Volume 90 Issue 26 | p. 9 | News of The Week
Issue Date: June 25, 2012

Shifts In Pharma Noted At BIO

Biotechnology: Annual conference focuses on a new world of drug research and funding
Department: Business
Keywords: biotechnology, research and development, partnership
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BIO had about 15,500 attendees at the Boston Convention & Exhibition Center last week.
Credit: BIO
A view of the BIO Conference, held in Boston June 18-21, 2012.
 
BIO had about 15,500 attendees at the Boston Convention & Exhibition Center last week.
Credit: BIO

The BIO International Convention in Boston last week, sponsored by the Biotechnology Industry Organization, showcased a reviving biotech industry coming to grips with changes in how innovation is funded and drugs are approved and purchased.

The global financial crisis has led the industry’s traditional venture capitalists to pull back on financing. Still, the sector has managed to return to double-digit revenue growth—10% in 2011 compared with 8% in 2010, according to Ernst & Young, which introduced its annual report on the biopharmaceutical sector at the conference. Despite the revenue increase, to $83.4 billion, the sector experienced a 5% drop in net income last year.

Tracking firms in the U.S., Canada, Europe, and Australia, the report also shows that R&D spending increased by 9% last year, continuing its rebound from a drop of 21% in 2009.

Gautam Jaggi, managing editor of the Ernst & Young report, and others at BIO described a business landscape in which funding from government agencies, big pharma partners, and patient advocacy groups has picked up where venture capital dropped off. In particular, he said, biotech firms and large drug companies are engaging in a new level of partnership in research.

Patient advocacy groups are a big part of the change, according to Margaret A. Anderson, executive director of FasterCures, a Washington, D.C.-based think tank focused on accelerating medical research, who spoke on a panel on translational research. She pointed to the long-standing collaboration between Vertex Pharmaceuticals and the Cystic Fibrosis Foundation as crucial to the biotech firm’s therapy for the disease, Kalydeco, having been approved earlier this year.

Funding from patient advocacy groups generally comes with a high expectation that researchers produce results, Anderson emphasized. “People running these foundations are not just going to hand over a check and see where things go,” she said. “There are milestones.”

Academics involved in drug research don’t like being given such deadlines, but they are changing their attitudes as funding from traditional sources tightens. And drug companies are eagerly pursuing partnerships with patient groups. “Big pharma walked up to the table and said, ‘We can’t get there from here without the patient community,’ ” Anderson said.

Introducing his firm’s annual industry outlook, G. Steven Burrill, CEO of the investment bank Burrill & Co., spoke of transformative changes ahead for large drug companies as the science of drug discovery becomes more complex, the regulatory path less certain, and reimbursement through the health care system more challenging. He also pointed to partnerships as crucial to advancing biotech drugs.

Ronald C. Newbold, vice president of strategic research partnerships at Pfizer, speaking on a panel on partnerships, described business pressures forcing the drug giant to reorganize R&D, close large operations, and build a network of academic alliances that began with its biopharmaceutical hub in Cambridge, Mass. “Ten years ago we had the luxury of doing it all ourselves,” he said. “Now we need to partner.”

 
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ISSN 0009-2347
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