Pharmaceuticals Invest To Speed Drug Trials - InformationWeek

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Pharmaceuticals Invest To Speed Drug Trials

Venture capital money might be hard to come by for young tech companies these days, but some recent investments show a new trend of pharmaceutical giants financing IT start-ups to develop ways to speed clinical drug trials.

Clinical trials are a "major bottleneck" in the development of new drugs, says Michael Carusi, general partner at venture capital firm Advanced Technology Ventures. Every day lost in slow trials costs drug companies millions of dollars, he says, because the short patent life of the drug is running out, and because other companies are coming to market quicker with copycat products.

On April 18, pharmaceutical giant Eli Lilly announced it would invest an undisclosed amount in start-up 1747 Inc., developers of a system that automates the clinical trial process and uses the Internet to speed interaction with test subjects. The investment was made through the e.Lilly venture fund, founded in January with a $50 million annual budget. According to the company, the fund is designed to support early-stage development companies working on E-business products to benefit the development of pharmaceuticals.

Late last year, the nation's second-largest drug maker, Merck & Co., formed a new subsidiary, Merck Capital Ventures LLC, which plans to invest $100 million over the next two years into private businesses focused on pharmaceutical development using the Internet and other information technologies. In March, the fund made its first investment, contributing to a $27 million financing round for Acurian Inc., another manufacturer of Web-based trial systems.

Carusi says pharmaceutical companies see these investments as external R&D, allowing them to build tools that they wouldn't be able to develop on their own. "Particularly in the IT area, it's just not an area of competence for them," he says. "There's a level of scale required larger than what Eli or Merck could bring."

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