Strong pharma research is key to bringing in investment
14 October 2012
Pharma Letter
“Few people disagree that small drug discovery companies are vital to the health of the UK's pharma industry, and central to the government's aim of innovation-led growth. But private backers have become increasingly risk-averse," said Ana Nicholls, Healthcare Analyst at the Economist Intelligence Unit in response to an article in the UK’s Financial Times yesterday, titled Pioneering research on drugs is key to clinching investment.
“If the UK is to retain its historically strong role in drug discovery and development in the face of heavy cuts by big pharmaceutical companies such as Pfizer, it needs innovative small companies to come up with breakthroughs and new approaches,” wrote Chris Tighe and Andrew Bounds in the FT.
Unlocking the potential of their knowledge base to build enterprises creating new drugs and ¬discovery techniques entails huge risks and investment, they said. Industry estimates of the average cost of bringing a drug to market have jumped in the past two decades from $150 million to $2 billion. The chances of an initial concept reaching licensed, commercial sale can be as little as one in 100,000 and can take 12 years, the FT journalists observed
Scarcity of venture capital support
With stock market listings now scarce and few venture capital firms supporting the sector, the pharma industry is still on the lookout for promising research pipelines - but is normally only prepared to invest in companies with products that are nearing the end of clinical trials, Ms Nicholls noted.
The European Investment Bank has been backing the industry for over a decade, but it is far from alone. UK Chancellor George Osborne is due to announce a tripling of the $100 million funding he allocated to the Research Partnership Investment Fund back in March, she noted (see also below).
“The fund backs university science projects on condition they get twice as much funding from the private sector or charities, and has been heavily oversubscribed. The government recognizes that, with many pharma R&D jobs being moved to emerging markets that are already building up their research skills, the UK needs to build on one its biggest remaining assets - the excellence of its universities,” Ms Nicholls argues.
Government investment secures £1 billion for university and private research
Later yesterday, Chancellor Osborne announced that the UK’s world leading science projects are receiving a £1 billion ($1.62 billion) joint industry, university and government boost.
The government will add £200 million of new money to the UK Research Partnership Investment Fund (UK RPIF), supporting long-term university capital projects. The fund, which launched with a government investment of £100 million at Budget 2012, was heavily oversubscribed and received an overwhelming number of high quality bids. This additional support will more than double the number of projects that will benefit.
To access the money, universities must match the funding by at least double from private companies or charities – taking the total investment, including universities’ own contributions, to at least £1billion. As well as supporting the best proposals already submitted by universities, the fund will now reopen for further bids.
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