There have been multiple attempts by healthcare companies to develop early-stage ideas from academia and entrepreneurs into the next blockbuster product but the challenges to success remain severe.
Into this (mine)field is stepping Japan-based drugs company Takeda Pharmaceuticals, which could launch its early-stage development initiative as early as next month.
Takeda New Frontier Science (NFS) aims to build relationships with academics and entrepreneurs developing disruptive ideas to improve patients’ lives.
Juan Harrison has moved from the drugs company’s US-based corporate venturing unit, Takeda Ventures (TVI), to head up NFS. In a Global Corporate Venturing webinar hosted by US-based academia organisation National Council of Entrepreneurial Tech Transfer (NCET2), Harrison said the aim of NFS was to "position Takeda as a most-favoured innovation partner" so it could gain insights into new technologies and access data.
For this to happen, he said the "relationship to innovator is key" and so Takeda could provide funding through grants or other finance, advice "through active engagement" and assets, including scientific support and databases.
As the relationship is important, Harrison said Takeda would not seek to have intellectual property rights first as "shame on us" if Takeda cannot negotiate before its rivals a commercial partnership if the ideas develop into something the company is interested.
He said TVI could then potentially take on these ideas and relationships from NFS through buying minority equity postions as part of a syndicate in a company, or they might be taken on by another part of Takeda’s business development units, if appropriate. (See chart.)
This model of building relationships with top academics and entrepreneurs rather than funding specific projects has been taken on by Europe’s largest medical charity, Wellcome Trust, as one way to liberate innovation.
By looking round the world for the best 10 to 15 ideas per year (it will likely have 10 to 12 staff in Germany, Chicago, Cambridge (MA), San Francisco and Japan), Takeda is also prepared to look outside of traditional pharmaceutical faculties in case the ideas from, say, biofuels, might be applicable to treating patients, Harrison said.
But while NFS is focused on the so-called far adjacencies, ie helping Takeda enter new industry spaces, it is all designed to treat patients rather than enter new economic sectors because change is increasing in healthcare.
Harrison listed the main changes as coming from: increased costs while reimbursement budgets are constricting; precision medicines increasingly demanded, such as patient-specific drugs and combinations; multi-disciplinary treatments from combining drugs with diagnostics and devices; and demographic and economic trends, including ageing populations and developing market needs.
As Harrison said in the NCET2 webinar, held in conjunction with our sister paper, Global University Venturing: "Healthcare demands are changing faster than ever before [and] pharma is becoming ever more dependent on innovation to advance its business."
Given Takeda sources half its pipeline of future drugs and the sources of alternative funding – such as venture capital and government money – are shrinking, the company is trying to step into the breach.
The US-based Federation of American Societies for Experimental Biology said the American government made 1,600 fewer awards to support healthcare innovation last year compared to its year-2003 peak while the current budget was $4bn less than a decade earlier.
There has been an implosion of healthcare VCs over the past few years. Takeda has just hired top-tier VC Prospect Ventures’ Ilan Zipkin as senior investment director at TVI.
Corporate venturing, by contrast, has been increasing by at least 18% over the past two years, according to US trade body National Venture Capital Association, or to more than a fifth of healthcare venture rounds using global data from Global Corporate Venturing in this month’s magazine.
But the approaches taken by firms are starting to overlap as firms join up the vaious items in their innovation toolkits. For example, Johnson & Johnson is wrapping its Development Corporation (JJDC), Corporate Office of Science and Technology (Cosat) and RedScript Ventures under a new framework led by Paul Stoffels based round innovation centres in Boston and southern California in the US; Shanghai, China; and the UK (see profile in related content).
And where healthcare leads, other sectors follow.