One thing that is well understood about the pharma business is that it’s not cheap. Quite apart from human ingenuity, drug discovery takes time and money. Yet, with strong clusters of multinational life sciences and pharma companies in Ireland, an ecosystem of start-ups has blossomed.
“Medtech has a better and more developed network of investors than pharma,” says Sophie Frederix, partner at Arthur Cox.
According to Enterprise Ireland, medtech is one of Ireland’s strongest and most important business sectors, employing around 27,000 people across 400 companies, 50 per cent of which are indigenous small and medium enterprises.
“Pharma takes more time and money due to the cost of meeting regulatory requirements and trialling therapeutics and technology to get through the approval process,” says Frederix.
Why an SSE Airtricity energy audit was a game changer for Aran Woollen Mills on its net-zero journey
Getting solid legal advice early in your company’s journey is invaluable
Water pollution has no one cause but many small steps and working together can bring great change
Empowering women in pharma: MSD Ireland’s commitment to supporting diverse leadership
The ecosystem here provides funding opportunities from Enterprise Ireland (which invests in 30 to 35 life sciences start-ups annually), the Disruptive Technologies Innovation Fund, the European Commission’s EIC Accelerator programme and the Horizon programme, as well as various university programmes including University of Galway’s BioInnovate programme and UCD’s commercialisation boot camp, which is managed by NovaUCD.
In addition, healthcare and life sciences investment is a key area of focus for the Ireland Strategic Investment Fund, which prioritises building deep, strategic partnerships with venture firms with track records of leading rounds and attracting syndicates of high calibre international investors.
However, it’s a challenging time for venture capital (VC) funding in the current economic environment; in the third quarter, international VC investment fell by 69 per cent, or by more than €120 million, according to the latest Irish Venture Capital Association (IVCA) Venture Pulse survey. The value of deals for Q3 2023 sounds alarm bells as figure fell significantly – with some notable exceptions. In the life sciences sector Shorla Oncology secured €32 million and ProVerum secured €15 million.
In addition to VCs and angel investors, Frederix says life sciences and pharma companies are increasingly turning to licensing and collaboration agreements – established pharma companies to put new products in their pipelines and start-ups to secure non-dilutive financing needed for development, clinical trials, manufacturing, and distribution.
Life science and healthcare businesses face unique legal regulations so having a good understanding of the regulatory environment is crucial
— Sophie Frederix
“If a life sciences or pharma start-up possesses a promising technology or intellectual property, exploring licensing or collaboration agreements with universities, established pharma companies or healthcare providers can be a strategic move; these partnerships can offer funding through upfront payments and regular ongoing payments or payments upon the successful completion of specific project goals, which in turn can provide the necessary funds for further research and development activities,” says Frederix.
“Beyond funding, these partnerships lend credibility to the start-up’s scientific approach, may attract additional investors and help the start-up commercialise its product more effectively.”
For early-stage start-ups, Frederix points to key areas, including choosing the right corporate structure that will enable development and attract funding, as well as creating a strategy around protection of intellectual property (IP).
“Life science and healthcare businesses face unique legal regulations so having a good understanding of the regulatory environment is crucial,” she says.
She warns that, in terms of IP, understanding questions of inventorship and ownership in the context of strategic partnerships is critical from a legal standpoint.
“Anti-trust issues are also becoming more prominent because licensing or collaboration agreements generally involve competitors or potential competitors,” she says.
Sometimes it takes more than money to keep a start-up going. Will Hogan is CEO of EccoSpray, an Irish-German start-up headquartered in Galway. The team are working on bringing POCUS EccoSpray, a patented, CE-approved spray alternative to traditional ultrasound gels, to market.
The pandemic slowed everything down for the company, and Hogan attributes its ability to finance itself through that period to the fact that the founding team are giving all their time and effort gratis.
“We’re doing a lot of stuff for free in the belief that this will pay off,” he says.
The company is currently funded by its founders and it is supported by Government agencies, although not financially.
With a combined experience between the three founders of more than 100 years, Hogan says “senior entrepreneurship” is a valuable resource that is often overlooked in the youth-focused image of the start-up scene.
“That lifetime of experience and networking, and mistakes – because we have all made a tonne of mistakes as we’ve gone through life in business – also comes with its advantages.”