Barren Lives: The Valley of Death for Innovation in Healthcare, Brazilian Style

In recent days, after I wrote about PNIRS, I received the same question from founders, researchers, and investors, phrased in different ways: and the money, where is the money? I heard this from people I've known for years, people who built good science within universities, started companies, won grants, and then saw their projects stall not due to technical failures, but due to a lack of a next step . It is about this next step that I want to write, because it contains the most important and least discussed contradiction in our health innovation policy.

Brazil has once again invested a significant amount of public resources in innovation. The second round of the Mais Inovação Brasil program brings together R$ 3.3 billion in non-refundable resources, of which R$ 300 million is specifically reserved for health , with advanced therapy projects potentially receiving up to R$ 30 million each .

The first round, in 2024, had already contracted approximately R$ 250 million in projects in the sector. Finep began to explicitly address support for phase 1 and 2 clinical research and, alongside BNDES and the Butantan Foundation, structured FIP Saúde , an investment fund with a minimum capital of R$ 200 million, dedicated to technology-based companies in the health economic-industrial complex, whose manager has already been selected for 2025. On paper, the instruments have multiplied . The problem is that multiplying calls for proposals is not the same as creating continuity .

The Brazilian funding system still functions, in practice, like a series of starting points . Each call for proposals finances a project, a stage, an institution, but almost no instrument accompanies a technology throughout its entire trajectory. For a health biotech or deep tech company , this means winning a selection process, executing the project, and then practically returning to the institutional starting point , seeking another source, under different rules, competing again for resources unrelated to the progress already achieved. The country has learned to fire the starting gun. It has not yet learned how to sustain the race .

In Death Valley, the drought doesn't begin with the dry spell.

A few weeks ago, I reread Vidas Secas by Graciliano Ramos. I returned to the book by chance, but it wouldn't leave me while I was thinking about this text, because the tragedy of Fabiano and his family doesn't happen in a single blow. It accumulates in the interval , in the space between the last rain and the next, when what was lost has already been lost and there are still no conditions to rebuild .

Despite all the differences between the human drama of the novel and the economic problem I'm addressing here, this image of the journey best describes what I see happening with innovation in Brazilian healthcare . Many projects don't fail due to bad science at the beginning. They fail along the way , lacking capital, infrastructure, and regulatory guidance to reach the point where investors and industrial partners are finally willing to take the risk.

This interval has a well-established name in international literature: the valley of death . It's the space between validating a concept in a laboratory and the moment when the company manages to attract significant venture capital, a journey that in healthcare usually takes six to ten years and is expensive. Non-clinical studies, analytical development, batch production, toxicology, regulatory documentation, and initial clinical trials are not natural extensions of academic research. They require skills, governance, and capital volumes of a different order. And it is precisely there, in this most expensive and riskiest stretch, that the Brazilian funnel narrows too early . The question that every healthtech founder ends up asking, sooner or later, is the same one Fabiano asked looking at the sky: is there still rain to come, or is it time to gather what's left and leave?

FAPESP got the logic right, but it can't carry the burden alone.

It would be unfair to say that Brazil isn't trying. The program that comes closest to a policy designed around stages of maturity is PIPE , from FAPESP , and it's worth acknowledging. In 2026, the Foundation launched PIPE Jornada Tecnológica Saúde (PIPE Health Technology Journey), with up to R$ 25 million and support of up to R$ 2 million per project, explicitly presented as a gateway to a development path. In parallel, the Regular Innovation Grant began supporting academic projects with up to R$ 600,000 for three years, with the stated purpose of increasing their maturity and facilitating licensing and spin-offs that can then access PIPE itself. The logic is correct: to create distinct, yet connected, instruments so that knowledge advances from the university to the company and from the company to the market.

But FAPESP runs into two limitations that no internal reorganization can resolve, and it's important to name them bluntly. The first is territorial . It's a state foundation, funded by a portion of São Paulo's tax revenue, whose calls for proposals require that the company, principal investigator, and team be based and operate within São Paulo's territory . This is an excellent design for those in São Paulo and, in practice, nonexistent for the rest of the country, where equivalent state foundations tend to operate with much smaller and less predictable budgets.

The second limitation is scale . Investments of up to R$2 million validate a platform or prototype, but in pharmaceutical and advanced therapy projects, they are not sufficient, on their own, to cover the complete non-clinical development, regulatory preparation, and initial clinical validation. FAPESP proves that Brazil knows how to chart the right course. What is lacking, even for São Paulo companies, is connecting this course to higher levels of capital and replicating its logic, with the necessary adjustments, on a national scale.

Three countries, three answers to the same problem.

We are not facing an unsolvable enigma. Other countries have faced exactly this valley, and it is worthwhile to look at three different answers, because each one illuminates a part of what we are missing.

