California Biomedical Industry Report Highlights New Challenges for Industry

Companies facing fewer funding sources, reimbursement issues

California’s biomedical industry is one of the largest in the world. In 2011, its more than 2,000 biomedical companies generated just under $70 billion in revenue, and the state represents about one-fifth of the total biomedical pipeline in the U.S, according to the California Biomedical Industry 2013 Report from California Healthcare Institute, BayBio and PwC. But despite its powerhouse status, the California biomedical industry still faces many challenges, according to the 175 biomedical CEOs who were surveyed for the report.

One such challenge is access to capital. Despite California being the No. 1 recipient nationwide of both venture capital and federal funding -- totaling $1.98 billion and $3.33 billion respectively in 2012 -- 74% of CEOs surveyed indicated that the reason R&D projects were delayed last year was because funding was not available. This figure is in stark contrast to 2011, when only 40% of CEOs indicated funding as an issue for delaying R&D.

Meanwhile, 59% of respondents cited limited or lack of access to capital as the most threatening issue to the short-term health of biomedical innovation.

Also stunting new projects last year were regulatory hurdles. Sixteen percent of respondents delayed a project because of regulation in 2012. But FDA seems to be less of a problem for pharma companies, as that number represents a 17% decline from the previous year, and nearly 14% of respondents said the FDA regulatory process had improved over the previous year.

As payers move toward pay-for-performance models, CEOs say reimbursement and health insurance issues will play a bigger role in preventing companies from successfully getting products to market. Three-quarters of CEOs surveyed said reimbursement became a bigger challenge for their company over the past year, up from 37 percent the previous year.

Read the complete report at www.californiabiomedreport.com.