New models of financing that allow small companies to move through the phases of preclinical and clinical development with financial independence are becoming more prevalent today. By now, word has spread that classic paths do not necessarily have to be taken. Through crowdfunding, every investor can decide for himself for which project he wants to use his money. And this transparently, sustainably and with a clear conscience.
Innovations in the pharmaceutical industry are not as common as you might think. This is for several reasons: The development of a new active ingredient is lengthy and expensive, and only a fraction – about two in 10,000 – of the molecules of initial interest make it to the approval stage. Meanwhile, many patents are expiring, new ideas are urgently needed. Today, these come about through in-licensing, because apparently small development companies are very innovative in developing a large number of new active ingredients quickly and cost-effectively. In addition to the large companies, people with rare diseases and many small investors also benefit from this.
Pay together – benefit together
Crowdfunding – originally born out of the need for start-up funding for social projects – has now become an established model. This easily adds up to several million in just a few weeks. Crowdfunding can be summed up with the following principle: “We offer you a piece of the pie and you help us reach our goal with a small investment.” All those involved can then call themselves pioneers, because without crowdfunding, many a successful project would not even exist today. The fact that it is already being used to finance new solar and IT technologies as well as art or drug developments no longer surprises even conservative investors. Some crowdfunding projects are so successful that over 500,000 euros are raised in just a few days, or the funding amount is oversubscribed several times over because the “crowd” (i.e. the donor community) is enthusiastic about the product. According to a representative survey in Germany, 5% of citizens can now imagine investing via crowdfunding (BITCOM study 2014).
Still, there is a limit to “community investing.” Because if the amount of capital needed is too large, crowdfunding obviously no longer works. Therefore, those models that have very high financial requirements fall out. In contrast, alternative models that have not only dedicated their business model to profit maximization and are thus independent and flexible score points.
What are the advantages for medicine?
The advantage of crowdfunding is obvious. In addition to minimizing the financial risk by means of pooling, the costs of administration are kept low. Through transparent and collaborative investing, Many contribute to solving a problem and a moderate return is also provided. Crowdfunding investments are now established, secure and very well connected via social media. So a small good deed – like supporting a project with social added value – is noticed by very many. The shoulder-to-shoulder cooperation of developers, treatment providers and patients brings movement into the system and enhances the reputation of the individual.
In the meantime, pharmaceutical developments can also be tackled with it. For example, RIBOXX wants to fund a cancer drug through fundraising. The fact that crowdfunding has already made orphan drugs possible is demonstrated by examples from the USA and England. There, patient organizations such as the British AKU decided back in 2013 to organize the relevant kickoff capital for a drug through crowdfunding. The active ingredient developed in this way is then in turn available to the company’s own patients.
Many become mini-innovators through crowdfunding. Financing gaps can thus be successfully closed. Banks are now also trying to copy the model and are creating fundraising platforms.
First projects under development in Switzerland as well
In a few weeks, Orphanbiotec AG will launch a crowdfunding to finance the first orphan drug in Switzerland. This means that this type of financing is also becoming an issue in the medical sector in this country.
If you, as a physician yourself, are interested in promoting such products with your contribution and directly improving the care situation for rare diseases, you can find more information here:
www.orphanbiotec-foundation.com
www.orphanbiotec.com
HAUSARZT PRAXIS 2014; 9(8): 48-49
