Many biomedical companies in California are delaying research or development projects because of challenges in securing financing options, according to a new survey, the San Jose Mercury News reports.
The survey was conducted by:
- BayBio, a San Francisco life sciences trade organization;
- The California Healthcare Institute, a biomedical research and advocacy organization; and
- PricewaterhouseCoopers.
The survey polled CEOs from about 100 California biomedical companies in November 2011 about finance and research plans.
Key Findings
About 75% of the surveyed CEOs said their company experienced a delay in their research or development projects in the last year, up from 69% in a similar survey released last year (Johnson, San Jose Mercury News, 1/10). The main reason for such delays was a lack of financing, according to the survey.
The survey also found that:
- 80% of biomedical firms' CEOs said FDA's regulatory approval process has hindered their organization's growth (Sibley, Silicon Valley/San Jose Business Journal, 1/10);
- 44% said they plan to seek licensing agreements for their technology and corporate partnerships as a source of funding in the next year, nearly double since the previous survey;
- 30% plan to seek corporate venture financing, compared with 10% who said the same in the previous survey; and
- 11% are weighing whether to seek funds from nongovernmental organizations such as patient advocacy groups, compared with 4% who said the same in the previous survey.
Implications
Tracy Lefteroff -- a life sciences partner at PwC -- said that many early-stage biomedical companies are finding alternatives to venture capital but that "the next couple of years could be a very tough time for some of these young companies."
Economic challenges also have led some companies to consider relocating outside of the U.S., where more financing options could be available, according to the Mercury News (San Jose Mercury News, 1/10).