about the research in the first place, and
  • perhaps even overly cosseted academics who see no need to commercialise their work — there aren’t the rewards on the one hand, and why go to all that trouble when you’ve got a comfortable academic job.

Having said that, some countries such as Sweden are shining beacons; the Commission’s Biopolis report for instance is full of praise.  However, other commentators see some countries never moving out of last place — French biotechnology is cited as one instance.  Another is poor quality research itself, but that is a different story.

The valley of death is what is known kindly as the zone between the end of public funding and the beginning of private equity financing.  Start-ups in this zone do or die.  Today, with severe credit problems, many start-ups face starvation and eventual failure as their burn rate exceeds their credit worthiness.  Short-sighted investors are also partly at fault, but these days, who can really blame someone from protecting what wealth they hav left?

The Commission a few years ago invented the concept of ‘pre-commercial procurement’ [PCP] to create a category of state support that bypassed the state-aid rules.  However, do we see much discussion of the pending collapse of the innovations market to put PCP into context?  Countries with large venture capital industries (UK and Germany, for instance) will grasp the significance here of failing start-ups and future wealth creation, but seem to be focused on saving the banks (throwing good money after bad?).  Smaller EU states generally understand the importance of innovation for their economic well-being.  People are distracted by events and looking elsewhere.

While we cannot look to government for everything, we can expect them to show leadership in areas where market-failure is pending.  This is happening in the research commercialisation field.  If Europe wants to emerge from the recession with renewed industrial capabilities, it should focus on start-ups as they are certainly part post-recession Europe than we realise.

But as the valley of death swallows more fledgling companies and with them healthcare cures of the future, who will now ride into this valley of death?  Who will go where angels fear to tread?  Where are Europe’s entrepreneurial investors?

Greedy governments, poorer societies

Beggar in Venis, May 2008

Government greed at work

Greedy governments stifle innovation by reserving all the intellectual property of publicly funded research for their own use.  The problem is that governments are not very good at knowing what to do next, and invariably tie up valuable innovation in bureaucratic process, without adding any social value at all.

The Eurocrats like US comparisons, so here is a good one.  In 1945, the US Government commissioned Vanevar Bush to review the role of science in post-war America.  His report founded the US National Science Foundation.  It was, however, not until US scientific pre-eminence in patents began to flag when compared to Japan and others, that US legislators realised that they were hogging all the innovation.  The result, the Bayh-Dole Act (the University and Small Business Patent Procedures Act) in 1980 gave US universities and businesses ownership of the discoveries resulting from US government-funded research.  The result is what we have today, and why the EU compares unfavourably.

The whole EU labours under mistaken beliefs about the central role of government in adding value.  In this case, getting the dead hand of the state off the bright ideas of the research community galvanised the US academic and commercial communities into entrepreneurial development which continues to this day.

Some EU members are very good at converting research into commercial products, have vibrant venture capitalists who are knowledgeable in finding winners, coupled with entrepreneurial research communities.  Others, of course, are laggards, or worse, deadwood.  The Biopolis report is a useful map of the terrain in one area.  Sitting at the heart of the issue, though, is the academic culture itself which in many countries lacks an entrepreneurial dimension, with inappropriate incentives and featherbedding of senior academics.  Perhaps the greatest threat to innovation besides greedy governments, is academic tenure.

The race these days goes to the smartest.  Let’s hope the Commission’s Communication on Pre-commercial Procurement will actually drive innovation.

Innovative medicines: it is about the patient, stupid!

The Clown

Clowning around with policy

The Innovative Medicines Initiative seeks to put right the chaotic treatment of pharmaceutical innovation by EU member states, and will likely fail.  The goose that lays golden eggs of medical innovation is cooked to death by member state medicines policies.

Increasing the speed of product development will come to a grinding halt as member states inconsistently apply economic evidence, and thereby stifle adoption of new medicines into clinical use to the benefit of patients.

Current regulatory thinking (i.e. EMEA) is dated as the priorities have moved beyond safety/efficacy issues to outcomes and cost-effectiveness.   NICE and its counterparts across Europe have yet to harmonise their methods, adding uncertainty as member states use economic evaluation as a 4th hurdle which varies in height depending on which country you’re in.  That economic evaluation is really just a code for controlling health expenditure and reimbursement, and is less about real value and outcomes in many member states only adds to chaos of the regulatory environment into which innovative products are thrown.

So, as we incentivise the early stages of medicines development and speed up the launch of drugs, we continue to tolerate a bottleneck on the utilisation and adoption of medicines themselves within member states.    The whole translational medicine process, from bench to bedside, is not just of faster benches, but of clear bedside clinical priorities.  We can incentivise the bench until the cows come home, but until we address the real disconnect between adoption and utilisation and link innovation priorities with real-world priorities, patients will still not have the medicines they need.  However, the statistics will undoubtedly show a rise in innovation!