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November 13, 2006
VC funding lags in diagnostics
by Kelly McKenna
It's clear that diagnostics offer huge potential: reducing costs, predict an individual's risk of acquiring diseases and responding to specific therapies…the list goes on. Yet, venture capital funding has been minimal compared to investment in other healthcare areas – pharma, biotech and even devices. Key reasons may include a lack of understanding of this new business model, no blockbuster (big pharma) product prospects, slow-moving reimbursement and a general skepticism due to the misperception that few to no companies have shown a tangible cost savings.
Smaller, early stage diagnostics companies rely on funding for R&D. And, unfortunately, there are few successes, even though these companies can bring products to market and generate revenue quicker because their products typically don’t undergo the lengthy FDA review and approval process. Companies like Genomic Health and XDx have generated significant funding, commercialized products with several in the pipeline (essential to these companies long-term success) and paved the way for start ups. The diagnostics business model does work, but it requires investment and commitment. Diagnostics companies are and will enable the reality of personalized medicine.
Posted by kelly_mckenna at November 13, 2006 06:29 PM
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