Sustained by governmental support and private capital, biotech companies around the globe are translating cutting-edge science into life-improving therapies.
Biotech raised $16.9 billion in capital in the United States and $3.4 billion in Europe, surpassing 2003. Successful companies drive investor optimism for the sector, with two biotech companies valuations rivaling the worlds sixth largest pharmaceutical company. The sector received approval for 20 new biotech medicines in the United States and nine in Europe, compared to 18 and six, respectively, during 2003.
Factoring in new indications, the United States garnered 36 approvals in 2004 compared to 35 in 2003. The late-stage product pipeline grows considerably in 2004, and the majority of new product approvals in 2005 will come from biotech companies. Global revenue increases by 17 percent, sustaining the growth achieved in 2003. Biotech hotbeds emerge in the Asia-Pacific region, particularly Japan, India and China.
The surge of new biotechnology products that started in 2003 continued through 2004. Biotech companies market approximately 230 drugs, including 13 therapeutic antibodies. Fifty-five New Drug Applications (NDA) await approval in the United States alone, including therapies for cancer, congestive heart failure, pain and diabetes. Medicines in Phase III clinical trials number 365, compared to 290 the previous year.
The biotech sector has gained respect in the capital markets, maximizing financial resources, developing human capital for innovation, and protecting intellectual capital resources. Beyond Borders cites strong financial performance in 2004. Highlights include a record-breaking $3.6 billion in venture capital raised in the United States, $1.4 billion in Europe and $271 million in Canada, a long-awaited surge in IPOs, including 28 in the United States, 17 in Asia-Pacific, nine in Europe and four in Canada, cost containment demonstrated by an R&D expense increase of 12 percent and total employee increase of 5 percent globally.
After recovery in 2003, biotech stocks held steady in 2004 as the performance of the Amex Biotech Index was relatively moderate, growing at 11 percent. The sector has made progress in terms of profitability, and U.S. publicly traded biotechnology companies could still reach aggregate profitability by the end of the decade. One key threat to profitability, according to the report, is the possibility that a regulatory response to recent drug safety issues could either increase the cost of drug development or extend the average time for approval.
The United States remains the global biotech leader by a significant margin. U.S. biotech companies raised 80 percent of venture capital. Seventy-eight percent of biotech revenues are U.S.-generated. Over 50 percent of the public companies are still U.S.-based, the report said.
However, competition is heating up, with Europe better positioned to move forward after a painful period in 2003. Europes financial performance in 2004 is up relative to 2003, and the sector registered a significant uptick in capital raised during the year.
The Asia-Pacific region, with rapid growth, increasing governmental focus, and improving regulatory regimes and infrastructure, is not far behind.
When the U.S. Administration curtailed government funding for stem cell research, more liberal regulations in Sweden, Singapore and Korea gave those countries a lead in this area. Now, several U.S. states have jumped into the fray by moving to provide funds for stem cell research.
Agricultural biotech, controversial in much of Western Europe, is being rapidly embraced by the developing world. 2004 marks the first year that the absolute growth in the cultivation of transgenic crops in developing countries outpaced growth in developed countries. From cost containment to public policy hurdles, biotech companies are increasingly overcoming local constraints by leveraging strengths in other parts of the world.
