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The relationship between public research funding and drug approvals is actually pretty limited. The bottleneck is actually funding for translational research, i

The relationship between public research funding and drug approvals is actually pretty limited. The bottleneck is actually funding for translational research, i.e. The space after public funding but before the $200B+ in big pharma r&d kicks in. This area is called the "valley of death" and is where most science dies Venture funding is what gets drugs through the valley of death. There's a pretty good correlation between the types of drugs VC funds, the drugs big pharma companies buy from VC, and the drugs that get approved. The kinds of drugs that get approved are less correlated with areas of focus for public research spending Or diseases with most societal impact Wrote something on this last week: http://newbio.tech/blog/vc_basics_1.html http://newbio.tech/blog/vc_basics_1.html

Retric 9y ago
Pharma research is not limited to the US. FDA will approve drugs developed in other countries though their will be some hoops involved they are tiny relative to finding something useful. Anyway, as you say: "Randomly picking 24 early-stage drugs to develop is a losing bet." What I think you are missing is VC's can extract money from failed drugs. VC's are playing with other peoples money and they get a larger chunk of upside while limiting their downsides. This means investing in VC's has poor returns on average which is why the system looks the way it does. PS: Trying to fit that decreasing curve when the actual trend line is clearly positive is ridiculous.
- aaavl2821 9y ago
  Agreed that pharma research is not limited to the US, but neither is VC investing. US VC firms account for the majority of global biopharma VC investment (though china is catching up). As it stands now most FDA approved drugs are developed by US, European or Japanese firms, and in 5-10 years china will be up there as well. The US is the most profitable drug market, so as a quick and dirty analysis I think using FDA approvals, VC funding and big pharma m&a data makes sense. Not perfect, but it's a decent heuristic VCs do make money on management fees, and VC returns in biotech from 2000-2012 were poor, but biopharma VC has done insanely well the last five years. Better returns than software VC, more IPOs and big m&a exits than tech despite only accounting for 20% of venture funding A lot of money is now chasing these high returns, but there are not enough good biopharma entrepreneurs. So there more money but not more good startups. And yes, that chart about r&d spending is not statistically valid :), but it isn't meant to be. But it illustrates a trend that big pharma is cutting back on r&d, especially early stage research which they outsource to startups. This topic is tangential to the topic of the post, but the article that was the source of that chart has good context around pharma r&d trends

Retric 9y ago

Pharma research is not limited to the US. FDA will approve drugs developed in other countries though their will be some hoops involved they are tiny relative to finding something useful. Anyway, as you say: "Randomly picking 24 early-stage drugs to develop is a losing bet." What I think you are missing is VC's can extract money from failed drugs. VC's are playing with other peoples money and they get a larger chunk of upside while limiting their downsides. This means investing in VC's has poor returns on average which is why the system looks the way it does. PS: Trying to fit that decreasing curve when the actual trend line is clearly positive is ridiculous.

aaavl2821 9y ago
Agreed that pharma research is not limited to the US, but neither is VC investing. US VC firms account for the majority of global biopharma VC investment (though china is catching up). As it stands now most FDA approved drugs are developed by US, European or Japanese firms, and in 5-10 years china will be up there as well. The US is the most profitable drug market, so as a quick and dirty analysis I think using FDA approvals, VC funding and big pharma m&a data makes sense. Not perfect, but it's a decent heuristic VCs do make money on management fees, and VC returns in biotech from 2000-2012 were poor, but biopharma VC has done insanely well the last five years. Better returns than software VC, more IPOs and big m&a exits than tech despite only accounting for 20% of venture funding A lot of money is now chasing these high returns, but there are not enough good biopharma entrepreneurs. So there more money but not more good startups. And yes, that chart about r&d spending is not statistically valid :), but it isn't meant to be. But it illustrates a trend that big pharma is cutting back on r&d, especially early stage research which they outsource to startups. This topic is tangential to the topic of the post, but the article that was the source of that chart has good context around pharma r&d trends