Stephen M. Sammut

Asia's Ascent — Global Trends in Biomedical R&D Expenditures

In recent years, industry has reduced its investment in U.S. biomedical research and development by billions of dollars, while increasing investment in Asia–Oceania. Thus, boosting U.S. government funding alone may be inadequate for retaining long-term R&D leadership.

India's health biotech sector at a crossroads

Indias home-grown biotech companies must strike a balance between domestic and international markets.

Brazilian health biotech—fostering crosstalk between public and private sectors

Brazil boasts world-class biomedical science, but tension between the public and private sectors hinders progress in health biotech innovation.

Life sciences venture capital in emerging markets

195 in-licensed by the firm (see Supplementary Tables 1 and 2 for a full list of Chinese and Indian firm descriptions). We exclude manufacturing and traditional medicines, which occur overwhelmingly in China, for a consistent and fair comparison of countries across regulated products that require R&D and clinical trials for approval. Including such firms focusing on traditional medicines or manufacturing would bias our analysis of relationships between VC and PE investment and other factors, such as government financing of biomedical R&D. For funds with international investments, we required that the firm had an R&D presence in one of the emerging markets. We validated our data set by surveying 25 VC funds that collectively participated in half the historical life sciences deals in these countries and verified them with independent databases, including Zero2IPO, VentureIntelligence and DowJones VentureSource. In contrast to the widely held perception that life sciences VC and PE investment activity is booming in emerging nations12,13, our data suggest that innovative life sciences VC activity has been muted. Overall, we report a total of 116 VC-backed firms financed by 148 deals. Of these, 76 firms report public equity rounds totaling ~

The role of the domestic private sector in developing countries for addressing local health needs

1.065 billion (Fig. 1). Extrapolating from these data, we estimate that since 2000, VC and PE firms To the Editor: Emerging markets, such as Brazil1, China2, India3 and South Africa4, are increasingly recognized as placing great emphasis on innovation in the life sciences. Expanding research expenditure and capacity driven by rapid economic growth and repatriation of scientific talent has led to rising numbers of peer-reviewed publications5, patent filings6 and international scientific collaborations7,8. A simultaneous surge in investment has reportedly accompanied this research activity in terms of foreign direct investment flows by large multinational pharmaceutical firms9, biotech firm formation recorded by industry association data and billion-dollar annual life sciences private equity (PE) investment levels10 (Table 1). Yet, data on sources of venture capital (VC) that are supporting such innovative biotech startups are unclear because existing investment metrics include not only innovative enterprises but also manufacturing or service firms lacking R&D capability. The quality of published data is also poor, with only one study on healthcare VC activity in China providing data for a single quarter in 2008 and it does not separate innovative ventures11. Here, we present a data set of life sciences VC in emerging markets to inform government innovation policy and VC investment strategy. Our data suggest that life sciences VC activity is low in the emerging economies we studied, despite growing levels of activity in that sector and in those regions. Furthermore, VC investments in emerging economies are disproportionately concentrated in a small set of funds historically selecting oncology assets (~78% of therapeutics). What’s more, these investments are supported by syndicates and investment-round sizes that are substantially smaller than those seen in the United States or European Union, forcing both domestic and foreign VC investors to develop novel investment strategies to mitigate countryspecific risk. We conducted a comprehensive search for innovative, VC-backed investments related to human healthcare from January 2000 to August 2012 in key emerging markets, specifically Brazil, China, India and South Africa (Supplementary Methods). We selected these countries because we were able to validate the quantitative data with qualitative reports from our prior relevant fieldwork. For the same reason, we excluded important emerging countries, such as Singapore, because we were unable to reconcile data with qualitative reports. This validation is critical, given the lack of access to high-quality data. We use the term innovative to characterize biotech firms developing products for humans, such as therapeutics and vaccines, based on new, proprietary technology invented or Life sciences venture capital in emerging markets

Global biomedical R&D expenditures.

Developing countries can benefit from conducting innovative research and development in science and technology prioritised to their own specific health and development needs. Here, the role of the domestic private sector in utilising its knowledge, expertise, resources and relationships is critical for translating R&D results into tangible health products and services for individuals. We have recently initiated a study to analyse how the domestic health biotechnology sectors of four developing countries - India, China, Brazil and South Africa - address local health needs. In this paper, we introduce the purpose, design and objectives of the study, describe our rationale for undertaking this research and present preliminary results from our analysis of health biotechnology firms in India.

