Hana Chlebná: Czech Republic has a long tradition in the production of pharmaceutical products and medical devices

Startups TECH4LIFE

19.09. 2024

The CzechInvest Agency also supports companies from the biotechnology, healthcare and defence industries in its Technology Incubation project and has established the Tech4Life Hub for them. How are Czech companies doing in these demanding sectors with high added value? Read in an interview with Hana Chlebna, Director of the Tech4Life Hub.

The article was taken from the website Vědavýzkum.cz

What areas of human activity are covered by the Tech4Life Hub?

The Tech4Life Hub is focused on supporting the creation and development of technology startups and the launch of new products in the fields of healthcare, defence, security and public protection.

In the healthcare sector, these include pharmaceuticals, medical and diagnostic devices, telemedicine technologies, biotechnology and new materials for healthcare.

The defence and security industry includes non-lethal dual-use technologies such as. Training and simulation solutions, communication systems or cyber security technologies.

In the area of population protection, we are looking for solutions to strengthen critical infrastructure, the IRS, protection against chemical, biological, radiological and nuclear (CBRN) threats or measurement, detection and security technology.

And where does the Czech Republic stand in the areas covered by Tech4Life Hub? Are we at the top of our game and, conversely, are there areas where we still have a lot to learn?

The Czech Republic’s strengths lie in the fields of biochemistry, genetics and advanced materials – most recently nanomaterials.

Are there enough companies on the Czech market dealing with these areas? Who are the main players in this area?

The Czech Republic has a long tradition of manufacturing pharmaceutical products and medical devices. The most important representative of the tradition of pharmaceutical production is the company Zentiva, whose history is linked to Fragner’s pharmacy U Černého orla, opened on Malostranské náměstí at the end of the 15th century. The company was founded in the early 20th century. Today’s plant of the Israeli company TEVA Pharmaceuticals, originally the Czech company Galena, in Opava also has a history of more than a century.

The current pharmaceutical and medical device production in the Czech Republic is represented not only by foreign investors who have built new development and production capacities, such as. MSD, Novartis, Gilead Sciences or Olympus, but also successful Czech companies that have established themselves on the global market, such as Linet, Contipro, BTL or Biovendor.

What makes Tech4Life specific?

The development and marketing of a new drug or medical device presents significant challenges. One of the most significant is the high cost, which includes investment in research, development, clinical trials and approval of products that are subject to strict regulatory rules. This process is not only financially but also time consuming. For pharmaceuticals in particular, the time from the initial research stage to the launch of the product can be very long, as after the initial research phase, extensive clinical testing must be carried out and the necessary approvals obtained. This also requires significant financial resources.

Another obstacle is technological complexity. The development of medical devices and pharmaceuticals usually requires the collaboration of experts from different fields such as biotechnology, medicine and engineering. Coordinating these teams and integrating different technologies is often very challenging. The consequence of this financial, time and technical complexity is high risk in terms of private investment.

This is why publicly funded support for basic research is crucial to bridge the early stages of research and development of new technologies that are essential for positive economic and social development.

Legislation-intensive and high added value area

In the Tech4Life Hub, the group of (co)founders with a PhD or higher degree and also with a licensing or ownership representation of a public research organisation is the most represented. What is the reason for this?

You need to have a clear exit strategy and a clear business plan. You have to learn to speak the language of the investor. The level of applications in the Tech4Life Hub is really high, and the number of projects that are technology transfer projects developed in academia is significantly higher than the average achieved in all applications of the Technology Incubation Challenge. This is due to the fact that the development of innovative solutions in the health sector is a challenging process, which very often stems from advanced research. Founders with PhD degrees and experience from public research institutions are therefore key to the successful introduction of these technologies into practice. Their academic and research background enables them to better understand complex scientific and technological challenges, which is an essential competency in this field.

What are you doing at CzechInvest to overcome this challenge?

Laboratory facilities with their demands for high standards and specific equipment are another aspect of the complexity of drug and medical device development. By equipment I mean not only special costly instruments such as e.g. Fluorescence and electron microscopes, chromatographs, mass spectrometers, DNA sequencers, various imaging technologies or human body simulators that allow advanced experiments to be carried out. Equally demanding are the technical requirements for the actual laboratory facilities, especially those in which drug development takes place. These include not only surfaces, which must be resistant to chemicals, easy to clean and disinfect, but also, and above all, the provision of air filtration and negative pressure systems, for example in laboratories with infectious materials, where negative pressure ensures that contaminated air does not get outside the laboratory.

