Johnson & Johnson turns to internal venturing
In a move designed to encourage collaborative ventures between its 230 subsidiaries internal Johnson & Johnson has recently set up an Internal Ventures Group. Until now Johnson & Johnson had allowed its acquired companies to function largely autonomously in the fields of innovation and research.
However with pressures mounting on the company to come up with new products, J&J is rethinking this strategy and looking for new ways of integrating its business and research divisions in pharmaceuticals, medical devices and diagnostics to increase its rate of innovation. As part of this initiative to unlock innovation the Internal Ventures Group hunts across the group in an effort to identify and support the development of internally generated and unexploited early-stage technologies and to promote new projects or ventures that currently have a low priority in J&J's strategic priorities. Once identified by the Group, ideas are passed on to J&J's Development Corporation, an internal venture capital group and the Corporate Office of Science and Technology, a central group that evaluates and tracks scientific advancements and new technologies for evaluation.
If the ideas are considered worthy of support J&J's Development Corporation acts as the lead investor for the project and solicits funds and resources, including laboratory space and scientific expertise, from outside partners.
One of J&J's first internal ventures funded in this way was a project to develop a medical device called the Macroflux system. Consisting of a small titanium mesh patch with precision drug-coated microprojections that create superficial pathways on the skin, the device is intended to provide a needle-free solution for transdermal delivery of therapeutic agents. Launched in 2004 the project was incubated in J&J's subsidiary ALZA Corporation, and became a spin-out transdermal drug development company called Macroflux Corporation which raised $75 million in an equity financing in October 2006. ALZA Corporation retains an equity stake in the company. Macroflux's lead product incorporates the Macroflux patch with a parathyroid hormone aimed at treating severe oesteoporosis.
Movetis AV is another spin-out from J&J. Set up as a speciality company focused on gastrointestinal disorders, the company was founded in December 2006 by three former managers of Janssen Pharmaceutica, a J&J subsidiary. The aim of the company is to develop eight medicines licensed from Janssen Pharmaceutica and one from Ortho McNeil, another J&J company. As a niche player, Movetis, is seen as having more potential to develop and market the drugs than would have been the case for Janssen or Ortho-McNeil.
Another start-up company is currently being set up within J&J through its Stem Cell Internal Venture. The company is being incubated at Centocor, a J&J subsidiary, in Radnor, Pennsylvania. Funded by Centocor's Research and Development and J&J Development Corporation, this venture is based on a technology platform derived from cells from the retina which can help establish degenerative-disease cell lines and develop assays for disease markers.
Other early-stage collaborations in the pipeline supported by the Internal Venture Group includes a project being undertaken by J&J's subsidiary Ethicon in collaboration with Omrix Pharmaceuticals to develop the drug Evicel to control bleeding during liver and vascular surgery, a cancer project involving J&J's subsidiaries Centocor, Therakos and J&J's Corporate Office of Science and Technology and Development Corporation.
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