OneMedForumSF 2012 (onemedplace.com/forum), the Emerging Company Finance Conference took place in January. It began with the workshop on “Entering China” and ended with a panel discussing “India as a Market Opportunity”. Taking place concurrently while J.P. Morgan annual conference was taking place at the close by venue, the differences in some cases, could not be more stark. And the similarities in terms of focusing on emerging markets, were also evident. At J.P. Morgan conference, it was clear that the big pharma companies are flush with cash, dust is settled for most of them around coming to terms with patent expiration challenges and strategic realignment issues, and debt is cheap. All of this is leading to big biotech becoming active acquirers, with 2011 fundraising at $23.4 B, almost on par with the funds raised in the glory days of 2007. However, most funding was raised by public companies and the players were big syndicates. At OneMedForum, I saw a sharp contrast. I saw some cool technologies but less optimism and good news on the funding front, as the discussions in the hallway centered around “but where is the money” especially for early stage companies. Also all large pharma companies are focusing on almost guaranteed market growth among emerging markets and therefore are more attractive to individual investors as well. So what is the future for device innovation and early stage companies? The answers will have to be as creative with respect to funding, as their innovative offerings are.
The workshop on entering China, on day one, began by defining the opportunity for non-Chinese companies to commercialize medical products and services in china. The lessons shared included, a start with a well defined plan. Companies seeking to enter China must define their business model early on to avoid issues concerning repatriation of money earned in China, aggressive safeguarding of IP, and other issues like strategic clarity around the long-term objective whether the interest is for R&D or manufacturing or reverse innovation. A well defined plan should be followed with good understanding of culture and identifying right resources and forming strategic partnerships and relationships to make it happen. China is a diverse country and for doing business, it would be best to form relationship with key local person, on the ground. Additionally, understanding the culture, including little things like sharing a drink with a business partner, lowering the glass when toasting, not giving the clock as a gift, could make difference. And then there are other issues like being comfortable with lack of control, slowness and complexity of decision making, and sometimes slow execution of a decision that was achieved speedily, that can be challenging.
A panel on the last day discussed market opportunities in India. Yash Rana, Attorney at Goodwin, shared that allIndiasectors are open to foreign investment without much regulatory hurdles. Once the contract is signed, companies in India honor them, unlike in China, where it is often a starting point for further negotiation. Also IP is much more secure and the patent law is almost up to Western standards. Tom Moore, CEO of Advaxis shared that their company chose India for cervical cancer study trials, since there are many cases of cervical cancer, the cost is low, and they found medical community to be cooperative, helpful, and knowledgeable, and it was an overall positive experience. The challenges they faced were around good prior medical history and records because in some cases they were non-existent. Rana shared that a universal ID system is now being rolled out in India and it will make keeping track of patients enrolled in clinical trials, easier. While India has strong expertise in Chemistry and Pharmacology, historically it has not had strong expertise in Biology but collaboration and cross-fertilization makes it a win-win strategy, said Sri Mosur, CEO of Jubiliant. Biocon is the first pharma company out of India, said, Abhijit Zutshi, head of North American Operations for Biocon, India. While innovation was not big in India, that is quickly changing, added Zutshi.
Some of the other panels I only attended sporadically, while also spending my time at J.P. Morgan Conference. Other interesting panels focused on Mobile Health & Medical Devices and on Diagnostics & Personalized Medicine, both of which should be cranked up in high gear with innovation focus tied to affordability and reduction in healthcare costs. Other panels also explored investment trends in Biotechnology, and investment trends in Medical Devices and presumably explored trends in regenerative medicine, neurological disorders, vaccines, & infectious diseases on the biotech side and cardiology, neurology, orthopedics, and diabetes on the device side.
While the outlook remains somewhat bleak, with respect to funding, the company presentations were high quality, panels and workshops were insightful, and the conference presented ample opportunity for CEOs, corporate development executives, and some sprinkling of investors to build relationships and hopefully find creative solutions for funding dilemma.