Access to capital, a burdensome and uncertain regulatory environment and lack of innovation and productivity in R&D are the biggest threats to US biomedical industry growth over the next five years, according to sector leaders.
74% of US biomedical company chief executive officers (CEOs) have told a new survey that they have had to delay a research or development project in the last year. Lack of funding was the top reason for such delays cited by private company CEOs, and this accounted for 40% of delays by all private and public companies included in the survey, which was conducted by CHI-California Healthcare Institute, BayBio and PwC US.
"Biomedical companies have long relied on government grants and venture capital to finance innovation, but funding sources are shifting and companies will need to adapt to a new reality," said Tracy Lefteroff, national life sciences partner at PwC US.
"While venture capitalists and angel investors will continue to be an important source of funding, it has become increasingly difficult for biomedical companies to gain access to them. Alternative sources of funding are emerging, which highlight shifting opportunities and dynamics in life sciences innovation," he added.
44% of CEOs responding to the survey said they will look to licensing agreements and corporate partnerships as a source of finance in the next 12 months - double the number who told last year’s poll that their companies are using this avenue for finance.
Corporate venture funding - the investment of corporate funds into external endeavours - is expected to become a much more crucial source of funding to the industry, with 30% of CEOs surveyed saying they will tap corporate venture capital as a finance source in the next 12 months. A year ago, only 10% said that they would do so.
And while disease foundations/non-governmental organisations (NGOs) are still only a small contributor to the financial equation, they are growing, with 11% of CEOs now saying they plan to use these funds over the next 12 months, compared with just 4% who did so last year.
The survey also finds that, for biomedical CEOs, the Food and Drug Administration (FDA) and regulation are the key issues affecting R&D. 80% of the CEOs surveyed "agreed or strongly agreed" that the current regulatory approval process at the FDA has slowed the growth of their organisation, and the same percentage said they do not believe that the FDA has the best regulatory system in the world.
Moreover, three-quarters of those surveyed said they believe that within five years, another country could conceivably recreate the ecosystem that has made the US the leading biomedical region in the world.