Biosafety of laboratories must be ensured by access control as well as by separate ventilation systems and decontamination areas. Specific regulations also apply to the distribution of special gases and liquids, which must be distributed safely and efficiently, or to the handling of hazardous and biological waste, including chemical disposal and decontamination.

The complexity of the equipment and the actual operation of the laboratories is very costly. Therefore, incubated companies have the opportunity to use the support provided by the Technology Incubation programme for their rental, especially in research centres in the academic sphere or to use limited offers from the private sector (e.g. the private incubator Innocrystal, the Vidia incubator in Vestec or the incubator of Contipro).

For example, do you have any laboratory space on offer? Do you help companies build such spaces?

CzechInvest is currently negotiating with several developers interested in investing in this area of the real estate market. Together with them and representatives of cities, we are looking for suitable models for construction and operation abroad. At the beginning of this year, we organised a study trip for them to Medicon Valley, which includes major biomedical parks in Denmark and Sweden ( you can read more in the interview with René Samek, ed. ).

I believe that the growing number of people interested in renting space for biomedical research will encourage the construction of incubators. At the same time, it would be very helpful if we could promote public support for this type of development projects, e.g. In the EU, we could also support this type of development by means of a guaranteed lease for a certain initial phase after commissioning, when the necessary occupancy is not reached.

When the Pharmtheon Translational Centre, which belongs to the IOCB, was launched, its director, Jan Skácel, mentioned the excessive, sometimes even impossible to meet, complexity of the regulations for building laboratory facilities. Are you trying to remedy these legislative shortcomings in any way?

The aforementioned complexity of regulations, which applies not only to the regulatory conditions for medical research, development and production, but also to the technical requirements for the premises in which these activities take place, is one of the previously mentioned barriers to the establishment of new companies. The primary concern is ensuring safety at all stages of these activities, and less so the level of bureaucracy. In the case of Pharmtheon, the challenge was exceptional because the laboratories had to be retrofitted into a building that was originally designed for office use.

Ultra-high frequency ECG and anti-bug product

How much funding is allocated to 4. Call for Technology Incubation, how many projects can be supported from it and how many have applied?

The fourth challenge is 118 million allocated. CZK. A total of 125 projects were submitted to the call, of which 31 are being evaluated in the Tech4Life hub. How many startups will enter incubation will only become clear at the end of the process.

In addition, the top-ranked projects may include applicants claiming up to EUR 1.5 million in support. CZK, as well as those applying for support under the Incubation Plus scheme up to a maximum of CZK 5 million. CZK. Which applicants will eventually share the limited allocation is difficult to predict at the moment.

Nevertheless, I am very pleased to confirm that among the projects that have advanced to the final round of evaluation are once again very high quality projects in the Tech4Life area. Despite limited resources, I believe that many of the applicants will also receive high scores in the panels, which will allow us to support their further development.

The question remains how best to take advantage of the willingness of some successful Czech entrepreneurs to invest in quality startups and create an investment fund, following the model of PPP projects and best European practice, which would provide an additional source of funding for projects that successfully complete incubation. We don’t have to look far for inspiration – for example, in Austria, the government agency AWS (Austria Wirtschaftsservice GmbH) manages a fund that combines public funds (state and EU) with investments from private partners and focuses on supporting innovative startups and development companies with significant market potential.

Are there any supported projects from previous calls that you would like to mention that you think have the potential to be successful?

Top-rated projects include an ultra-high-frequency ECG(VDI Technologies), environmentally friendly insecticides against bed bugs(Preagon Biotech), advanced polymer surfaces for in vitro diagnostic medical devices(Sophomer), and the portable “Catcher” device, that helps law enforcement detect counterfeit drugs(Lightly Technologies), an AI-assisted dysarthria diagnosis and therapy system(Scicake), or an ultra-lightweight disposable wireless drill and cutter designed for head and spine surgery(uWesp Medical). These are a few successful projects.

