Access to capital, FDA regs worry CEOs
SAN FRANCISCO – What is keeping biomedical CEOs up at night in California? According to a new survey, it's lack of capital and stringent FDA regulations that threaten to stunt the growth of the industry.
At a January press conference CEOs gathered in San Francisco to get a sneak peek of the 2012 California Biomedical Industry Report released by CHI-California Healthcare Institute, BayBio and PwC US. The survey targeted approximately 100 companies in the state in the areas of pharmaceuticals, biotechnology, medical devices, diagnostics or medical equipment.
Gail Maderis, president and CEO of BayBio, called the survey data “critical.”
“Nearly three quarters of CEOs delayed research or projects in the last year primarily because funding was not available,” she noted.
Another major concern was the “FDA regulatory environment,” said Maderis. According to the survey, eight in 10 CEOs surveyed agreed or strongly agreed that the current FDA regulatory approval process has slowed the growth of their organization.
CEOs, Rick Winningham of Theravance, Alex Lukianov of NuVasive and Stephen Cary of Omniox were invited to speak at the conference to share why and how their companies will continue to business in California.
The three CEOs all agreed on two things: the weather in California is fantastic and so are the people. But with growing competition from other regions, the ability to keep all manufacturing in the state could become difficult.
“We want to manufacture in California but there is a lack of extension or establishing better conditions for us in the state,” said Lukianov.
“We ideally want to keep everything in California,” agreed Cary. “Our top priority is to find a California investor so we can stay here,” he added.
“We have an affinity to stay in California,” Winningham said, adding that “challenging taxation and cost of living issues may detract recruiting people in the area. Clearly, we would like to use this as a point to grow from as long as the system is supportive.”
Part of this support also depends on the FDA.
“There has been a huge slow down in the approval, release of new products,” said Lukianov.
“Last year, we estimated delays cost $7 million dollars in lost revenue and reduced headcount growth plans by 15 percent because of all the products that were backed up by the FDA,” he said.
Lukianov says this type of “ecosystem is not supportive for innovation.” Companies “can't attract capital,” he said. And if they can't do that they “can't hire good people to solve public health problems,” he added.
Lukianov noted that the FDA has been successful in approving cancer medicines and hopes it will extend beyond that.
Cary said that currently “investors are laughing at starting a cardiology drug.” One of the reasons for this, he says, is that the requirements for the number of patients in a clinical trial to show that you have something safe is “mathematically and financially unattainable.”
The CEOs expressed concern for public health if this trend continues.