Healthcare Venture Capital for Africa

n engl j med 370;25 nejm.org june 19, 2014 2451 these three points. First, in the EPaNIC trial, early parenteral nutrition failed to improve the outcome in the preplanned subgroup of 863 patients with a very high nutritional risk.3 Second, the assumption that more severely ill patients would benefit from early enhanced feeding was proven wrong; when subgroups were defined according to severity of illness on admission, it was clear that early parenteral nutrition caused the most harm in the most severely ill subgroup, whereas the intervention did not alter the outcome in the least severely ill patients.3 In addition, the administration of early parenteral nutrition aggravated rather than reduced muscle weakness in the sickest patients requiring prolonged intensive care.4 Third, a retrospective analysis showed that it was the dose of amino acids, not the amount of glucose, that explained the harm evoked by early parenteral nutrition, an observation that is completely in line with the results from a study of experimentally induced critical illness in rabbits.3,5 Michael P. Casaer, M.D., Ph.D. Greet Van den Berghe, M.D., Ph.D.

Innovation: venture capital is vital too

In their Policy Forum “Stagnant Health technologies in Africa” (10 December 2010, p. [1483][1]), K. Simiyu et al. argue that what is truly needed is a venture capital fund (VC fund) to provide capital for promising ideas that are currently stagnating in research institutions. As academics focused on private equity and venture capital in emerging markets, we agree that more funding is required to move “stagnant technologies” from universities to the marketplace. However, it may still be premature for an early-stage life sciences–based VC fund in Africa, at least in the conventional sense of a freestanding, sector-focused, geographically diffuse structure. Successful venture capital efforts presuppose many conditions, ranging from the readiness of entrepreneurs to policies and laws that allow enforceable structuring of often elaborate transactions. VC funds also depend on a critical mass of technologies within a geographically limited area in order to leverage the networks and expertise of the venture capitalists. Although Simiyu et al. have identified 25 technologies with potential as products, many of these technologies remain far away from validation. In established markets, venture capitalists generally make only one or two investments for every 100 opportunities identified and evaluated. With the high attrition rates associated with even well-established technologies, the viability of a private-sector VC fund would be in doubt. Indeed, BioVentures, the only dedicated life sciences fund in sub-Saharan Africa (as noted by Simiyu et al. ), was unable to raise a follow-on fund. The trajectory of life sciences industries in leading emerging markets such as China, India, and Brazil suggests the importance of an existing manufacturing base in order to build a critical mass of infrastructure and talent. Domestically grown technologies and startups are unlikely to scale without this existing base of supporting industries in services and manufacturing. Even in South Africa, almost 90% of pharmaceutical and medical devices are imported, which makes the necessary scientific equipment unaffordable. Furthermore, the primary mechanism of exit for early-stage funds is to out-license technologies to—or to be acquired outright by—larger, well-established life sciences funds and firms. This is unlikely to happen with the suite of “stagnant technologies” identified. A market mechanism allowing for positive returns upon exiting is still in the future. There have been venture capital programs in many industrialized countries, as well as states and provinces, that were put into action before conditions were ready, thus souring the milk for years to come. Prematurely launching an early-stage VC fund compounds the ordinary risks and increases the odds of failure. In such a case, funders would only reinforce the prevailing negative investor perceptions in Africa, as well as reduce government enthusiasm for innovation. Simiyu et al. s points are a clarion call, to be sure. They demonstrate capacity for health innovation in Africa that merits risk capital. Our concern is that the inherent lack of diversification of a specialty life science VC fund poses an overwhelming risk of failure. Alternative approaches to a free-standing VC fund are worth considering. Multinationals seek access to countries beyond India and China to drive growth, and African countries are among the new frontiers. Investors can anticipate this interest by investing in high-tech manufacturing activity with the intention of exiting to multinationals, and in the process, they can also acquire early-stage technologies, combine them with these late-stage manufacturing investments, and build R&D capability. One such approach is used by our colleagues at the Investment Fund for Health in Africa (IFHA), a private equity fund that has raised

Chinese health biotech and the billion-patient market

100 million as of October 2010 from development banks and multinationals focused on private healthcare. IFHA has allocated 10% of its capital toward such an early-stage approach. This provides a seamless funding mechanism not only to validate, but scale up technologies. Hybrid VC/private equity funds such as the IFHA allow an entire innovation ecosystem to emerge, and can induce the large generics manufacturers to pursue R&D related to locally endemic diseases, similar to what has occurred in the Indian biotechnology industry. In this way, Africa can tackle its indigenous health needs and drive self-sustaining economic growth. [1]: /lookup/doi/10.1126/science.1195401

Valuation Methods in Early-Stage Biotechnology Enterprises: The “Venture Capital Method†at Work

We find that for one-third of grant applications in 2009 to Australia’s National Health and Medical Research Council, success is random owing to variability among peer reviewers. Increased competition for restricted research budgets means we must rectify this element of chance in selection. A quota limiting the number of proposals per applicant would thwart researchers who have a high success rate, while improving the odds for others. Barring unsuccessful applicants for one ‘cooling-off ’ round is another idea (Nature 464, 474–475; 2010). Simplifying the application process would reduce costs for both applicants and peer reviewers (for example, some funding agencies request superfluous information). It would help in recruiting good peer reviewers and cut the Innovation: venture capital is vital too