Here is a good post from Xconomy by Shawn Iadonato, CEO of Kineta in Seattle. In it, he argues that in order for the NIH to better support its stated mission "to improve human health and reduce the burdens of illness and disability" by "acclerating cures", it must do more to support translational research with funding for biotechs.
He makes the point that while Big Pharma annual R&D spending has increased 6 fold between 1982 and today - the number of drugs making it through the pipeline is virtually unchanged (if not down slightly). If you look at NIH funding, most of that is focused toward Universities and basic research. He cites this example. In 2009, an incremental $10 B in NIH funding was approved in the Amercian Recovery and Reinvestment Act. Of the 406 ARRA grants going to Washington State, only 5 went to provided to biotechs. He argues that excluding biotechs doesn't help new drug development or job growth in Washington, and small businesses are effectively cut out of the stimulus package by this type of allocation.
He concludes that academic institutions are clearly important to basic research. However, they are not designed to develop drugs. Since Big Pharma has largely removed early translational research from its R&D groups (in favor of outsourcing), that leaves small biotechs as the last line of defense in doing this important translational work. Therefore, if NIH wants to truly accelerate cures, it should change its allocation procedures and send more money in support of this research at biotechs. This is the best way to speed development of high-need new drugs.
I think you couple policy changes in this direction, with the $1 B in tax and grant provisions for small and medium biotechs in the latest healthcare reform bill, and you will begin to make an impact in drug development in the biotech environment. This is especially true given the more difficult venture capital environment in this sector - although that appears to be improving somewhat. The industry is restructuring. Big Pharma is changing its development model to become more dependent on CROs, CMOs, biotechs, etc. It is time for the funding mechanisms used by the Federal Goverment to modify and change as well.
Posted by Bruce Lehr September 3rd 2010.