vital signs full data deck
TRANSCRIPT
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The Crisis in Investment in U.S. Medical
Innovation and the Imperative of FDA Reform
Vital Signs
Survey Findings
October 2011
NVCA MedIC Vital Signs Report, October 2011
Confidential: Do Not Distribute Prior to October 6, 2011
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Table of Contents
Summary and Methodology
Survey Results
Demographics of Survey Respondents
NVCA MedIC Vital Signs Report, October 2011
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We must act now or lose our leadership position inmedical innovation, job creation
and access to life-saving treatments in the United States.
Decrease their investmentin biotechnology and medical devicestart-ups
Reduce their concentrationin critical therapeutic areas, and
Shift focus awayfrom the United States towards Europe andAsia
A 2011 study found that U.S. venture capitalists have been andwill continue to:
Summary
FDA regulatory challenges were identified as having the highestimpact on these investment decisions.
NVCA MedIC Vital Si ns Re ort October 2011
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Study Methodology
Online survey conducted JulySeptember 2011
Sent to 259 NVCA member firms investing in the healthcaresectors
156 firm responses = 60% response rate = 92% of NVCAinvested capital (2008-2010)
Survey respondents accounted for $10 billion of VCinvestment in healthcare companies in the past 3 years.
NVCA MedIC Vital Signs Report, October 2011
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Survey Results
Overall Investment Trends
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-50%
-25%
0%
25%
50%
Decreased Increased
39% of VC firms reported decreases in theirhealthcare investment in the past 3 years.
Past 3 Years - Change in Healthcare Investments
39%
17%
% of Respondents
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Nearly twice as many VC firms expect to decreasetheir healthcare investment in the next 3 years.
-50%
-25%
0%
25%
50%
Decrease Increase
Next 3 Years - Expected Change in Healthcare Investments
39%
21%
% of Respondents
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FDA regulatory challenges are having the greatestimpact on VC investment decisions.
*Unrelated to Regulatory Challenges
Factors Cited as Having the Highest Impact on VC Investment
% of Respondents
RegulatoryChallenges
(FDA)
FinancialMarkets /
Availability ofCapital to Invest
CapitalRequirements
ClinicalTrial
Issues*
Firm / LPChanges orRequests
Lack of TaxIncentives
ReimbursementConcerns
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VC investment in Biopharma and Medical Devicesis expected to continue to suffer.
40%
15%
42%
24%
21%
30%
9%
26%
9%
42%
8%
54%
-60%
-40%
-20%
0%
20%
40%
60%
80%
Next 3 Years - Expected Change in Investments in Healthcare Sectors
% of Respondents
Biopharma Diagnostics Life ScienceTools /
Equipment
HealthcareServices /Consumer
Health
HealthcareIT
MedicalDevices
Increase Decrease
High FDA Regulation Low FDA Regulation
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Survey Results
Therapeutic Area Trends
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Significantdecrease in VC investments expected inhighly prevalent diseases.
Source: CDC; NIH; American Heart Association; American Diabetes Association; Surgeon General; American Academy ofNeurology; American Lung Association; US Health & Human Services; National Cancer Institute
35%
33%
26%
36%
36%
38%
39%
53%
54%
60%
0% 20% 40% 60% 80% 100%
Next 3 Years - Investments in Therapeutic Areas Expected to Change
% of Respondents [Expected Decrease]
Diabetes /Endocrinology
Obesity / MetabolicDisease
CardiovascularDisease
Prevalence(millions)
Psychiatry /Psychology
Obstetrics /Gynecology
Bone Disorders
Respiratory /Pulmonology
GastrointestinalDisorders
Neurology
Cancer
NVCA MedIC Vital Signs Report, October 2011
>50
23
72
12
12
7
30
6
35
>60
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Orphan Diseases is one of few therapeutic areas inwhich VC firms are expected to increase investment.
* In U.S., orphan or rare diseases is defined as a disease or condition that affects less than 200,000 people. ** Office / Hospital visits.Source: CDC; NIH; American Academy of Dermatology; American College of Rheumatology; WHO; National Sleep Foundation.
46%
31%
23%
21%
21%
10%
28%
0% 20% 40% 60% 80% 100%
Next 3 Years - Investments in Therapeutic Areas Expected to Change
% of Respondents [Expected Decrease/Increase]
Dental
Immunology
Sleep Disorders
Prevalence(millions)
40
>100
23
50
>100
>28**
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Survey Results
Global Investment Trends
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Today, 42% of VC firms surveyed invest in healthcarecompanies outside the U.S.
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Current Investment in Life Sciences Companies Outside U.S.
% of Respondents
42%
58%
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VCs expect to decrease healthcare investment inthe U.S. in favor of Asia and Europe.
31%
13%
0%
44%
7%
36%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
Next 3 Years - Expected Change in Healthcare Investment by Region
% of Respondents
Asia /
Pacific
EuropeNorth
America
Increase Decrease
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VC-backed companies are expected to increaseoperations outside the U.S.
80%
86%
85%
0% 20% 40% 60% 80% 100%
Next 3 Years - Likelihood of Portfolio Company Decisions to ShiftOutside of U.S.
% of Respondents
CommercializeProducts Outside the
U.S. First
Set Up AdditionalCompany Operations
Outside the U.S.
Seek RegulatoryApproval Outside
the U.S. First
Increased Likelihood
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Survey Results
The Need for Reform
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Meaningful FDA reform is critical to reversingthese trends.
Expected Impact on Investments from Changes at FDA
% of Respondents
58% 25%
64% 22%
68% 17%
69% 17%
71% 14%
0% 20% 40% 60% 80% 100%
Increased Efficiency /Speed with Decisions
Rebalancing Risk /Benefit Requirements
Increased Predictabilityof Decisions
High Impact Moderate Impact
Expanded AcceleratedApproval Pathways
Improved Transparencyof Communication
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Implications
Many promising medical therapies and technologies willnot be funded and therefore will not reach the patients that
need them.
Those that are funded may not be brought to market in theUnited States first, or at all.
An estimated funding loss of half a billion dollars over thenext three years will cost America jobs at a time when wedesperately need employment growth.
The U.S. leadership position in medical innovation will beplaced in further danger and economic growth with suffer.
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If the current situation is left unaddressed, the implications toU.S. patients and the economy are significant:
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Call To Action
Rebalancing benefit-risk assessments in the drug and deviceapproval processes to appropriately reflect the value of newtherapies to patients in need;
Expanding the accelerated approval pathway into a progressiveapproval system for drugs, diagnostics and medical devices;
Ensuring conflict-of-interest policies are not hindering patientaccess to new treatments; and
Ensuring FDA is well resourced and endowed with state-of-the-artscientific tools, clinical input, processes and procedures
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MedIC priorities include the following:
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Survey Respondent Demographics
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13%
19%
17%
19%
19%
13%
Survey respondents represent cross-sectionof VC firms by capital under management
Total Committed Capital Under Management
% of Respondents
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VC firms surveyed nearly even by sector focus:life sciences only vs. diversified firms
Sector Focus
% of Respondents
42%
58%
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Majority of firms are private VC partnerships
Type of Firm
% of Respondents
6%
86%
8%
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Most VC firms surveyed have between 10-29 activeportfolio companies in healthcare
10%
29%7%
19%
5%
Number of Active Portfolio Companies in Healthcare
% of Respondents
29%
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VC firms surveyed allocate most of their capital toBiopharma and Medical Devices
Average Allocation of Capital Within Healthcare
% of Respondents
4%
10%32%
11%
3%29%
11%