With the first half of 2020 having been heavily impacted by the COVID-19 pandemic, the virus finally seems to be in retreat – at least in a handful of European countries. However, a return to the old status quo – or even the advent of a so-called “new normal” – can never be wholly countenanced until the disease has been thoroughly vanquished. Achieving such a feat will involve the discovery of a sufficiently effective vaccine to achieve herd immunity – a process which normally takes years or even decades to accomplish. At the same time, other technological advancements such as telemedicine and remote treatment are likely to become a fixture in our daily lives.
As such, it seems clear that medical technology (MedTech) will play a crucial role in plotting an exit strategy from the current crisis. Indeed, long before the outbreak of coronavirus threw lives and livelihoods into disarray, the European Investment Bank (EIB) had been funding life sciences projects with one eye on the future. Over the last four years, around 50 European companies have received a cumulative €1.3 billion from the bank, with the Infectious Diseases Finance Facility (IDFF) accounting for €316 million of that amount. At the beginning of the outbreak, the IDFF’s budget was boosted by a further €400 million in order to help companies develop new technologies and treatments for containing and overcoming COVID-19.
The latest beneficiaries of the funding are CureVac and BioNTech, two biopharmaceutical clinical trials companies from Germany. The former will receive three tranches of €25 million in debt funding to finance its vaccine programme and expand its onsite facilities, while the latter – which was the first company to conduct clinical trials in Europe – is set to receive two instalments of €50 million to bankroll a four-way vaccine trial programme. Both investments are dependent upon the companies in question reaching certain pre-agreed milestones.
Private sector following suit
Public bodies like the EC and the EIB are not alone in looking to start-ups for a solution to the COVID conundrum. A raft of fledgling European MedTech outfits have received significant funding from the private sector. Munich-based CereGate secured seed capital earlier this year from High-Tech Gründerfonds to develop new ways of helping people with neurological conditions, while Sanity Group, which is working on developing cannabinoid-based pharmaceuticals, raised 20.1 million Series A funding, catapulting them into the lead of this up-and-coming industry.
That investment hasn’t been limited within Europe, either. Luxembourg-based SGH Capital habitually focus on innovation among American companies, having recently invested significant capital into coronavirus diagnostics testing company Clear Labs, which uses revolutionary next-generation sequencing technology to optimise both the availability and quality of COVID-19 tests. Led by Alexandre Azoulay, SGH Capital have a knack for identifying promising ventures from the outset and helping them achieve their potential, as has already been witnessed with paediatric telehealth start-up Blueberry Pediatrics.
Indeed, telemedicine and remote video consultations are likely to constitute an integral part of the healthcare of tomorrow. Social distancing has been a key strategy in limiting the spread of coronavirus, while many countries are simply incapable of dealing with excessive footfall in their surgeries, practices and hospitals. Even the best equipped G7 country, Japan, only has 13.1 hospital beds per 1,000 people, while the bottom feeders (Canada and the UK) have a mere 2.5. Stemming the inflow of new patients by treating them remotely has already proven to be hugely popular in France, where the adoption of telemedicine has shot up by 40% in the last year. In the US, the change is even more pronounced; today, 46% of patients have used telehealth in some capacity, up from just 11% in 2019.
Start-ups hold the key
While some countries like Australia and Singapore are actively promoting technologies like telemedicine, there has been a globally sluggish uptake of those kinds of services, due primarily to budgetary constraints, regulatory barriers and old-fashioned resistance to change. However, MedTech initiatives like these can provide a safe lifestyle for a post-COVID society, while other MedTech pursuits (such as faster, more accurate diagnostics and, above all, an effective vaccine) are perhaps the only way in which the disease will be defeated, once and for all.
Given that start-ups are, by their very nature, more adaptive and dynamic than larger corporations, they can react quickly to a market landscape that is currently in constant flux. However, they are, of course, susceptible to the pitfalls of having fewer resources at their disposal and are much more likely to fall into bankruptcy and fail. For that reason, it’s essential that they receive the funding from investors both public and private to allow them to carry out their vital work, but the status quo with regard to EU legislation is limiting in that respect.
Greater funding flexibility needed
By only taking the current cashflow situation of a start-up into account, the EC precludes state investment into loss-making enterprises which may prove lucrative further down the line and – most crucially of all – instrumental in conquering COVID-19. With that in mind, a coalition of more than a dozen start-up representative bodies from across Europe have written an open letter to the EC, demanding the rules be relaxed in order to allow smaller businesses to carry out their important work.
These companies are not asking for preferential treatment, but simply access to the same opportunities that all other businesses enjoy. If current EC President Ursula von der Leyen was serious in her assertion that tech-drive change would comprise a key facet of her five-year tenure, and if the bloc as a whole wishes to fund those best-placed to identify and develop new technologies for vanquishing the virus and dealing with its aftermath, then the Commission should take heed of the coalition’s concerns. Loosening their requirements, streamlining investment processes and facilitating innovation are the best way to navigate an escape route out of the nightmare in which the human populace is currently imprisoned.