Archive: Food for Thought

Food for Thought: Crowd-funding – A Useful Financing Strategy for Healthcare Companies?

Crowd-funding is a widely discussed and disputed financing approach these days. It has proven to work in many industries, including the entertainment sector. But what implications will it have for the healthcare industry? Will it have any impact on healthcare at all?

So far, there are only few examples of crowd-funded healthcare ventures. One of them is the Rare Genomics Institute, a US-based non-profit organization dedicated to providing better and faster diagnostics and therapies for rare diseases. They decided for a personalized approach by putting up individual cases of rare disease sufferers on their website and organizing funding for the diagnosis and treatment of the affected patients. Thereby, Rare Genomics Institute provides treatment opportunities for patients who otherwise would not be able to pay their medical bills, as these kind of therapies (and diagnostics) are usually not funded by healthcare providers.

What seems to work as a fundraising approach for individual cases in the US still has to prove its viability in other regions of the world – and in a larger healthcare context. Could expensive drug development eventually be financed by crowd-funding? According to an article in Genetic Engineering News, there is currently not much evidence that biopharmaceutical companies could benefit from crowd-funding, as their financing requirements are significant and long-term oriented. In fact, there are only very few examples of biopharmaceutical companies which have managed to close a financing by crowd-funding, e.g. cancer immune therapy company Urodelia (France). However, the financing volume has not been disclosed. Others, like AMD Therapy (Germany), a fund dedicated to finance the development of novel therapeutics to combat age-related macular degeneration, or Selexel (France), which is developing cancer therapies based on RNA interference, are still raising funds. Interestingly, AMD Therapy aims to raise as much as EUR 60 million by crowd-funding – much more than other biopharma companies in Europe were able to raise by private equity financing during the past 12 months.

At the end of the day, many questions are still unanswered. Will private sponsors continue to be willing to pay a stranger´s medical bills in the long run? Will start-up healthcare companies financed by crowd-funding eventually have to fulfill strict reporting and transparency requirements?

 

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Food for Thought: Greek Ghosts Haunting Pharma

Up to the end of 2010, pharma companies were able to set the price for innovative new medicine at will upon introduction to the German market. Under the new AMNOG law, however, the price is dependent on the degree of innovation, as assessed by G-BA (Federal Joint Committee). G-BA requires pharma and biotech companies to provide information on medical benefits and advantages as compared to existing medicines across all indications the drug is approved for, and statistics on the (sub)sets of patients who will benefit from the drug. In addition, they have to provide spending figures of the statutory healthcare system and need to explain how quality can be assured during treatment.

G-BA can mandate the Institute for Quality and Efficiency in Healthcare (IQWiG) with the assessment (to make matters more complex, IQWiG can assess drugs and treatments also without assignment by G-BA) and once it has come to a conclusion, it needs to call for opinions of all parties (manufacturers, reviewers/experts, head organizations of patient/self-help groups and medical associations, etc.) – written statements as well as hearings.

If at the end of the process G-BA comes to the conclusion that the respective drug does not provide additional benefit, the medicine is subject to reimbursement under Germany’s fixed-price system and will be reimbursed in the price range of drugs already marketed in the same indication(s).

However, if the new medicine is ruled innovative, the bazaar is open: lobby groups of the pharmaceutical industry, including generics manufacturers, start debating with G-BA and representatives of the statutory healthcare system. The interesting part of this procedure is that pharma companies have to provide data on the selling price in “other European countries”.

But which are these “other” countries? With the European debt crisis, the debate has become heated: while manufacturers demand to select countries with similar economic power as comparators (such as France or UK), the statutory healthcare insurers are advocates of including Europe’s weakest economies: Greece, Portugal, The Czech Republic, Slovakia, etc. To resolve the problem, an arbitration board was founded.

Since last week, the jury is out, and it is not in favor of manufacturers. The arbitration board selected 15 European countries as reference countries for price fixing. The list comprises Austria, Belgium, the Czech Republic, Denmark, Finland, France, Greece, Ireland, Italy, The Netherlands, Portugal, Sweden, Slovakia, Spain, and the UK. At least five of them are economically weak countries with low drug prices.

The ruling will have consequences not only for Germany. If, as a result, prices for innovative medicines in Germany come down, prices elsewhere in Europe might follow as Germany is a reference country for pricing in many other European countries. To avoid a downward spiral, manufacturers may choose to introduce novel innovative drugs in Germany only with a considerable delay.

Food for Thought: The Indian Biotechnology Industry – Opportunities for Europe

By Dr. Amal Mukhopadhyay

The Indian biotechnology industry is growing at record speed, both in terms of turnover and investments. While Indian biotech is recognized in the West  for high quality services, bioinformatics and manufacturing, it also offers great opportunities for conducting clinical trials and manufacturing of biosimilars. Only recently, European companies have started to realize that India also is a huge and receptive market for innovative drugs and medtech products.

With a consistent double digit growth rate throughout the last decade the Indian biotechnology industry has been recognized as a sun-rise industry not only in India but also globally. According to a survey based on inputs from over 150 biotech companies, conducted by  Biospectrum – Association of Biotechnology Led Enterprises, Bangalore India  (2010-2011), the Indian biotechnology industry posted revenues of $ 2.9 billion, in spite of the global recession during 2009 and slow recovery during 2010. The total turnover is expected to reach $ 8.6 billion in 2015 with an anticipated annual growth rate of 30%.

