A separate agreement in the US between Pfizer, Eli Lilly, AstraZeneca, and the National Institutes of Health's National Clinical
and Translational Sciences program seeks to award grants to fund preclinical and clinical feasibility studies for new uses
of more than 20 compounds shelved by the pharmaceutical companies because they failed to work in the disease areas for which
they were being developed.
These agreements reflect efforts by industry and others to address the high cost of drug development and find ways to develop
needed new medicines while reducing risks. But the slowing of traditional alliances is concerning because these agreements
play a key role in funding development of the biotech industry's most promising products.
Venture capitalists, who also play a crucial role in funding early-stage biotechs, have seen their traditional models upended
by the long timelines involved in therapeutic R&D as well. Although life-sciences venture capital investment has been increasing—up
29.6% in the first five months of 2012 compared with the same period a year ago—funding for drug developers is flat compared
with 2011. Most of the gains have come from investments in medical device and diagnostics companies.
To bridge the therapeutic funding gap, a host of initiatives are focusing on funding translational research and early-stage
companies that bring together the public and private sector, particularly with the goal of building life-sciences centers
in specific locations. The largest of these efforts, announced in early March, is a $760-million partnership between Russia's
Rusnano and the US venture-capital firm Domain Associates that will invest in emerging life sciences technology companies,
foster the transfer of technology, and establish manufacturing facilities in Russia for the production of advanced therapeutic
products. As part of the effort, Rusnano and Domain expect to co-invest in about 20 US-based healthcare technology companies.
Other initiatives include an effort by the Welsh government to create a biotech hub through an $80-million commitment to what
is targeted to be a $375-million fund; a $100 million R&D fund backed by Merck Canada, Lumira Capital, and other venture capital
firms to attract pharmaceutical companies to Quebec; and a Wellcome Trust project to invest $317 million in emerging healthcare
and life-sciences businesses and technologies in Europe in early-stage development with significant potential to grow.
Among the most unusual efforts is a $250-million initiative from Cleveland's University Hospital, which is establishing a
nonprofit entity to fund and advise physician-scientists on translational research and a related for-profit accelerator that
will develop selected compounds to proof of concept.
All of these efforts reflect a dramatic change in the way drug development is conducted and funded. They represent not only
a search for new models to address a system that has become too costly to sustain, but also the involvement of a wide range
of stakeholders that want to ensure they realize the benefits they have come to see in successfully bringing new therapies
G. Steven Burrill is chief executive officer at Burrill & Company, San Francisco, CA, 415.591.5400, email@example.com