Johnson & Johnson and GSK launch £125m fund

GLAXOSMITHKLINE (GSK) and Johnson & Johnson are taking a creative new tack in the hunt for tomorrow’s drugs by linking with venture capital firm Index Ventures in an unusual tie-up.

The two pharmaceutical manufacturers will together contribute half the funding for a €150m (£125m) fund being launched by Index to invest in early-stage life sciences projects, primarily in Europe.

The three-way collaboration aims to capitalise on Index’s successful track record in backing companies with just one or two projects – a so-called “asset-centric” approach that has already led to a number of trade sales and flotations.

Deals such as the sale of PanGenetics, an Index-backed firm, to Abbott Laboratories have produced fat returns and elicited keen interest from Big Pharma, whose own in-house research investments have produced disappointing returns in recent years.

“This is a completely new collaboration model,” Index partner Francesco De Rubertis said.

Under the deal, Index’s existing limited partners will put up the other half of the cash and the venture capital (VC) firm will maintain full decision-making rights to the portfolio of companies in which it invests.