Big Pharma Invests in Future Through Incubators and Venture Funds

In a strategic move to secure their pipelines and stay ahead of emerging trends, major pharmaceutical companies are increasingly turning to incubators and venture funds. This approach allows them to tap into cutting-edge science, explore new therapeutic areas, and even establish footholds in emerging geographical hotspots.

Eli Lilly and Boehringer Ingelheim Lead the Charge

Eli Lilly's Lilly Gateway Labs and Boehringer Ingelheim's Venture Fund are at the forefront of this trend. Julie Gilmore, VP and global head of Lilly Gateway Labs, revealed that at least half of their companies are working on projects outside Lilly's core strategy. Similarly, Detlev Mennerich, global head of the BI Venture Fund, stated that they tend to invest in areas where Boehringer Ingelheim is not yet active.

Lilly Gateway Labs, with locations in Boston, San Diego, South San Francisco, China, and soon the UK, focuses on companies with novel, cutting-edge science. The program offers a symbiotic relationship, providing startups with Lilly's expertise and capabilities while allowing them to remain for around four years.

Boehringer's Venture Fund, established in 2010, has invested in over 70 companies and currently manages a portfolio of more than 40 firms working in autoimmunity, oncology, regenerative medicine, and digital health. The fund has exited 13 companies, with about half going to Boehringer and half to other pharmas or healthcare firms.

Emerging Trends and Focus Areas

Both companies are keeping a close eye on emerging trends. Boehringer's venture fund is particularly interested in neurodegenerative diseases, despite the company's recent rebranding of its CNS division to focus on mental health. Investments in Boston-based Rgenta Therapeutics and San Diego-headquartered Libra Therapeutics, both targeting ALS with new approaches, exemplify this strategy.

Lilly Gateway Labs is exploring healthspan and longevity, which Gilmore describes as "kind of adjacent" to the company's current internal efforts. This area is seen as potentially impacting each of Lilly's core therapeutic areas and possibly extending beyond them.

Industry-Wide Movement

Other pharmaceutical giants are also embracing this model. Pfizer Ventures boasts a $900 million capital commitment for investment in private companies, with a strong focus on early-stage opportunities. The Novartis Venture Fund manages around $750 million, investing in over 40 life science companies across North America and Europe.

Roche has taken a different approach, establishing the Roche Accelerator in May 2021 to strengthen its position in China. The accelerator has already selected nearly 20 local startups from over 500 applicants, focusing on therapeutics, diagnostics, and AI/ML solutions.

This industry-wide shift towards incubators and venture funds represents a significant change in how pharmaceutical companies approach R&D and pipeline development. By investing in startups and emerging technologies, these companies are not only securing their future pipelines but also gaining valuable insights into new therapeutic areas and cutting-edge scientific trends.