CEO Survey finds lack of Investment and Regulatory Environment threaten Growth and Innovation
Access to capital, a burdensome and uncertain regulatory environment and lack of innovation and productivity in research and development are the biggest threats to the biomedical industry’s growth over the next 5 years, The CEO Survey found:
- Nearly three quarters (74%) of biomedical industry CEOs surveyed said their companies have had to delay a R&D project in the past year;
- Lack of funding was the top reason for project delays cited by private company CEOs, and accounted for more than one-third (40%) of delays by all public and private companies in the survey;
- 8 in 10 CEOs surveyed agreed or strongly agreed that the current FDA regulatory approval process has slowed the growth of their organization.
The CEO Survey found that biomedical companies inCaliforniahave been resourceful over the past year in seeking diverse funding sources, divided almost evenly among government grants, angel investors, venture capital and licensing agreements and partnerships.
- “Biomedical companies have long relied on government grants and venture capital to finance innovation, but funding sources are shifting and companies will need to adapt to a new reality,” said Tracy Lefteroff, national life sciences partner, PwCUS. “While venture capitalists and angel investors will continue to be an important source of funding, it has become increasingly difficult for biomedical companies to gain access to them. Alternative sources of funding are emerging, which highlight shifting opportunities and dynamics in life sciences innovation.”
44% of biomedical CEOs surveyed said they will look to licensing agreements and corporate partnerships as a source of finance in the next 12 months, double the number of CEOs who last year said their companies are using this avenue for finance.
- Corporate venture funding, the investment of corporate funds into external endeavors, is expected to become a much more crucial source of funding to the industry, with 30% of CEOs surveyed saying they will tap corporate venture capital as a finance source in the next 12 months, versus only 10% who did so in the past 12 months;
- Though still only a small contributor to the finance equation, disease foundations/non-governmental organizations are growing as a funding source for 11% of CEOs who plan to use these funds in the next 12 months, versus only 4% who did last year;
- Access to capital is seen by CEOs as the most influential state policy issue to keep biomedical research, innovation and investment inCalifornia. Nearly ¾ (72%) of CEOs said that access to capital is extremely important, followed by (in order of importance) tax incentives for innovation (60%), corporate taxation (51%), workforce preparedness (47%) and duplicative regulation among various state and federal agencies (37%).
According to CEOs surveyed, FDA and regulation are the key issues affecting research and development.
- 81% of CEOs also said that coverage and reimbursement issues are extremely important to the industry’s ability to advance biomedical research, innovation and investment inCalifornia;
- In addition, 80 percent of CEOs surveyed do not believe that US FDA has the best regulatory approval process in the world, and ¾ ‘s believe that within 5 years, another country could conceivably recreate the ecosystem that has made theUSthe leading biomedical region in the world.