By Max Klietmann, VP of Research, LSN
In the domain of early stage biotech and med-tech innovation, point-of-care facilities are typically not where one would expect to find nascent translational technologies. However, some highly innovative hospitals and clinics are taking a novel approach to the healthcare arena by not only providing care, but also by actively driving new therapies into the marketplace. These entities are leveraging physicians and specialist staff to vet technologies and ideas in their earliest stages of development, and choosing the best to shepherd through the clinic and onto the market.
Why are they doing this? As hospitals are under increasing cost pressures, it serves as a natural way to create a competitive edge in the marketplace, and can create long-term commercial value, as well as a measurably higher standard of patient care. What makes this trend particularly interesting is that the vetting is done by boots-on-the-ground doctors – those who are addressing real-world medical challenges that they encounter on a regular basis. This is a significantly higher level of insight than any traditional provider of capital could bring to the table when evaluating commercial viability. Essentially, this means that they have an edge when it comes to picking winners, and that we can anticipate some of the leading sources of commercialized products in the future will be coming out of research hospitals.
One large hospital group that began implementing this strategy less than ten years ago serves as a perfect example. The Ohio-based institution has made tech commercialization a priority, and is finally seeing some very impressive results: the group has registered approximately 500 patents, and has created over 50 new companies. Those figures are the result of excellent vetting done by experienced specialists who understand the patient needs from the very beginning. This allows selection of the best science, which can then be backed by the capital of a major institution with a long-term orientation.
So what does it mean for the industry? First, this is a solution to one of the biggest issues in life sciences today: that there are so many emerging companies that it is difficult for anyone to know what is truly leading technology and how to vet it, leaving many early stage companies with great science to perish in the valley of death. Research hospitals can vet technologies better than anyone, and help to cut through much of the “noise” in the early stage space.
What’s more, these “pre-selected winners” can then access the capital required to move them past the early stages and into a position to be spun out or sold to a strategic buyer. This allows for more fair valuation, a partnership approach, access to resources on a massive scale, and will undoubtedly move science along faster and more effectively than by traditional means. This trend is poised to be a major disruptive factor for the life sciences at large, and will shift much of the industry dynamics.
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