Despite the economic turmoil, biotechnology companies in the US, Europe, Canada, and Australia had a combined net profit of $3.7 billion in 2009, a vast improvement from the $1.8 billion net loss in 2008.
Thus the global biotechnology industry has been more resistant to the economic crisis than expected, opine some of the experts.
The biotech corporations that had survived the challenging financial climate will have to continue adapting to fast-changing surroundings, they add
Positive notes from the past year included a record total value for partnership deals during one of the most-difficult financing environments ever, and the industry hopes to keep up that pace during 2010.
Some of the major pharma companies are in the process of transforming their operations via a biopharmaceutical business model to remain competitive against the rapidly growing generics market.
However there was a "modest decrease" of 10 per cent of the number of biotechnology companies worldwide. The shrinking US biotechnology sector lost 25 per cent of companies in the past three years
One hundred publicly traded biotechnology companies in the US have been acquired or ceased operations since the end of 2007, a 25 percent drop in the number of active companies, a report said.
Financing is the main problem faced by biotechnology today. Companies had to struggled to raise funds from public offerings and acquisitions While acquisitions of biotech companies grew to 55 in 2008 from 40 in 2007, the number fell to 38 last year and to 21 so far this year.
The number of public biotech firms in the US dropped by a quarter to 294 since late 2007, says BIO. One hundred companies were either bought or they went out of business in that time.
This striking number points to the challenge these companies face raising capital. Now more than ever, investors need to scrutinize the cash on hand at these companies and question funding strategies.
However industry experts are upbeat about growth as there is huge demand for biotech products from across the world, largely from the west, Asia and the domestic market. India has a strong potential to become one of the major players in the biotechnology sector with its large pool of skilled and cost-competitive manpower, efficient scientific researchers and advanced infrastructure facilities in place.
Most players possess the capability to produce quality products at low-cost, high quality bulk drugs and formulations.
According to industry estimates, India's biotechnology industry can become a $5 billion industry by next year, and a double of that in next five years. The industry has grown three-fold in the last five years. For the fiscal 2009-10, it has witnessed a growth of 17 per cent against last year to touch revenues of $three billion.
pectrum, bio-pharma units led the growth by contributing over 60 per cent to revenues of nearly Rs 8,800 crore, followed by bio-service units at Rs 2,600 crore and bio-agri at nearly Rs 2,000 crore. The remaining revenue came from the bio-industrial segment with a contribution of Rs 564 crore and bio-informatics at Rs 231 crore.
In the entire biotechnology s
With revenues of Rs 6,631 crore, the western part of the country emerged as the biggest contributor to India's biotech sector revenues followed by the southern bio-cluster contributing Rs 5,538 crore to the total biotech kitty. Gujarat alone contributed about eight per cent of the total revenues at Rs 1,100 crore, registering a growth of about 50 per cent.
Indian bio-pharmaceutical companies are well positioned to leverage the opportunity provided by blockbuster drugs going off patent over the next few years.
Not only do Indian pharma players have an FDA-approved pipeline but they are also equipped with a strong, cost-effective production ecosystem. Indian generics manufacturers can make huge gains with the US, the world's largest pharma market, turning to generics to decrease pressure on the healthcare budget costs and the pipeline of new drugs in the US drying up as the FDA becomes cautious in granting approvals.
Moreover, global companies are adopting cost-cutting strategies to increase margins after the economic meltdown. They are striving to discover and develop drugs at lower costs by embracing outsourcing and contract research, which will help India’s highly price-competitive clinical research and manufacturing activities thrive.
Apart from exports, the domestic consumption of medicines is slated to increase with the increasing income levels of India’s growing middle class. So, overall the Indian pharma companies can look forward to a significant spurt in growth.
Global sales of biotechnology drugs crossed the $ 100 billion dollar mark in 2008 with several drugs achieving blockbuster status (annual sales in excess of $ 1 billion). The sector had been growing in excess of 15 per cent over the last several years outperforming the pharmaceutical sector by a wide margin.
The pharma exports are going to scale new heights in the next few years. Indian companies already have a substantial presence in the United States, the biggest pharmaceutical market in the world, and in several European countries. India also enjoys a favourable presence in emerging markets like Russia, Latin America and Africa, which are also critical for growth. The pharmaceutical sector has seen increased volume of exports in the recent years. Indian companies and their subsidiaries have also secured approvals for several Abbreviated New Drug Applications (ANDAs) in the US.
Even as MNCs enter into tie-ups with Indian companies for the domestic market, Indian players are likely to continue expanding their global foot-print through M&As. These acquisitions may not be transformational – instead, they will add to strategic capabilities by helping the player gain intellectual property assets or access to marketing and distribution networks. A good example is Biocon’s acquisition of its partner, Nobex Corporation, an IP company in the United States. The acquisition provided the company a valuable IP platform as well as ownership of our oral insulin and oral BNP programmes for the treatment of cardiovascular disease.
There are clear trends that indicate that the industry is recalibrating to the present-day challenges of poor R&D productivity and emerging market opportunities by opting for strategies that involve portfolio diversification to include products with shorter regulatory timelines. For example, diagnostics, devices, new drug delivery systems, vaccines, generics, bio-similars, etc. The focus is on emerging markets to deliver topline growth. There would also be acquisition of late stage R&D assets to fill depleting R&D pipelines with programmes that can accelerate time-to-market and reducing the risk and cost of R&D with new models of risk sharing, co-development programmes and outsourced research services.