Here are the top 10 trends to watch in the biotech industry in 2001.
1. Technology platform companies will grow by acquisition.
Platform companies (bioinformatics, combinatorial chemistry and genomics companies) will acquire other platform companies with complementary drug discovery tools to provide fully integrated, "one stop" drug discovery services to pharmaceutical companies.
The year 2000's more than 50 genomic tool company IPOs will begin to consolidate. Also, platform companies will acquire late-stage product companies to diversify their risk-reward profile and make their earnings less dependent on the timing of milestone payments from pharmaceutical companies. Mergers will be more strategic and less transactions of last resort.
2. The pharma company mega-mergers of 1999 and 2000 will result in greater numbers of product out-licenses and co-promotions.
As the hurdle for a pharmaceutical company to profitably market a drug rises to $300 million, drugs with smaller anticipated markets will be out-licensed to new, virtual drug development companies, like The Medicines Company and Copharma. Companies with niche marketing and sales forces will strike innovative risk-sharing deals with product owners.
3. The pharma mega-mergers will force a response from mid-size European pharmaceutical companies.
Expect to see mid-sized European pharmaceutical companies such as Boehringer Ingelheim, Grunenthal, or Servier follow the example set by UCB Pharma's acquisition of Massachusetts-based Cytomed, using acquisitions to fill a depleted product pipeline or access new drug discovery resources, so they can compete effectively and avoid getting acquired.
4. Gene sequence information from the Human Genome Project will not only help genomics companies, but also bioinformatics, gene therapy, and proteomics companies.
Bioinformatics companies will help researchers deal with the deluge of information by establishing enterprise-wide solutions for data analysis. Viral and synthetic vectors used in gene therapy will continue to improve in efficacy, in part due to the discovery of additional genetic payloads to transport. Gene sequence information will be used to discover additional drug targets and protein-based therapeutics.
5. As the political debate continues over embryonic stem cells, alternate sources and users of stem cells will spur their increasing utilization.
Massachusetts-based ViaCell's proprietary method for stem cell expansion will begin FDA testing in 2001. Advanced Cell Technology will continue to apply its nuclear transfer technology to the animal health field and for potential applications to human organ growth and transplantation. Celera and Geron's innovative strategic alliance should yield an understanding of the genetic basis of stem cells and their mechanism of action.
6. New cancer therapies will be used for larger numbers of patients in clinical trials.
More than 100 different cancer products are currently in some phase of clinical testing. Massachusetts-based Antigenics will begin Phase III testing of its Oncophage immunotherapy product for renal cell carcinoma, as well as Phase II testing for several other cancers. As a result of its acquisition of Worcester-based Aquila, it will also continue clinical trials of Aquila¹s portfolio of antibody-based products.
7. Patent litigation will continue to be a core element of competitive strategy.
Although a court decision will be rendered in TKT's battle with Amgen, litigation will continue in other critical areas of biotechnology, such as the production of humanized monoclonal antibodies and the design of gene chips. This will result in increased barriers to entry, end-user uncertainty, and an enormous waste of financial resources.
8. E-health companies devoted to pharmaceutical company out-sourcing will rebound; the verdict is still uncertain on other applications of the Internet to health care.
The pharmaceutical industry consolidation will drive increased out-sourcing of activities to achieve economics of scale and increase efficiencies. This will be true for drug development, manufacturing and technology licensing. Massachusetts-based companies such as Phase Forward (automated clinical trial management), Lifetecnet (contract manufacturing procurement over the Internet), and ActiveCyte (an automated exchange for compounds and technologies) may be pioneers in these areas.
9. Universities and for-profit companies will continue to work together, with stricter university oversight.
Beth Israel Deaconness Medical Center's strategic alliance with biological tissue provider Ardais, exemplifies the application of an under-utilized resource (human tissues collected by its pathology department) to commercial research, while obtaining full patient consent and preserving confidentiality. However, the stakes for these arrangements are now much higher, as a result of the governmental backlash against gene therapy and other clinical trials conducted in the academic environment instigated by the University of Pennsylvania¹s derelict handling of the Jesse Gelsinger case.
10. The stock market will probably continue to be volatile, but adequate financial resources are now available for biotechnology companies.
Biotech companies raised considerably more funds in 2000 than any other year. Even if the markets begin unsteady in 2001, the large number of well-financed late-stage private and newly public companies will be able to continue their development unabated. As the number of profitable biotech companies grows, investor confidence in the sector will increase.
The pace of positive change should accelerate.
The information contained in this article is intended only to provide a general guide to the subject matter. Advice from specialists is still recommended for your specific requirement and particular circumstances.