Five Segments

The Indian biotechnology industry has five thriving segments – agro-biotech, bio-industrial, bio-informatics, bio-pharma and bio-services.  Among these five sectors, the bio-pharma segment has seen major growth stimulations retaining the first position in turnover and investment, closely followed by the bio-industrial segment which has registered the fastest growth rate within the sector, surging from less than 5% market share five years ago to over 14%. Recently, the Indian Biotechnology sector has witnessed close to 50 major deals, a development which has boosted investment in this sector and catalyzed its growth.

India offers low-cost, top quality manufacturing facilities as well as research and development capabilities – not only in the field of small molecule generics, but also in drug development and innovative formulations. Another strength is in the well-developed segment of computational biology and bioinformatics. India fully respects the international standard of intellectual property rights and has an abundant pool of well-trained scientists both at pre- and post-doctoral level, who are well versed in English and are available at a fraction of cost required in Europe. Thus, a large number of biotech companies in India offer R&D support and services related to biotechnological analytics, ranging from large scale DNA sequencing, gene cloning, fermentation technology, small animal experimentation  to protein purification. Many biotech and pharmaceutical companies in developed nations faced with crunch in funding are taking cost saving advantage by outsourcing some of their research and development projects to Indian companies.

Biosimilars and Clinical Trials

Two sectors within the broad framework of biotechnology, (a) biosimilar manufacturing and R & D and (b) clinical research operations, are currently receiving phenomenal industry interest.  According to the report “Biosimilars and Biobetters: Positioning for a New Market”, a large number of  biologics with a potential value of about $59 billion are threatened by competition from biosimilars because of expired or near-to-expiration patents. It is expected that by 2013, biologics sales will have almost doubled to $202 billion, of which $80 billion will be susceptible to biosimilar competition, and biosimilars could generate a global market of $5.6 billion. India is well positioned to capture a sizeable portion of this market. The turnover of Indian biosimilar products is expected to have increased from $ 200 million in 2008 to $580 million in 2012.

India is also gaining importance as a top clinical trial destination, boosted by a large number of world class hospital chains equipped with the latest medical technology and staffed with well qualified medical professionals, being established throughout India.  Together with a large number of well qualified companies (compliant in GCP, GLP, ICH and ISO standards) offering services in conducting clinical research this makes India a destination of choice for saving time and money with clinical trials. According to a joint study by an industry body and Ernst and Young (E&Y) released in August 2009, industry-sponsored Phase II and Phase III clinical trial sites in India have grown by 116 per cent from June 2008 to August 2009, advancing the country from rank 18 to 12 across the 60 most active countries. India participates in 7% of the global Phase III trials and 3.2% of Phase II trials, with a 39% CAGR of industry-sponsored trials from 2004-08.

Therefore, by collaborating with Indian companies, European companies can considerably save on their R&D budget by cost cutting and speeding up their discovery process.

Huge Market

But India has more to offer: the country is a huge market for innovative products, services and technologies that companies in Europe can offer.  However, the lucrative Indian market can be quite challenging and therefore a thorough preparation is necessary before entering the market. It is recommended that companies aiming to enter India must plan their strategy well. They should gain firsthand experience and insight by visiting India, talking to their potential partners, clients and investors. This process can be considerably aided by professional experts who are operating in Europe and have a thorough knowledge of India and the science behind the biotechnology business. In addition, support from organizations like the various external Chambers of Commerce established throughout Europe, the Indo-German Chamber of Commerce, Trade Associations, the IGEP Foundation, commercial sections of embassies operating in India, etc. can be helpful. Attending specific and focused trade fairs in India or Indo-German Biotech Conferences being held in Germany can be beneficial, too.

Dr. Amal Mukhopadhyay is founder and CEO of ELGA Biotech, Hamburg, an organization dedicated to promote Indo-German cooperations in biotechnology and life sciences.

Food for Thought: Future Benefit Assessment of Medtech in Germany

Germany´s Law on the Stabilization and Structural Reform of the Statutory Health Insurance (Versorgungsstrukturgesetz) came into effect January 1st, 2012. For medtech companies it is important that the law introduces a novel instrument of the statutory healthcare system’s Joint Federal Committee G-BA for the assessment of innovative medical technologies. This novelty – the so-called “trial provision” for innovative medtech methods – has the advantage of not summarily excluding methods whose benefit is not immediately clear.

Dr Rainer Hess, Chairman of G-BA, in January detailed the plans of G-BA for the assessment of innovative medical technologies: “We are not assessing medicinal products, such as pacemakers or endo-prostheses,” he said during the recent MedInform conference “Versorgungsstrukturgesetz 2012” hosted by BVMed, the German Medical Technology Association. “We are evaluating medical diagnostic and therapeutic procedures in which medical devices may play a role.”

The trial provision, he added, would offer the opportunity to conduct representative studies of novel procedures, if adequate evidence is not available and novel studies are not to be expected.

Hess said G-BA will expect the demonstration of an additional benefit as compared to existing methods.  To determine this additional benefit, G-BA will lay out study requirements in a guideline and assign an institute with conducting the study. Manufacturers will have to contribute financially to the study – otherwise the device can be excluded from reimbursement.

Germany’s Institute for Quality and Efficiency in Healthcare (IQWiG) will then furnish a scientific opinion. Finally, G-BA will host a hearing, including experts, and subsequently make a decision about reimbursement.

Assessment can be demanded by the manufacturers but also from a statutory health insurance company.

Further information can be found at the webseite of BVMed – The German Medical Technology Association

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