CEOs Blame FDA For Slow Growth
January 12th, 2012 // 1:36 pm @ jmpickett
As they say, money isn’t everything. And while CEOs at some biotechs as well as small drug and device makers, lament the lack of funding for their projects, an overwhelming majority also blame the FDA for slowing the growth of their companies. At least that is what a new survey of approximately 100 such companies has found.
Roughly 80 percent of the CEOs surveyed agreed or strongly agreed that the the current FDA approval process has slowed growth. A similar percentage do not believe the FDA has the best regulatory approval process in the world. The survey of 94 CEOs was conducted by BayBio, the California Health Institute and PriceWaterhouse Coopers consulting.
“Sound public policy and managerial and operational improvements at FDA, along with responsible congressional oversight, will encourage biomedical innovation and, ultimately, job growth here in California,†David Gollaher, who heads the California Healthcare Institute, says in a statement. The survey release was timed to coincide with the annual JP Morgan Healthcare Conference being held in San Francisco, where thousands of drugmakers, investors and analysts meet to peer into the future.
The FDA is a favorite target of complaints by industry executives, especially in the aftermath of the Vioxx scandal, which erupted in 2004 after Merck withdrew the painkiller. The episode ignited a torrent of accusations that regulators failed to adequately monitor signals that cardiovascular risks were overlooked or ignored.
Since then, the agency has been blamed by industry for being overly cautious, a posture that execs have regularly cited as a reason for fewer product approvals. Two months ago, though, the agency responded by releasing a report showing that 35 new medicines were approved during the previous 12 months, which is nearly the highest number of approvals in the past decade. The only year in which the agency issued more approvals was in 2009, when there were 37 such endorsements (see here).
The CEOs surveyed did acknowledge, however, that finding money remains another big problem. To wit, 74 percent say their companies have had to delay a research or development project in the past year. A lack of funding was the top reason for delays cited by private companies and accounted for 40 percent of delays by all companies surveyed.
And so, 44 percent of the CEOs will look to licensing agreements and corporate partnerships as a source of financing in the next 12 months, double the number from last year. Corporate venture funding is expected to become more crucial as 30 percent of CEOs will pursue this in the next 12 months, versus only 10 percent who did so in the past 12 months.
Meanwhile, funding from disease foundations and non-governmental organizations are growing as a funding source for 11 percent of CEOs who plan to use these funds in the next 12 months, versus only 4 percent who did last year.
The CEOs surveyed, by the way, are either located in California or do business there. Not surprisingly, they responded that access to capital is the most influential state policy issue to keep research and related activities in the state. Further down the list are tax incentives for innovation, corporate taxation, workforce preparedness and duplicative regulation among state and federal agencies.
Meanwhile, 81 percent say that coverage and reimbursement issues are extremely important to their ability to advance biomedical research, innovation and investment. But roughly 75 percent believe that, within the next five years, another country could conceivably recreate the ecosystem that has made the US the leading biomedical region in the world.
