GLOBAL BIOTECH R&D PRODUCTIVITY ON THE RISE
The productivity of big pharma has been remarkable over
the past 25 years.
In each of the last 10 years, the pharmaceutical industry has ranked at
the top
of Fortune.s .most profitable. industry list. But this top ranking has
eluded the
industry in recent years, during which the productivity of the biotech
sector.
for many years poor in the aggregate.has strengthened markedly.
An emerging distinction between biotech and big pharma
is the productivity of R&D.
According to Arthur D Levinson, chairman and CEO, Genentech, R&D
spending
by large pharmaceutical companies has been steadily increasing over
time, while the
number of new drug approvals (NDAs) coming out of these companies has
been
decreasing. In 2004, the pharmaceutical industry spent about $50 billion
on R&D,
compared to $16 billion spent on R&D by publicly traded US biotech
companies,
and an estimated $20 billion spent by the global biotech industry.
In spite of its large R&D expenditures, big pharmas.
NDAs have been declining steadily,
while biotechs have accounted for an increasing share of NDAs over the
past five years.
In 2003, the biotech industry hit a milestone when it surpassed big
pharma in the number
of new drug approvals from the Food and Drug Administration (FDA) in a
given year.
The trend continued to favor biotech in 2004. In 2005, an estimated 35
new
pharmaceutical or biotechnology products with sales potential of at
least $150 million each
will enter the market. Of these, 20 are expected to be products from
biotechnology companies,
and will be marketed directly by these companies or in collaboration
with pharmaceutical partners.
In addition, there are more than 700 compounds from biotech firms at
various stages of development,
with more than 400 compounds in clinical trials. More than four out of
five therapies currently in drug
development are founded on biotech discoveries or employ biotech tools.
Source: Ernst & Young
