This year marks the
biotechnology industry’s 30th anniversary, and the
industry is finally starting to act its age. Biotech
is “a global powerhouse with over $60 billion in
revenues and hundreds of marketed products,”
according to Donn Szaro of Ernst & Young, who
spoke at the recent Massachusetts Biotechnology
Council annual meeting. The industry is closer to
reaching profitability than at any other time in its
history. And the market valuations of its biggest
players, including Amgen and Genentech, are
approaching those of Big Pharma.
Szaro, leader of Ernst
& Young’s Global Biotechnology Sector,
highlighted trends from his firm’s “Beyond
Borders: Global Biotechnology Report 2006.” Since
its inception, the biotechnology industry has
undergone remarkable transformation. The year 2005
marked three consecutive years of stability for the
U.S. biotech industry. The industry experienced strong
financial performance, numerous product approvals, and
robust financing.
In the Americas, public
biotech revenues grew by 16.9 percent, and revenues
increased 15.8 percent for the industry as a whole.
R&D expenditure was relatively flat, up only 1
percent. Net loss was down a staggering 54 percent and
continues to decrease. On a global basis, the biotech
industry achieved a 30 percent reduction in net loss
in 2005.
Biotech is also
bridging the innovation gap in terms of producing new
therapeutics. At the end of 2005, 58 biotech products
were awaiting approval at the FDA. During the year,
the United States saw 32 new biotech approvals,
including 17 first-time approvals.
In Europe, the big news
is that the biotech sector is back on track. Europe
has a younger and less mature biotech marketplace. But
it appears to be catching up quickly. The region saw
strong IPO activity in 2005, with more IPOs than the
United States (23 IPOs in Europe as compared with 13
in the United States). It is emerging from a prolonged
consolidation period and is raising more funds than it
has in years ($3.9 billion in total financing for
2005).
In Asia, meanwhile,
governments have stepped in and are using
biotechnology to fuel economic development. Making
biotech a strategic priority, they are enacting
measures to bridge gaps in funding, education,
infrastructure, and regulatory standards. Also, says
Szaro, “‘brain gain’ is happening in developing
countries — scientists are going abroad to study in
the U.S. and subsequently returning home,”
benefiting this fledgling sector with their newfound
knowledge and expertise. This development is giving
biotech companies more options for sourcing activities
such as R&D and manufacturing. It also gives
Western companies access to some of the largest and
most rapidly growing drug markets in the world.
Its entrepreneurial
spirit has allowed the biotechnology industry to grow
by leaps and bounds. As Szaro acknowledged, this
industry has gotten where it is today “by doing what
it does best — bringing its tremendous inventiveness
and creativity to cross hurdles, whether they lie in
the laboratory, in investor attitudes, or in
regulatory requirements.”
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