The world of healthcare is rapidly embracing the open innovation model and, by extension, corporate venturing. This trend, which has been developing for a long time, was underlined by open innovation’s best-known thinker, Harvard academic Henry Chesbrough, who told last month’s Nature magazine how open innovation in life sci- ences had initially been treated with scepticism but had now taken more of a hold due to open innovation successes at biotech companies such as Genzyme and Millennium. Research and development (R&D) spending in health- care is still increasing slightly, with more than $70bn spent by the 10 biggest companies in the sector in 2012, accord- ing to news provider Fierce Biotech. Yet smaller companies are taking a growing share of R&D – Fierce Biotech said the 10 largest biotech compa- nies spent $11.8bn on research in 2012, up 15%, while some companies, such as Anglo-Dutch AstraZeneca, US-based Pfizer and Japan-based Astellas, are scaling research back. As R&D levels off, many are turning to corporate venturing. New entrants since 2010 include US-based health- care company Merck’s Global Health Innovation Fund, now $500m in size, US and UK-listed Shire Pharmaceuticals, US-based Baxter International, China-based Wuxi Pharmatech, Germany-based Boehringer Ingelheim and New York-listed Teva Pharmaceutical Industries. Many believe this change in the structure of research, plus wider changes to the US healthcare system under President Barack Obama, make it a very interesting time to be in healthcare venturing. Matt Hermann, manag- ing director at Ascension Health Ventures (AHV), which invests on behalf of numerous Roman Catholic healthcare facilities, including hospital Ascension Health, said: “This is the most exciting time to be part of the healthcare venture business as the strategic impact of what we are doing is so high. We believe our LPs [limited partners – investors] enable us to offer unique insights.” He said entrepreneurs and other venture and private equity firms were appreciative of the strategic value Ascen- sion Health Ventures brought to its portfolio companies.Chris Coburn, outgoing executive director of US-based Cleve- land Clinic Innovations, said: “This is a great time to be a big com- pany with investable resources. The arithmetic in the venture com- munity means large players are able to get relatively better value for investments.” People in the sector welcome the move towards venture. Her- mann said: “I believe hospitals and healthcare systems have in the past underinvested in innovation and AHV helps its limited partners become more aware of additional innovations that reduce costs, improve…

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