The United Kingdom has opted for continuous funding tied to investors. The Biomedical Catalyst , created in 2012 as a partnership between Innovate UK and the Medical Research Council , has a budget of £140 million in the current cycle and operates permanently, with successive rounds ranging from feasibility studies to larger projects closer to clinical evaluation, including a modality that combines public funding with aligned private investment . The fact that makes this design difficult to refute is the measured result: evaluations of previous rounds showed that each £1 of public funding leveraged more than £5 of private capital within two years, and anticipated market entry by about 18 months . This is not rhetoric, it's metrics. The role of the State there is to reduce technical risk and, at the same time, bring the company closer to those who will finance, regulate, and buy it in the next stage.

Israel chose a different path, using public money to create, and then sustain, a private venture capital market. The original Yozma Fund , from the 1990s, is credited with triggering the entire Israeli venture capital industry, which within a few years became entirely private, without state participation, and remained so for more than two decades. Faced with a new capital squeeze, the country relaunched the model in 2024 as Yozma 2.0, with approximately US$154 million in public funds designed to mobilize more than US$670 million in total investment.

The mechanism is elegant and worth understanding precisely: for every dollar an institution invests in a venture capital fund, the innovation authority adds about 30 cents , and if the fund succeeds, it relinquishes its share of the profit, leaving the entire return to the institutional investor. The State does not choose companies nor interfere in the managers' decisions. It only alters the risk-return relationship so that private capital enters areas where it would not enter on its own. And, since 2025, there has been a branch dedicated to deep tech , including healthcare, precisely the areas of greatest scientific intensity and longest maturation period.

The most recent example comes from the United States and tackles another facet of the problem: the waste of isolated efforts. On July 9th of this year, ARPA-H announced up to US$160 million , equivalent to more than R$800 million at the current exchange rate, for the THRIVE program, aimed at rare genetic diseases, about 95% of which still lack approved treatments. The remarkable point is not the amount, but the design . Instead of funding seven teams to develop seven separate treatments, each building its own technology, documentation, and clinical trial from scratch, the program requires all teams to build modular platforms capable of testing multiple treatments for multiple diseases within a single umbrella trial, with explicit year one, year three, and year five targets. It is an architecture designed, from the first call for proposals, to traverse the entire valley , not just to fund the walk to its edge.

What Brazil lacks is not money, it's design.

Taking these three examples together, it becomes clear that Brazil is not starting from scratch, and to insist that we are would be unfair and false. We have robust economic subsidies , a nascent national line of clinical research , the already correct design of the PIPE program in São Paulo, a private equity fund dedicated to health structured by BNDES , FINEP , and Butantan , scientific institutions capable of operating highly complex infrastructure, and now the PNIRS , which recognizes the need to fund higher-risk technologies. We have the pieces. What we lack is the system that connects them .

A mature design would need to stitch these pieces together at four points . It would require a funding path driven by technological maturity , where a project approved today has predictable access , albeit conditional on goals, to the next tier, instead of starting over with each call for proposals.

We would need a co-investment mechanism specialized in life sciences, along the lines of Yozma, capable of attracting not only capital, but also managers who truly understand clinical design, intellectual property, and regulatory strategy, and not generalist capital seeking quick returns, which in biotechnology is almost a contradiction. Brazil has already experimented with this instrument with FIP Saúde , which is good news, but it did so in a still limited way and without the deep sectoral specialization that the Israeli model presupposes, and the challenge now is to expand and deepen what has already begun, not to invent from scratch.

It would be necessary to integrate ANVISA ( Brazilian Health Regulatory Agency) and clinical research centers into the very design of funding programs, so that no company discovers, only at the end of the funding period, that its studies are not suitable for the regulatory process . And it would require a true territorial strategy , so that national instruments do not reproduce, on a federal scale, the same regional concentration that currently limits FAPESP (São Paulo Research Foundation).

The rain that we haven't yet learned to store.

There is a crucial difference between the drought in the backlands of Graciliano Ramos's novel and the drought in the capital that I describe here. The one in the novel is imposed by nature . Ours is entirely constructed by us , and therefore can be undone by us.

Brazil's New Industry has placed healthcare among its most strategic pillars , and the volume of resources is truly growing, which deserves honest recognition. But money without a continuity plan tends to reinforce what we already know how to do— funding the beginning —without solving what we don't yet know how to do— funding the transition . The United Kingdom, Israel, and the United States gave three distinct answers to the same question, and none need to be copied verbatim. The common principle among them, however, is one: innovation in healthcare cannot be sustained with isolated funding events; it requires continuity , specialization , and coordination . Without this, we will continue to watch good Brazilian ideas wither along the way, not for lack of rain at the start, but for lack of a reservoir to reach the next stage.

Here at the Brazilian Institute for Innovation in Health - IBIS , we closely monitor these gaps between what Brazilian science is already able to produce and what capital, regulation, and industrial policy still need to structure to support it. If this type of reflection is useful for your work or your institution, we would be happy to discuss it.

by Marcio de Paula

Founder of the Brazilian Health Innovation Institute - IBIS , with over 25 years of experience in life sciences, he has held strategy and innovation positions in companies such as Biolab and Ferring Pharmaceuticals , founded the Brazilian Pharmaceutical Innovation Network and is a member of health innovation boards in Brazil. He writes about the paths to radical innovation in health and how to connect science, industry, and public policy.