It is very positive news that of the thirteen projects supported in the Tech4Life technology area, eleven of them (85%) are the result of the transfer of academic R&D results. This shows, among other things, how important investment in research is for the development of domestic companies and for building a knowledge-based economy in general.

What is the profile of a biotech startup founder? Is it a former researcher who sees potential in something he came up with during his PhD?

Three basic types of startups are repeated in the third and fourth challenges. The first are the so-called. The first type of startups are wellness apps, which do not require certification and are used to plan and monitor a healthy lifestyle. These are usually founded by young enthusiasts with experience in software development and artificial intelligence applications.

The second type of startups are projects that are based on the clinical practice of physicians, or projects that address their needs with new products not yet available on the market. Because doctors want to focus on treatment and are not interested in the business of manufacturing medical devices, they look for a technically savvy partner and together with him develop a new product that is the basis of a new startup.

The third group consists of former researchers who decide to commercialise the results of their research. These projects show the highest level of added value and potential for market success, and some of them are quite rightly heading for the global market.

According to the data, technology incubation and startup founding is mainly a male affair. Is this also the case in the Tech4Life hub? What is it and are you trying to take any steps to support women founders?

Yes, this is true, and it is quite understandable if we respect the fact that young scientists consider their role in professional and private life after completing their demanding studies. Given the demanding nature of the medical field, the role of founders is thus predominantly male, although the successful projects in the third call include a startup founded by a woman, and I expect the same will be the case in the fourth call currently being evaluated.

By the way, you made me look at the management composition of 10 global pharmaceutical and medical device companies. In all cases, I found men in charge, and I was even surprised to find that most of the management is male. So, we are better off in this respect in our startups, as women are represented in a much more significant proportion in most Tech4Life startups.

Founding a startup is a matter of motivation and willingness to take risks

What public research organisations do you collaborate with in the Hub?

The primary objective of the cooperation is to search for quality projects suitable for commercialization, to promote Technology Incubation as a motivation and support in the early stages after the establishment of a new company and, of course, professional cooperation in the evaluation of projects.

Academic institutions in the fields of biotechnology, pharmaceuticals and materials research can make a significant contribution with their expertise and support in the process of incubating startups and are therefore a valuable partner.

Which partners do you work with and how specifically?

Most of our activities are focused on creating effective collaboration between the academic, private and public sectors to support the development of the entire ecosystem in a given technology area. Not surprisingly, we work with major commercial partners interested in innovative startups, both in terms of joint product development and as potential investment opportunities. These collaborations bring mutual benefits, accelerate innovation and strengthen the market position of startups

How are Czech research organisations in general doing with the establishment of startups and spin-offs? What is holding them back from setting up spin-offs? Are there any legislative shortcomings?

Startups in the Tech4Life Hub that are based on research results in academia have settled licensing agreements with the parent institution where the technology was developed. It is therefore clear that the establishment of spin-offs has a solution in the current legislative environment.

Where I think there is a deficiency in this area is in the methodology in the area of patent valuation. The process of commercialising a patent is quite a complex process requiring expertise in intellectual property law as well as in finance and technology. Developing these competences would help to increase the percentage of patents put into practice.

A general problem in founding startups, applicable to all technology hubs, is the lack of motivation and unwillingness to take risks. In addition, Tech4Life startups are in a significantly more difficult situation than startups involved in, for example, data processing, organisation or data protection – where start-up costs are low, risks are low and the possibility of exiting the company is relatively easy.

In the future, will you be evaluating how many of the companies you incubated are still in business 2-5-10years after incubation and how they are doing?

I’m sure it will, and it will undoubtedly be very valuable feedback. This information will help us not only to optimise our services, but also to make the most efficient use of public resources and to improve the whole ecosystem for the development of healthcare production.

Who is Hana Chlebná
She is currently the Director of the Tech4Life Hub at the CzechInvest agency and represents the Ministry of Industry and Trade of the Czech Republic in the European Alliance for Critical Pharmaceuticals. She has recently completed a two-year secondment to DG GROW, where she contributed to the work of the European Working Group focused on scaling up the production of covid-19 vaccines and medical devices. During her work for the European Commission, Hana has applied her 14 years of experience in the Life Sciences sector, building on more than 15 years of previous experience gained at CzechInvest in economic development, regional growth and foreign direct investment.

Author Martina Kurfirstová