Life Science Innovation Dependent on Venture Capital, New Report Asserts
VC Investment in Biotech and Medical Device Companies Accelerates Time to Market, Extends and Improves the Lives of Millions
More than 100 million (1 of every 3) Americans have benefited from venture-backed medical innovations developed during the past 20 years, according to a new qualitative research report issued today by Pacific Bridge Life Sciences and THE WEINBERG GROUP. The report entitled, "Patient Capital: Improving the Lives of Millions" examines the impact of venture capital investment on the treatment of chronic diseases and leading causes of death in the United States, including cancer, heart disease, stroke, diabetes, asthma and arthritis.
Commissioned by the National Venture Capital Association (NVCA), Patient Capital also asserts that venture-backed medical innovations are developed and made available to patients as much as three times faster than a "bootstrapping" approach to product development.
"Venture capital investment has played a pivotal role in incubating and commercializing many of the breakthrough innovations that have occurred in the life sciences sector during the last half century," said Dr. David Goodman of THE WEINBERG GROUP and co-author of the report. "Without venture capital investment, many of the United States category leaders in the biopharmaceutical, medical device and diagnostic sectors may never have gotten off the ground."
Patient Capital is the first sector-specific report on venture capital's impact on America. In July, Global Insight published a study that documented venture capitalists' role in job creation and revenue generation in the U.S. Patient Capital examines the role of venture capital in funding biotech and medical device companies which are often too risky for more traditional financing sources due to the large dollars required, length of investment timeframe, and high uncertainty of outcomes. The report examines lives saved and improved as a result of venture-backed products and includes cases studies on medical breakthroughs in the areas of cardiovascular, respiratory and kidney disease, arthritis, diabetes, stroke, and cancer.
"Venture capital has helped combat chronic diseases, which account for 70 percent of all healthcare costs in the United States," said Anthony Stolis, managing director of Pacific Bridge Life Sciences and co-author. "From medications such as ENBREL, Integrelin and Herceptin to devices such as pulse oximeters, blood glucose monitors, and MRIs, venture-backed innovations have improved the quality of our lives and provided peace of mind for millions of Americans."
The benefits of VC investing in life sciences extend beyond patient care and into the national economy. The US venture capital community invested more than $5 billion into life sciences companies in 2003, representing 28% of all venture capital investment. For more recently launched products examined in the study, every venture dollar invested yields more than $50 in revenues and as much as $750 for products introduced ten years ago, allowing venture-backed companies to pay taxes, develop new products, and hire more employees. The life sciences sector today employs more than 600,000 Americans, earning an average of $70,000 per year.
The report highlights some of today's market leading companies including Genentech, Amgen, Immunex (acquired by Amgen) and Nellcor (acquired by Tyco), all which received venture capital financing during their critical growth phases. Many early stage employees of companies such as these have moved on to start second-generation companies of their own, creating a multiplier effect. According to the Milken Institute, the nation's leading biotechnology clusters are Northern California, Boston, Philadelphia, Los Angeles, and San Diego.
"The US has been phenomenally successful in the life sciences area because the environment for investing has been favorable," said Mark Heesen, president of the National Venture Capital Association. "Our government must continue to foster innovation by providing grant funding for basic research, compelling the best and the brightest scientists from around the world to do their work here, and supporting the commercialization of products that are developed here."
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