Reliance on external partners threatens innovation; experts

By Nick Taylor

- Last updated on GMT

Related tags: Economics

Pharma’s reliance on outsourcing and products developed by biotechs could cause the pace of innovation to “decline considerably”, according to experts that are concerned about the lack of funding for small businesses.

In recent years pharma has become increasingly reliant on external partners, such as contract research organisations (CRO) and biotech start ups, and experts at the European Health Forum Gastein (EHFG) are concerned about the health of this model.

At EHFG, which took place last week in Bad Hofgastein, Germany, experts warned that biotech’s funding difficulties “could lead to a substantial restriction or slowdown in research activities in the pharmaceutical industry​”.

The fear is that if a substantial number of biotechs fail to survive the economic downturn the main driver of innovation will be gone. Viola Bronsema, a member of EuropaBio’s National Association Council added that rapid medical advances of the recent past “could soon be history​”.

Taking action

To prevent this occurring more must be done to ensure funding is available for small and medium enterprises (SME). In its press release the EHFG states that “an entire series of initiatives​” is needed to counteract the problems, highlighting the EuropaBio SME Platform as an example.

EuropaBio has developed its SME Platform to help companies overcome current financing difficulties and develop new funding opportunities. One aspect of this is a request that European institutions develop short-term investment vehicles to help firms through the current difficulties.

Under the terms of this arrangement organisations such as the European Investment Bank would establish the vehicles to increase the amount of risk capital for capital ventures. Bronsema added that limits to credit facilities per company should be lifted, at least until the economy improves.

This would help biotechs through the economic downturn, after which Bronsema believes there will be opportunities. She explained that market shifts, in particular the trend towards personalised medicine, will create “an extremely promising market​” for biotechs.

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