Curing the world’s ills

Edie Lush

Edie Lush says UK biotech and medical research is world-class, but that start-ups face a challenge to raise capital and must think global from the start

Neoss was founded by a dental professor from Leeds University and Swedish engineer Fredrik Engman in 2000. They raised seed capital from Harley Street, developed a prototype, then spent a year trying to find money. MMC gave them £500,000 in 2003 and has subsequently participated in five more funding rounds, the latest of which was in 2007 when they took an equity investment of £10 million to help Neoss fund overseas sales, especially in the US.

Neoss took four years to develop a US-sales strategy, but for other medical device companies this is critical from the beginning. Simply put, the US market is more interested in using technology in patient care than the UK. Gyrus’s Shaw says that the vast private input into the US healthcare system means that people are prepared to pay $400 for a disposable surgical instrument because they’ll save three days of the ‘hotel’ costs of hospitalisation by doing so. ‘Budgetary control in the US tends to lie in the hands of the people responsible for the whole process of care in the hospital setting. In the UK the nationalised system means that breadth of budgetary awareness and control tends to lie rather higher up at local or regional level – too high to make detailed decisions in respect of any individual product or treatment protocol.’

Simply knowing the payback for using a particular product seems pretty basic, but Ian Gilham, chief executive of Axis Shield, a medical diagnostics company, says the UK has a long way to go. ‘In Switzerland, Scandinavia and the US, healthcare is funded by reimbursement procedures. So finances of new devices or diagnostic tests are very transparent.’ Axis Shield produces the Afinion device that tests average glucose levels for diabetic patients in three minutes at GP surgeries. In the US, the doctor doing the test knows exactly how much she’ll be reimbursed for using a test cartridge. In the UK, if the GP surgery does too many tests they’ll go over budget and won’t get paid back. New innovative devices can be frowned on for breaking the budget.’