Biopharma giants eager to cut R&D costs but also to recover depleted pipelines are trying to fill the gap left by retreating VC firms. They are launching new funds designed to invest in promising startups. Corporate venture funds played a role in 25% of early-stage U.S. biotechnology financing deals during the first half of 2011, up from 15% for all of 2010, reports PricewaterhouseCoopers (PwC) and the National Venture Capital Association (NVCA).
For example, Merck Research Ventures Fund, the $250 million fund created by Merck & Co. last year, will collaborate with Flagship Ventures to create then fund firms developing new drugs for unmet medical needs. A month earlier, in March, GlaxoSmithKline and the VC affiliate of Johnson & Johnson, Janssen, announced a €150 million (about $200 million) fund focused on companies with first-in-class or best-in-class drugs. Also in March, Russia’s $10 billion state-owned technology fund Rusnano and U.S. VC firm Domain Associates committed $760 million. The money will go toward U.S. pharmaceutical, diagnostics, and medical device companies, creating a manufacturing plant, and increasing Russian drug development.
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