Pfizer Venture Investments (PVI) - a quick analysis of portfolio companies, categories

Trying to understand the driving factors behind the trends of life science investments in 2012, I was wondering if VC & CVCs behave differently or if one determines the trend & other follows it largely - which I realize is putting it too simplistically and perhaps the VC operates as one organism.

However, I believe that, with the genericization troubles looming large, the big pharma started to rationalize the product development strategies by taking into account parameters which hitherto were not given a serious thought.... foremost of which I'd guess is consumer behavior - This new diligence I expect will translate into the way big pharma CVCs have been building their portfolios over past 3+ years. 

Based on this premise, I tried to analyse the PVI portfolio & see if the data throws-up any tangible trend. Since I was unable to find the exact value of the funding in most cases (the funding rounds involved more than one VC, hence), I stayed with number of investments & hopefully the trend will still make some sense; 

A snap-shot of investment across innovation categories:

Some trends:

• Medical Diagnostic investments equal Drug Discovery numbers (& not in all cases it is merely companion diagnostics related investment)
• Enthusiasm for Medical devices & equipment is much lower than the overall average in 2012 (~50%) - However this I feel is still significant, as logic says a medcines company would be more interested drugs than devices
• Interesting appearance of investments into companies that'd contribute to research /business/ operational advantages for the investing big pharma - surely pro-logical, but interesting nonetheless & showcases the emerging realities in sustaining business
• Drug discovery at 30% only marginally higher than the 23% overall in 2012

Within the drug discovery investment, the innovation sub-categories point to a definite preference to go after platform technologies that'd generate leads in multiple therapeutic domains/ indications;

Overall, very interesting & I will hopefully continue this line of thought with another post or two.

Comments?

Awards: So what if there are some & some win them?

My comment today on the latest blog entry by A VC @ http://www.avc.com/a_vc/2013/02/award-shows.html

When I'm in a business and I’m courting investors & clients alike all the time, out there if there's one event that has a better brand equity than my new start-up's wet-behind-the-ears name has...., I'd surely want to jump right in & improve my chances of getting that extra nano-sec of attention, exposure and the possible business that could come along - please note my usage of would, could - no guarantees here folks, like in any investment, there's only hope which is not always merely fond...

Surely, self-nomination requires some amount of self-assuredness if not cocksureness...& if the few eyeballs I got when I figured in the nominations turn to lot more when I win - hey, am not complaining - you shouldn't even!

IRR v/s Social Impact: Do financial institutions necessarily go through this dilemma?

The news on Times of India Social Impact Awards & what Nicolas Aguzin, chairman and CEO of JP Morgan- Asia-Pacific said during his speech there about JPM's commitment to its social responsibility triggered a cackle of thoughts that're simultaneously standalone, contradictory, inter-connected and inter-dependent;

• CSR (Corporate Social REPONSIBILITY) isn’t necessarily the same as CSI (Corporate Social IMPACT)
• Given all the progress out there in the science of measuring impact, it’s possible a lot of companies have figured out OR will figure out sooner than later, how they could reposition their CSR as CSI
• In an effort to make their social impact measurable, it’s possible that corporates' inadvertently project & expect social-change in a defined, time-bound (& not practicable) fashion?   - While objectivity & accountability are a must, through my wife’s  work in the development sector (at an implementation level..), I could sense/ witness how some inappropriately designed impact measures of a funding organization can/ have killed or maimed a promising social initiative, which if supported on a longer term could've indeed resulted in replicable, scalable & sustainable social change
• Finally, if not blatantly so, at the very root most CSR initiatives tend to carefully (& smartly?) avoid any conflict of interest with the organization’s business goals – while this is understandable since the very purpose of a business is NOT social impact but profitability in the longer-term, it definitely makes more long-term business sense to ‘tangibly’ align the CSR/ CSI with an organization’s core business mission. While I wouldn’t risk associating this with the “social business model” of Prof. Muhammad Yunus, I’d think it’s nevertheless related, but limited to formulating the CSR plan – Social-Aligned Business Responsibility-SaBRe anyone?? :-) 

While attempting to apply, superimpose the above ethos onto the social sensitivity of the investing universe out there, I could only come up with a posse of questions, but no obvious answers – ponder this;

• What would amount to a social impact of a financial institution (LP)? – i.e. apart from making sure the eventual investments (through GPs) are in alignment with certain mandated geo-political guidelines – I do see some institutions following macro-level charters like the Equator principle et al & that’s no doubt a great start, but not sure if that’s comprehensive enough in all complex geological, social contexts and effective for what length of a long-term?
• In a climate where the accepted investment efficiency measures employed are the time-bound investment-to-exit cycles & IRR, is there a safety catch, any checks & measures that’d  ensure sustenance of an innovative enterprise that may have a greater social impact, if not an eye-popping ROI?

Food for thought…

Drug discovery unable to attract big money! - Is innovation, rather the lack of it to blame?

Some interesting observations on early-stage funding for healthcare from the 2012 Venture Capital Activity Report published by CB Insights (report abstract at this link);

• Healthcare gets a not-so-insignificant share of 23% of all venture capital in 2012, but the overall investment into healthcare is lower than 2011 numbers, inline with the overall decrease in VC funding from previous year

• The year also saw overall deal-sizes within healthcare fall from 2011 levels,  again like in other industry segments

• Within healthcare, medical device & equipment related investments took 40% of the total dollars distributed and this shift of money towards devices & equipment segment has gotten stronger in 2012

• Within the remaining 60%, drug discovery, development & biotechnology seemed to have got ~35% share, of which chemistry based drug discovery/ development got ~20%
• and finally, within the 35% share share towards drug development, a majority seemed to have gone towards late-phase funding (>60 %?)

