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Health Tech: Inspired from Boston

France is internationally ranked 4th of Nobel and 2nd of Field's medals. A fresh report of Boston Consulting Group highlights its qualities to become the promised land of health startups: high-quality research, generous public financing, one of the best hospitals and health systems.

As often, the Hexagon shows many high potential startup, with already 600 companies positioned on the health sector. The twentieth-first could reach over the long term 250 million people worldwide. Unfortunately, French stars have difficulties to upgrade their startup status to international giants. Cruel are the figures: 1/30 French company of the Health Tech is priced beyond the billion gap, against 1/14 for other countries and 1/8 for the USA. 

In an international competitive context, France has to take advantage from its good dynamics and creative impulse. Indeed, France has to face Japan, South Korea and China who advance very fast. Thus, Samsung Bioepis specialized itself in biosimilar. Its European sales reached 257 millions of dollars at the Q3 of 2017. Concerning China, it may have R&D gross expenses bigger than the USA by 2019. Finally, for the Israeli state self-proclaimed "startup nation", the health is one of its six sectoral priorities. The Boston example: the biotechnology international hub should help French companies to become the long-awaited Promised Land.

Why Boston? 

In thirty years, Boston became the biotech and medtech international hub. The city of Massachusetts generate a turnover of $60 billion and has raised $7 billion in 2016. It represents 6% of the international research pipeline. The most successful companies as Biogen, Boston Scientific, Genzyme and Hologic are protected by patents and are slightly affected by the international competition. As a consequence, market is growing at an average annual rate of 10%.

This success story is due to significant fund raising. Indeed, the USA counts many private equity funds which have important investment capacity like Flagship Pioneering and Polaris Partners

The density of the scientific community in Boston and the large number of universities have supported the emergence of talent and the development of a sectoral expertise. Furthermore, the cooperation of public and private which block some situation in France is profitable in the USA. Indeed, it creates opportunities for entrepreneurs and the FDA, authority in charge of the authorization of clinical testing and commercialization, to exchange and clarify some situations.

Like in Boston, biotech and medtech have the profile to boost the health environment. The rise of these young companies could absorb the trade deficit. By following Boston, France could create 130,000 additional jobs by 2030.

Why the Health Tech needs to growth? 

Beyond the job creation, we should consider the macroeconomics, scientific and technological trends. The aging of the population, the increase of life expectancy and the demographic growth threaten the supportability of public expenses. For this purpose, we must need new technologies to help professionals of health and hospital improving treatments for less. At the same time the life expectancy raise, the time being in good health fall. It is important to invest in patient’s life quality, considering the public healthcare and social cohesion issues.

Telemedicine and preventive medicine could be a solution. In addition, administer treatment by correspondence, home help and dematerialized diagnostic would seem to relieve professionals and cover patients. 

Fortunately, all disruptive innovations find an application in the health sector: the artificial intelligence interprets medical images since 2012. Robots are used to operate people and virtual reality could deserve to post-traumatic reconstruction. 

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Is France strong enough?  

Actelion, Incyte and Biomarin, directed by French, are the three thirsts international biotech. However, none of them is located on the French territory and their value do not exceed the billion. 

68% of Health Tech clinic trials happen abroad, because of strong regulation. Validation procedures are very long and cumbersome: it takes four times more to sell a product in France than in Germany. By contrast, clinic trials should stay in France. On the healthcare point of view, taking time to commercialize a medication is useful in case of severe illnesses. On the hospital point of view, it represents a complementary source of revenue and an opportunity to train staff members. 

Moreover, there is not enough development capital funds to finance Health Tech and venture capital funds are not able to respond to deals with high levels of need. Lastly, France is penalized by the lack of related talents. Nevertheless, France has many attributes to succeed: one of the most effective research all around the world, a good territorial grid, a supportive tax disposal that has enabled companies (in 2013) a reduction of over 6 billion € of tax. On the financial front, the BPI (Public Investment Bank) is especially active. For example, in 2015 BPI made equity financing in 35 companies of Health Tech sector up to 135 million €. All in all, the public support for seed stage companies represents 1/3 of R&D expenses. 

To fully exploit its potential and become a real international leader, the BCG made 15 propositions among there are: extend the maximum maturity of a young innovative company, develop contract types to encourage technology transfers, boost the link between university courses and Health Tech ecosystem and implement the performance of the indicator system to balance the cost of new therapeutic solutions. This ambition will require a strong political determination.   

The original article appeared here