Biotech Strategy Blog

Commentary on Science, Innovation & New Products with a focus on Oncology, Hematology & Cancer Immunotherapy

Posts tagged ‘Biotech Market’

One of the “Super Sessions” at the forthcoming 2011 Biotechnology Industry Organization (BIO) international convention is a presentation of the highlights of Ernst & Young’s 25th Annual Biotechnology Industry Report.

The 97 page report, available online, offers a useful summary of metrics around financing, deals and sector performance.

As the report notes, one of the key issues that biotech companies continue to face is access to funding in order to sustain innovation.  Many biotechnology executives I spoke to at the recent American Society of Clinical Oncology (ASCO) meeting in Chicago confirmed how difficult access to capital remained.

The E&Y report confirms this anecdotal evidence. In their report they note that the 80/20 rule that we are all familiar with applied to biotechnology funding in 2010, with 20% of US companies obtaining 82.6% of the capital!

Given this ratio, it’s not hard to see why so many small biotech companies have struggled for funds.  However, what would have been more interesting to learn about is what were the characteristics of the 20% that led them to successfully obtain more than 80% of the funding? In other words what are the learnings for emerging biotech companies seeking capital?

The report also notes that biotech’s share of available VC funding fell from 18% in 2009 to 12.2% in 2010, as VC’s invested in other market segments such as media and technology.  One only has to look at the recent market interest in LinkedIn to see that investing in web 2.0 companies is back in fashion again, although with the subsequent share price drop it might be considered to be a little akin to Tulip mania.

Another key funding point that the E&Y report picks up on, is that many VC’s now invest in tranches with milestone or contingency based payments.  The result of this “risk sharing” is a lowering of available working capital.  The consequence for biotech companies is that less upfront R&D investments can be made. Instead they may be forced to go after fewer indications and not pursue all available opportunities.

Ernst & Young also interviewed several biotech CEOs about how they planned to sustain innovation, and two strategies emerged:

  • Prove that what you are doing benefits patient outcome
  • Do more with less i.e. improve efficiency

They are not mutually exclusive, and as the report points out, these are the challenges faced by all life science companies.

It will be interesting to see at BIO 2011 how industry executives view the current state of the biotechnology industry and how innovation can be sustained.

I recently attended the Association of Health Care Journalists (AHCJ) annual meeting in Philadelphia. “Health Journalism 2011” offered the opportunity to hear speakers on a wide range of topics.

One presentation that by chance I attended was on what we can learn from Massachusetts, where a law was passed two years ago requiring individual healthcare insurance. Many of the features of the MA law were incorporated into the Affordable Care Act that will impact everyone in the United States.

I have used Storify to aggregate some of the live Tweets from the session, and I hope this captures the essence of what the panel presented.

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At this past weekend’s Association of Health Care Journalists (AHCJ) conference in Philadelphia, Ed Silverman from Pharmalot moderated a panel on “efforts to revive the drug delivery pipeline.” He drew the attention of the audience to FDA data, published earlier this year, on the number of applications/approvals for new molecular entities (NME).
Source: redrawn from FDA Center for Drug Evaluation and Research (CDER) presentation.  The data in my opinion is a little ambiguous as to the true state of the Pharma industry.  While the number of applications declined last year to a five year low of 23, from a previous 5 year high in 2009 of 37, the number of NME approvals at 21 was only just below the 5 year average of 22.

What I took from this data (see chart), was the fact that in 2010 the number of approvals as a percentage of applications was the highest in 5 years (91%) as compared to 70% in 2009.  It is too early to tell from this data whether companies are presenting better applications to FDA, or if this data reflects the fact that new products are being terminated if the phase III trial results are not promising.

For the biotechnology industry, the challenge remains that bringing a new product to market is an expensive and risky proposition.  However, it is clear that there are some factors that are likely to be key factors for success, including:

  • Improved understanding of the biology of disease
  • Better clinical trial design
  • More rigorous patient selection criteria
  • Increased time in the phase II stage

As big Pharma scales back R&D funding in favor of shareholder value and baby biotechnology companies struggle with the challenges of whether to grow or sell out, it will be interesting to see how the FDA application/approval data evolves.

As those of you who have been following my conference schedule already know, I will be at Health Journalism 2011 in Philadelphia later this week.  The annual meeting of the Association of Health Care Journalists (AHCJ) runs from April 14-17.

It’s my first time at an AHCJ conference, and in my first video blog post I have shared why I am going and what I hope to obtain from the meeting.

Some of the expert sessions that I am particularly looking forward to are on:

Spotting fraud in scientific research (moderated by Ivan Oransky, M.D. executive editor, Reuters Health; blogger, Retraction Watch and Embargo Watch)

Efforts to revive the drug delivery pipeline (moderated by Ed Silverman, editor-at-large, Med Ad News and R&D Directions)

Understanding nanotechnology’s role in fighting cancer (moderated by Eric Rosenthal, special correspondent, Oncology Times)

Best practices in blogging and social media (moderated by Scott Hensley, health blog writer and editor, National Public Radio)

As William Heisel states in an excellent blog post on Reporting on Health, the journalism stars have come out for ACHJ Health Journalism conference in Philadelphia. I am looking forward to an exciting and informative meeting. Hope to see you there.


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