In its 30-year history, biotechnology has made dramatic advances possible in health care, agriculture, energy production and industrial bioprocessing. These accomplishments are the result of painstaking work by many smart people devoted to transforming bench-scale life-science research into commercial products. In economic times both strong and weak this industry thrives.
The industry and the promise of its science were tested during the recent and continuing recession. Many biotech companies were forced to downsize or even shutter their doors altogether and place promising research on the shelf.
However, while global financial dynamics have stymied investment in our industry, the strength and quality of our science continue to astound, amaze and hold out promise for future advances. Our industry’s mission has never been more critical: The challenges confronting our world – broadening access to innovations in healthcare, improving nutrition and agricultural production to meet the needs of a growing worldwide population, and generating the energy and fuel needed to support economic growth and continued development – are enormous. Scientists at leading biotech companies and academic institutions continue to research and develop innovative solutions to meet these challenges, while seeking the capital to commercialize them.
Attendance and activity at BIO’s CEO & Investor Conference this past February was a sign that interest in the science behind our industry remains strong and the long-term prospects of the industry remain sound. More than 1,300 biotechnology executives braved a blizzard that descended on New York City to network and discuss deals. The conference hosted more than 900 one-on-one meetings between companies, an increase of more than 20 percent over the 2009 conference, showing that companies are looking for ways to finance continued research and development of projects.
At present, capital markets remain unusually risk-averse, which is an added impediment for an industry that faces inherent risks. On average, the development of a new drug costs $1.2 billion over the course of 10 to 15 years from the time research begins until it receives FDA approval to go on the market. This includes the cost of failed drug candidates along the way – on average, only five out of every 5,000 potential medicines tested ever reaches the stage of clinical trials, and only one of those is likely to achieve final approval for sale by the FDA.
The payoffs for taking the risk still exist, however, as shown by the positive outcomes of clinical trials across a number of key areas coupled with FDA approvals of new products in the last year. At the end of October 2009, 25 percent of all unique products in clinical trials were biologics. And FDA approvals of the first treatments for lupus, peripheral t-cell lymphoma, as well the first approval of a transgenic-derived therapy demonstrate the ongoing promise of the science.
Biotech companies continue to accept the risks in order to achieve the goal of bringing to market new products that heal, feed and fuel the world, and wary investors have very selectively backed some of these efforts. A number of follow-on offerings occurred in 2009, with much of the financing going to companies with Phase 3 data or late-stage products. While there have been fewer than five biotech initial public offerings over the past two years, at the start of 2010, a number of emerging biotech companies from all sectors of the industry were preparing to make their IPOs.
The risks remain sobering. The industry lost 99 (about 25 percent) of the 394 active U.S. public biotechnology companies BIO had counted in 2008. Many companies also reduced headcount. According to staffing firm Challenger, Gray and Christmas, in 2008 over 43,000 pharmaceutical and biotech jobs were lost, and in 2009 another 58,696 jobs were lost.
Biotech innovation always has been a high-risk enterprise and always will be. Even with the best scientists practicing the most cutting-edge science in the best run businesses, it is more important than ever for us to make sure that policymakers around the world make policy that values and incentivizes innovation.
The effect of policy decisions on the ability of biotech companies to keep developing and delivering breakthrough science and new products is greater than ever. BIO will continue to engage with leaders in Washington, across the nation and around the world to advocate for public policies that encourage innovation.
The 2010 BIO International Convention, May 3-6 in Chicago, will occur at a critical time for our industry. By continuing to showcase the strength, diversity and vitality of the industry, we can more effectively deliver our message to policy leaders and to potential investors. At the 2009 BIO International Convention in Atlanta, more than 1,700 companies from around the world and every sector of the United States engaged in more than 14,000 partnering meetings. The 2010 BIO International Convention presents us with another opportunity to gather for four days of networking, idea sharing, education and inspiration that will pay off for years to come.
The long-term prospects for biotech remain strong. Our companies continue to innovate, developing medicines that are providing hope where there once was none and new tools to allow for more personalized and effective care.
I invite you to join me in Chicago at the 2010 BIO International Convention as we tackle some of the challenges that will shape the future and deliver on the promise and potential of biotech to develop preventions, treatments, and even cures, that can save lives and improve the quality of life for all of us.