Business Activity in the Field: what are companies doing and why?

by Geoffrey Banda, James Mittra and Joyce Tait

In this theme, we investigated the commercial development of regenerative medicine products to identify the different business models that companies and other organisations in the sector are trying to implement. Focusing on 10 company case studies, based on  in-depth interviews, document analysis and participation at workshops and conferences, we mapped the product development process, identified key value chains and new opportunities for capturing value, and identified gaps and challenges to commercial success. The outcome of this case study work was a much better understanding of the broad innovation ecosystem for regenerative medicine, and the relevant enablers and constraints to the success of the very different business models that are operating in the sector.

Our project identified 10 company case studies and a number of unique business models, which covered a range of autologous, allogenic and drug discovery technologies. The business models were:

  1. Material and Service Provision;
  2. Early Exit: Phase 1/2;
  3. Manufacturing and Scale Up;
  4. Translational Services;
  5. Virtual Business Model; and
  6. Fully Integrated Business Model.

Our key findings were:

  • The field is dominated by Small to Medium Enterprises (SMEs), and most are still at a very early stage of clinical development (preclinical or phase 1). These companies are dependent on public funding, which is not guaranteed for later stage development.
  •  There is a mix of Grant, Private Equity funding: ranging from £5 million to £70 million - most funding is for development work and clinical trials
  • University based developers prefer a ‘virtual business model’ to limit cash burn.
  • Only 2 business models are currently generating revenue. These are ‘material and service provision’ and ‘manufacturing and scale up’. Revenues from clinical adoption of viable therapies are still a long way off.
  • NHS - clinical and transfusion services, and translational service providers like the Cell and Gene Therapy Catapult, provide key innovation infrastructure that will be indispensable for the future of the field in the UK
  • Skills development and retention is also critical for the sector
  • At some point re-imbursement needs to be addressed to act as an innovation puller [Innovative Procurement]