What’s the recipe for a thriving life sciences start-up ecosystem? It starts with a sizeable portion of the major multinational players in the industry converging in one space. Like a good sourdough starter, this combination activates and grows under the right conditions. It swells with experience and talent, spawning serial innovators backed by a wealth of experience. At least, that’s the traditional Irish recipe.
According to Alan Hobbs, the life sciences industry in Ireland is so active that exact figures change almost daily. When I spoke to the Enterprise Ireland lead for high-potential life sciences start-ups earlier this month, he estimated that there are about 180 domestic life sciences companies in Ireland employing in excess of 25,000 people and generating sales above $6bn per year. These indigenous life sciences companies span pharma, biotech, diagnostics and therapeutics, but the lion’s share are medical device businesses.
“Before the large multinationals were here, a lot of our medical-based device talent was going overseas for opportunities. But these companies allowed them to come back and build their careers in Ireland,” said Hobbs.
‘The more experienced entrepreneurs in medical devices are on their third and fourth company’
– ALAN HOBBS
Discussions around the life sciences industry in Ireland often centre on the fact that the majority of the world’s biggest pharma, biotech and medtech companies have operations here. Less attention has been paid to how being such a crucial node in this global network has generated a thriving indigenous industry.
Experienced professionals working in life sciences multinationals may have innovative ideas of their own that don’t fit the R&D roadmap of their employer, Hobbs explained. “So they’re encouraged and facilitated to go off and spin out their own start-up. And in some cases they’re supported financially,” he said.
This cycle of larger companies spawning new entities is particularly advantageous in an industry as complex as medtech. These emerging entrepreneurs come with deep domain expertise, experience of building a product and established industry contacts. And this cycle has already produced a number of serial entrepreneurs.
“If you look at the more experienced entrepreneurs in medical devices now, they’re on their third and fourth company. So they’ve got a ready-made network, ready-made management teams. They know the process, they know how it works. The regulatory process, the clinical trials – all of that skillset is here,” said Hobbs.
The next stage for these serial entrepreneurs, then, is angel investment, furthering the cycle that generates more local life sciences entrepreneurship. “Look at the west of Ireland in particular. It has been well documented. We’re very fortunate there,” said Hobbs. “There is a series of high net-worth angel investors that are spawning start-ups and they’re acting as non-executive directors, advisers, mentors, chairpersons and funders.”
The baseline of industry experience that underpins life sciences entrepreneurship also supports the investment side, as these angels are capable of identifying the long-term opportunities. In some cases, Hobbs explained, these angel investors leverage their global connections. “We have some start-ups over the last couple of years where the initial IP came in from the US. For example, the Mayo Clinic and other big institutes were prepared to license basic IP into an Irish entity because they knew of the ecosystem here that could help exploit it and develop products and a company out of it,” he said.
‘When you start up a medical device company, it’s a very expensive journey you’re going on’
– ALAN HOBBS
Early-stage funding is crucial for any start-up but in medtech in particular, it’s a necessary lifeline. “When you start up a medical device company, it’s a very expensive journey you’re going on and it takes quite some time,” said Hobbs.
Bringing a medical device to market can take years of design, trials and validation, not to mention the regulatory requirements. “The more non-dilutive money you can raise early in the process, the more value you can build in your company before you take on VCs. And that means you preserve as much equity as you can,” advised Hobbs.
Enterprise Ireland recently launched its supports for non-dilutive funding from EU programmes such as the European Innovation Council and Horizon Europe. The agency has established a dedicated website, HorizonEurope.ie, where potential applicants can find out more about the programme and explore past Irish success stories, of which there have been many. Irish research and innovation secured more than €1bn in support from Horizon 2020, the pre-cursor to Horizon Europe, and Hobbs expects to see continued success under the new programme.
Life sciences companies can also avail of non-dilutive funding from the Irish Government’s Disruptive Technologies Innovation Fund. Just last week, healthcare solutions in areas such as cancer treatments and chronic knee osteoarthritis were among the 29 projects awarded in the latest €95m funding round.
Funds such as these help to somewhat offset the challenge of securing early-stage funding, and for that there’s also Enterprise Ireland and the aforementioned angels. With the latter, Hobbs has noticed a trend of investors going in earlier with much larger sums to support life sciences companies. This can be a risky move but the depth of native life sciences knowledge makes these bets look more promising.
“You have a serial entrepreneur, somebody who has gone again, so they’ve already gone through a start-up in life science and med device. They’ve a fairly good idea about what works and how it works,” said Hobbs. The process will still take a lot of time and money, but investors can take a lower risk on a safe bet.
Another way in which Ireland is producing promising investments is through BioInnovate, the flagship programme within Enterprise Ireland’s life sciences division. This clinical immersion programme gives its selected fellows nine months to just observe clinical environments and see where opportunities may lie.
The ideal opportunity will identify a substantial addressable market with an unmet clinical need that, if addressed, can improve patient outcomes. These three key ingredients make for a highly attractive investment proposition. Add in the ability to decrease associated costs and Hobbs said, “It’s a slam dunk.”
‘Remote diagnostics monitoring has really been accelerated because of Covid’
– ALAN HOBBS
When it comes to emerging opportunities in life sciences investment, Hobbs cited, “AI, machine learning, diagnostics, imaging and electroporation [the use of an electric pulse to introduce DNA or drugs into cells].” And, of course, the biggest trend of 2020: remote healthcare.
Hobbs said that a number of Enterprise Ireland client companies “exploded growth-wise” over the last year as a direct result of the Covid-19 pandemic. “Remote diagnostics monitoring has really been accelerated because of Covid, and it has actually helped us because it has opened the HSE and other health systems around the world to adopting technology earlier.”
Hobbs praised Prof Martin Curley, the HSE’s director of digital transformation, and his team in particular for what has been achieved in Irish healthcare in the past year. “Credit to them. They’ve opened the doors and they’ve been very, very helpful,” said Hobbs.
Irish companies such as Wellola, which supports remote GP consultations, and PatientmPower, which has a device that enables remote monitoring of respiratory conditions, have directly supported Ireland’s Covid-19 response. Others such as BlueDrop Medical, whose medical device allows diabetes patients to check for signs of a developing foot ulcer at home, are perfectly poised to succeed in a connected health future.
The digital transformation of healthcare has taken a leap forward under Covid-19, accelerating what has long been the future plan for the HSE. Sláintecare, the Government’s roadmap for the future of Irish healthcare is all about moving more and more medical interventions away from the hospital, and Irish medtech companies have already begun laying the foundations to make this possible.
And it all begins with that recipe to feed life sciences innovation. “It’s a combination of the experience we have, the people that are there, the multinationals that are there, our repeat entrepreneurs, serial entrepreneurs, then the funding that’s available,” said Hobbs.
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