The success rate for small biotechs applying for regulatory approval from the EMA has risen by over 100% since 2016, which analysts partly attribute to increased access to sophisticated technology and funding.
According to a recent announcement from the EMA, the regulator greenlit a whopping 89% of applications for marketing authorization for new medicines from a micro-, small-, or medium-sized enterprise (SME) applicant last year. This figure dwarfs the 40% success rate for SMEs in 2016.
In 2020, 16 medicines developed by SMEs were approved by the EMA, of which half are treatments for rare diseases. This accounts for a fifth of last year’s EMA approvals of medicines for human use.
“SMEs play an important role in the development of new and innovative therapies in Europe and we are extremely pleased to see the increasing number of smaller companies bringing new medicines to market,” said Rafaèle Tordjman, founder of Jeito Capital, a Paris-based venture capital fund focused on biotech and biopharma.
The EMA classifies a company as an SME based on a range of criteria such as having up to 250 employees and an annual turnover of up to €50M. One recent example of an SME passing the regulatory finishing line was the UK-based Orchard Therapeutics, whose gene therapy Libmeldy got the EMA nod for treating a rare genetic neurological disease in December 2020. In the same year, the German biotech MYR Pharmaceuticals pushed through the first hepatitis D drug on the market, Hepcludex, and was later acquired by Gilead for €1.45B.
It may be something of a return to the romantic early days of the pharma industry when small companies could realistically hope to make it big — most of the big pharma companies of today in fact had humble origins. By the 20th century, that was largely a pipe dream for biotech startups, as companies needed exceptionally deep pockets to discover new medications, put them through years of clinical trials, and market them.
However, a recent analysis by global consultancy McKinsey & Company documents how the landscape is changing again, fueled by broader access to sophisticated technology and an influx of talent and investment into SMEs.
Thanks to a growing ecosystem of contract development and manufacturing organizations (CDMOs) and other specialist vendors, a biotech startup today can easily outsource major chunks of the work needed to commercialize a product, the report explains. In an echo of the financial markets, where a mushrooming ecosystem of financial brokers such as RobinHood have arguably democratized market access, these vendors have significantly lowered the financial bar facing biotechs who wish to bring their therapies to market themselves.
The Covid-19 pandemic, which brought increased investor interest to biotech, has also helped SMEs by turbo-charging the entire industry ecosystem. Companies such as vaccine maker Moderna, which started small but was propelled to the forefront of the global struggle against the virus, have blazed a recent trail for others to follow.
The increased success rate of SMEs with the EMA also reflects an increase in regulatory approvals for biotech companies around the world.
“[T]his year’s trend is definitely positive,” said Bertrand Delsuc, CEO and founder of the business intelligence firm Biotech Radar. He noted that the current approval rate for reviews initiated in Europe, the US, Japan, and China is 95% so far in 2021, according to publicly available records. “The average approval rate over 2019-2020 was 80%,” Delsuc added.
“On a smaller perimeter of EU listed bios, the average approval rate over the 2015-2018 period was only 67%. So, it seems the trend from the EMA report is a global one, for every jurisdiction.”
Cover image from Elena Resko