Thus the funding received in 2012 by individual companies towards early stage (discovery pre-clinical et al) seems much lower than the 2011 average (while ~10mio USD seems to be the average deal-value for all phases included, ~2 million USD could be the average value for early phase funding) - I don’t see any reason to believe that 2013 will be any different and if this trend indeed continues, the introduction of new candidates into clinic will continue to lag as before and economizing the cost of discovery & early-development will continue to be a rational strategy to be employed by the small & virtual discoveries - not sure if that'd compromise on innovation further....

The tilt of VCs towards medical device/ equipment segment looks like a commonly employed de-risking strategy of most investors. It also simultaneously suggests a seemingly prevailing weak-sentiment in investor universe towards the quality of innovation happening in biotech & chemical drug development.

While innovation domain should go through its own disruptive innovation now...., any major positive swing from 2012 trend would happen only if GPs (& LPs of course....) innovate their conventional low-risk investment strategies resulting in a) significant increase in number of deals and b) an appropriately incremental average funding on each deal and both towards drug development. 

So when is the new paradigm shift in drug discovery happening & who is going to drive it?

Generic Drug User Fee Act (GDUFA) - What will be the implications for the consumer & for the generic API manufacturers based outside NA & EU

20 August, 2011

Posted in Linkedin Answers by Murali Apparaju

For those who remember SOCMA & EFCG making a fervent pitch in 2006 for a level playing field for domestic (read: NA/ EU) and foreign (read India, China) API manufacturers, this is an announcement of their first success & how.....

Two days ago, GPhA, EFCG & SOCMA reached an agreement with US FDA on the proposed final form of the Generic Drug User Fee Act (GDUFA).

While at the conceptual level this act is for higher patient safety through a tighter regulation of Ingredient manufacturer, this also appears to be an apparent back-door strategy to wall-out "old-technology" (read: "No QbD/ PAT" also read: "Cheap") Indian & Chinese API manufacturers in favor of the more-regulated, domestic, safe & costlier? local manufacturers.

(the NY times brief in the above link is titled "A deal to get Cheaper & Safer drugs" - wonder how exactly was this deduced?!)

What do you think GDUFA will eventually achieve/ cause & do you think consumer is the real beneficiary?

Hoping to see some comments here.

Cheers,

Murali Apparaju

NRAchists in gun-afflicted america....

December 2012

My comment on a LinkedIn article on need for Gun Control in USA, I only see the comments now, no article!!, still an interesting read...

http://www.linkedin.com/today/social/comments?articleId=5686805067156422750&offset=15&limit=365&trk=tod2-all-comments

As per the chart, USA has ~90 guns for every 100 people. Despite this startling fact, I still see many below demanding a more scientific & non-discriminatory analysis rather than brooding over the above fact. - know what, to hell with more stats.... it is probability! - the probability of a gun being used is directly proportional to the number of guns that are available for use........ stop kidding yourselves gents & ladies, face it instead & save the kids.

Caste, gender & slur - Quite an explosive cocktail!! :-)

01 March 2009

Wow, this repro' is a dinosaur, way back from 2009!!! - my comment below was on a real flamer of a topic that was originally posted in November 2007 & still going strong with 983 comments amounting to terabytes of sane words & insane rhetoric. I don't want to be another blogger to do the same mistake & hence have disabled comments on this - If you have a compulsive impulse to add to Uday's woes, post your comments on the original site below - cheers, V 

http://udayms.wordpress.com/2007/11/16/brahmin-guys-are-not-lovemarriage-material-says-brahmin-girl/

My observations on the original post (rather on the content of Brahmin Ponnu’s statements) – to keep it simple, I will assume she’s indeed a brahmin ponnu & the feelings indeed are true…

I)

“Familiarity breeds contempt – Over exposure to a certain kind makes one nauseated – the insider knowledge causing prejudice”

•  Doesn’t this happen in your company, aren’t the insiders the last choice for the new post created & don’t outsiders look eminently more attractive than insiders to the management – this is a similar syndrome.

II)

“Choice of mate instincts keeps changing with age..”

•  At college I’m sure the lure is of big talking, macho & adventurous guys – which an average brahmin male may not demonstrate owing to upbringing.. PHYSICAL & SOCIAL QUALITIES COUNT WHEN ONE IS LOOKING FOR A PRINCE ON THE WHITE HORSE TO TAKE YOU ON A DATE – SWEEP YOU AWAY?….FOREVER?….. THINK AGAIN…
• 5 years down the line, I’m sure ponnu would settle for a Bay area techie in favour of the college stud who may not have settled as well & earning that well – MONEY COUNTS WHEN YOU ARE LOOKING TO MARRY

III)

“The lady’s comments are possibly reflecting the general liberation of minds in either sexes in this modern age…”

•  Perhaps an indication of a growing & general reluctance to accept limitations in partners & aversion to compromise.
• May be polygamy/ multiple partners is making a come-back… (check out the Axe Deo ad where mixing makes babes better….:-))
• Perhaps, the ever increasing domination of “I” over anything else

IV)

“Brahmin men caught in a time-warp? – starting to live the stereotypes showcased by society, films??

• Someone said this before, buck-up guys, change, work-out, change your attitude to looks, you have the basics in place, all you need to do is polish the stuff..
• Forget about the simplicity your grandfather so believed in — he was in a different era… re-package your body, spirit, get attractive to the opposite sex…
• I’m sure those who have done/ doing this already see the results, non-brahmin girls falling for them & yearning for them… (all the above applies still to these wide-eyed wonders, grass is greener on the other side of the fence)
• finally it’s an appraisal, part-true, part-crap —- well…take some good out of it…. emerge better… don’t justify & get labelled more harshly…

all the best…