SOURCE: Kauffman Foundation

October 20, 2008 08:00 ET

Reducing Risk Through Collaboration Can Generate Increased Economic Returns for Personalized Medicine Sector

Kauffman Foundation Draft Paper Reveals Strategies for Sector Growth

KANSAS CITY, MO--(Marketwire - October 20, 2008) - As the biopharmaceutical industry faces declining productivity and innovation, personalized medicine -- the concept that a person's genetic makeup could be used to tailor medical care to that individual's needs -- offers promise for increasing economic returns, according to "Assessing Risk and Return: Personalized Medicine Development & New Innovation Paradigm."

Commissioned by the Ewing Marion Kauffman Foundation, the draft white paper was presented at the 2008 National Summit on Personalized Health Care, "Innovation in Health Care Delivery," held Oct. 5-7, 2008, in Deer Valley, Utah, and hosted by Secretary of Health and Human Services Mike Leavitt.

"Even after typical 'blockbuster' drugs are marketed, only 30 percent of them achieve sales that match or surpass their multi-billion-dollar R&D costs," said Lesa Mitchell, vice president of Advancing Innovation at the Kauffman Foundation and one of the study's authors. "Based on the high-profile successes of some stratified medicines, however, the biopharmaceutical industry is beginning to realize the deficiencies in the economics of the blockbuster business model. This is one driver of increased interest and investment in developing personalized medicines, a task often best pursued by small biotech companies."

The paper's authors contend that industry stakeholders must be open to unique models that could reduce the risks of current drug development processes and increase their combined probabilities of success. This will be necessary to reverse the trend of declining productivity and innovation, and embrace new technological and scientific advances that will allow for safer and more effective treatment of diseases through personalized medicine.

The Kauffman Foundation paper suggests that collaborating with nonprofit disease-focused organizations not only would help bridge some of the funding gaps in early-stage discovery and development of new technologies, but, more importantly, would create efficiencies that generate increased economic returns for the personalized medicine sector. These collaborations -- and the de-risking strategies they provide in terms of time and costs -- could prove to be an important model for the sector's further development and growth.

Such a model would include nonprofit disease foundations or other collaborating organizations establishing and managing the programmatic research of networks of academics and investigators from small biotechnology companies, patient registries and expert clinical centers. In return, large biopharmaceutical companies would commit to providing some funding and to assuming late-stage development of "de-risked" drugs, taking them to the approval and marketing stages.

"In their respective areas, disease-focused nonprofits serve an important role in reducing the risks -- which include intellectual property issues, difficulty in rapidly achieving proof of concept, and inefficiencies in the current clinical development process -- of the preclinical and clinical phases of drug innovation," said Dr. Frank L. Douglas, senior fellow at the Kauffman Foundation, senior partner with PureTech Ventures and a study author. "These collaborative relationships could help to make the case for investors and industry stakeholders to view personalized medicine as a viable business model."

To read the complete paper, visit

About the Kauffman Foundation

The Ewing Marion Kauffman Foundation is a private nonpartisan foundation that works to harness the power of entrepreneurship and innovation to grow economies and improve human welfare. Through its research and other initiatives, the Kauffman Foundation aims to open young people's eyes to the possibility of entrepreneurship, promote entrepreneurship education, raise awareness of entrepreneurship-friendly policies, and find alternative pathways for the commercialization of new knowledge and technologies. It also works to prepare students to be innovators, entrepreneurs and skilled workers in the 21st century economy through initiatives designed to improve learning in math, engineering, science and technology. Founded by late entrepreneur and philanthropist Ewing Marion Kauffman, the Foundation is based in Kansas City, Mo. and has more than $2.4 billion in assets.

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