Though the  biotechnology industry could ride out the  global economic ructions and deliver solid top- and bottom-line growth in 2010, biotech companies should adopt new strategies  for fuelling  growth in future, say experts in the field.

Despite  the fact the industry has achieved aggregate profitability for the second year in a row, data  from  Biotechnology Industry Organization (BIO) as well as Ernst & Young's 25th annual report on the biotech industry  stress  the need to adapt to fast-changing surroundings and  the need to respond in a number of new ways.

"While the biotech industry's aggregate performance improved in 2010, there is now a widening gap between large, established companies and those at earlier stages for whom access to capital continues to be difficult," said Glen Giovannetti, Ernst & Young's Global Biotechnology Leader.

"Biotech firms will need to adapt creatively to this environment by doing more with the funding that is available and by working from the earliest stages of development to demonstrate the potential value of their products to investors, payers and regulators" , he added.

The  Ernst & Young's annual report points out that the funding for research and development has become increasingly scarce for the vast majority of firms in the sector, which tend to be pre-commercial stage companies that depend on years of funding to support drug development. This has placed new pressure on the traditional biotech business model and may reshape how companies pursue R&D in the future.   

And even with less capital available, companies are being asked to do more, as the process of discovering and developing drugs has become increasingly lengthy, expensive and risky. To overcome these hurdles, biotechs need to respond in a number of ways, the report says.

Firstly, to prove their products' worth they'll need to tailor their strategies from the early stages of development to show comparative effectiveness for regulators and be willing to engage in creative pricing approaches for payers, including outcomes-based pricing approaches.

Secondly, they will need to do more with less, and find new ways of raising capital and use that money more effectively.

Optimistic observations from 2009-10  indicate a growing number of partnership deals came about during the challenging  times where cash and companies were crushed under the financial downturn. While the economic crisis   resulted in a drastic fall in the expenditure on R&D, it saw rise in number of drugs approved by USFDA. There were an increasing number of companies that  were granted licenses along with growing  M&As of pharmaceutical biotech companies, according to Pharmaceutical Biotechnology Industry Report 2009-2010.

The US biotechnology industry raised 85 per cent  more money in 2009 than it did in 2008, according to figures released by venture-capital firm Burrill & Company in San Francisco. The  US biotechs raised $55.9 billion in 2009 through public and private financing and partnerships.

“Smaller biotech firms hope to use partnerships to fund the development of a biomedical breakthrough while retaining enough

control to preserve the growth potential of the company.  In order to survive a tough year, biotech start-ups have increasingly been forced to turn to partnerships and licensing for revenue production,”  said the Burrill report.

According to   industry experts, the  partnerships in the biotechnology sector would help ease the cash crunch, improve productivity of its existing technology, enhance clinical pipelines  and expand presence into new markets.

During the BioPartnering Europe held early this year, it was reported that Merck had taken lead in biotech partnering between 2005 and 2009. France’s  Trophos inked a pact with Switzerland’s Actelion.

In 2009,  a couple of partnerships were struck with US and China companies. These included  Hamner Institutes for Health Sciences partnered  with China Medical City, a biotech industrial park located in the north of Shanghai, to conduct research and manufacture  drugs for both the countries. that can be sold in the US and China. For China,  US is an  entry point to the global drug market.

With the days of massive fund allocations to develop blockbuster drugs are a passé and the emergence  of countries scouting for partners are  on the rise   primarily because   of rising costs and lower profit margins, the industry is in a phase of  reinvention, according to experts.

In the UK, in October 2009, GlaxoSmithKline and Jiangsu Walvax Biotech entered into  partnership for paediatric vaccines for measles, mumps and rubella (MMR) (Priorix).

According to Invest in Australia Trade Body, there was a memorandum of understanding (MoU) between Zydus Cadila and Symbion for a production alliance to build and operate plants in India. Ipca Laboratories acquired Australian formulation product dossier registration-cum-distribution company  to form now Ipca Pharma Australia BTY to enable it to register formulations in Australia. In addition there are many research collaborations between Australian and Indian universities. These include the  University of Melbourne, Monash University, Queensland University of Technology and the Queensland Institute of Medical Research. Under the Invest in Victoria initiative,  Deakin University,  entered into a MoU Biocon Ltd for a joint multi-disciplinary research focused on biotechnology and biosciences.

The Australia-India Strategic Research Fund is a joint initiative of the two governments  that is offering  $20 million over five years from 2006-07. In April 2009, $ 4 million of the fund was awarded, for 15 collaborative projects in  malaria vaccines, nanotechnology, medical diagnostics and  nutraceuticals, according to Invest in Australia.

 India has emerged as one of the most potential biotech destinations of the world in the recent times.  There is a clear consensus among the industry cognoscenti  that now is the turn of biotechnology to revolutionize many areas of production. They feel that  biotechnology is the new IT of India.

India is  the third largest biotech country in the Asia Pacific region, is providing infrastructural support to the industry with a two per cent share in the of the global market. Outsourcing occurs across various industrial sectors, including biotechnology and contract research where India’s talent pool and cost structure are a significant influence, according to a report by CheckOnomics.

The Indian biotech and life sciences industry recorded the fastest pace of growth in the last five years in 2010-11 to touch revenues of US $ 4 billion (Rs 18,399.34 crore), according to the ninth annual BioSpectrum-Association of Biotechnology Led Enterprises (ABLE) survey. Of this, the biotech industry contributed Rs 17,249.34 crore, while the life science education market made up the remaining Rs 1,150 crore,the survey said.

Biocon retained its top slot of No.1 company in the overall revenue ranking, growing at a healthy 26 per cent. Of the top 20 companies, Shantha Biotech and Jubilant Life Sciences faced a drop in revenue while Ankur Seeds posted a spectacular growth, nearly doubling its revenues, according to the Biospectrum ABLE BioTech survey.

Despite the growth, the sector in India is bogged down by slow regulatory approvals.  Vision Group on Biotechnology  led by  Kiran Mazumdar Shaw who is also the CMD , Biocon Ltd had   proposed to the Government of India to set up a task force to reform the regulatory system.  The biotech industry which has been putting up with long waits to get the clearances at various stages of drug development is now seeking  fast-track approvals.

We need a task force on similar lines that was created under the chairmanship of Dr. RA Mashelakr which spearheaded many decisions on a  fast track for pre-clinical  development , said Shaw.

Airing similar  concerns, Dr. Rashmi H Barbhaiya, CEO and managing director, Advinus Therapeutics Ltd.  said that the regulatory environment in the country  is suffocating with inordinate delays putting the country at a disadvantage. A simple  approval for a investigational new drug application for a single dose  taken anywhere between 26 months and the entire approval for human trials is expected only after 12-16 months, he points out.