A recent article in Nature Biotechnology highlighted a lack of venture capital (VC) funding in certain emerging markets. The authors estimated that from 2000 to 2012, innovative VC and PE financing for Chinese, Indian, Brazilian and South African research-based companies totalled $1.7 billion – this is in comparison to the $1.1 billion of VC investment US research companies received in the third quarter of 2011.
The term "innovative" used by the researchers in the study referred to biotech firms that are developing products such as therapeutics and vaccines for humans, based on new, proprietary technology either in-licensed or invented by the firm.
Publicly available data from the study shows that in Brazil, the number of non-VC backed health biotech firms outweighs VC-backed biotechs by 18-fold. Of the countries studied, India has the least striking difference, with VC outweighing non-VC firms by 5-fold.
Why is this? Perhaps there's a lack of a start-up culture. Perhaps biotech companies receive alternative sources of funding, from international pharmaceutical companies or the government. Perhaps venture capitalists see emerging markets as too much of a risky prospect.
In light of this study, the Nature website also offers an interesting interview with life sciences venture capitalist Dr Jonathan Wang on the state of VC in China.
What's your view?
Do you think biotech firms developing vaccines in emerging markets will be able to grow without VC funding?
You can join our discussion on LinkedIn or leave a comment below, I'd love to hear what you think.
If you'd like to know more about vaccine market opportunities and needs in China, India and Latin America, you might like to consider attending the World Vaccine Congress and Expo 2013 on the 16-18 April 2013, Gaylord National Hotel and Convention Center, Washington DC. You can download the brochure here.