Wilson da Silva
ABC Science Online
MELBOURNE: The lagging biotechnology sector is heading into boom times as the fruits of applied research begin to hit the market, and investors come to understand the industry is maturing, the world genetics congress heard today.
Speaking at the 19th International Congress of Genetics in Melbourne, a lawyer and a principal partner at global consultants Ernst & Young told 2,600 delegates that despite a slowdown following the Internet industry bust - which left burnt investors fearful of biotechnology companies - the sector was undergoing a powerful growth spurt that was long lasting.
“I think this is going to be the most exciting sector for the 21st century,” said Leslie Platt, head of the U.S. company’s health sciences group and a former senior advisor to the U.S. National Institutes of Health. Investors were becoming savvy to “the new transformational paradigm that’s emerging”.
“The technology is advancing at a rapid pace, to the point where potential late-stage targets for pharmaceutical development are being identified much more rapidly, efficiently and cost-effectively than ever before,” he said. “I think the exponential growth in biotech-based pharmaceuticals, and diagnostic tests in the pipeline for approval, is testament to an industry which, although very young, is beginning to deliver real promise.”
Although the biotechnology sector had undergone a shakeout since 2000, investment in the industry in 2002 was the third highest on record since it was born 25 years ago.
There are now 613 biotech companies listed on stock exchanges worldwide and another 3,749 private firms, according to Ernst & Young. Between them, these companies employ 193,753 people globally and last year generated US$41.4 billion in revenue - up 15% on the year before. Australia is the Asia-Pacific region’s leading biotech country, home to 38 listed companies worth more than US$5 billion.
“The original growth spurt [in the 1990s] that was unfocussed is being replaced by a maturation of the industry and [investor] expectations,” Platt told reporters. “People now understand that it’s a marathon, not a series of sprints, and not a series of individual sprinters. It will require sustained investment, but it’s good investment because it’s yielding fruit.”
Already, some biotechnology companies are bigger than a clutch of traditional pharmaceutical stalwarts: Amgen and Genentech in the United States are larger than Bristol-Myers Squibb, Bayer and Schering.
But the old biotech business model - setting up a company focussed on research and development that doesn’t show a profit for 15 years - is no longer appropriate, delegates were told.
Whereas companies once had to build their own equipment and software, file their own patents and do their own clinical trials, globalisation has allowed firms to focus on their specialties and form alliances with others. The growth of the industry has also seen the emergence of service and equipment providers that allow biotech companies to stick to their core function of research and development.
Governments are now buying directly into the industry in a way not seen before; Singapore is injecting US$1.7 billion over five years, the annual research budget of the U.S. National Institutes of Health has doubled to US$23 billion, and France, Ireland, Finland and Denmark have set aside large-scale venture capital funds to help start-up biotech companies.
But it’s not just about commercial gain and industry growth, said Platt - himself saved from colon cancer by diagnostic techniques that didn’t exist a few years ago. “It should not be ignored that the cornucopia of opportunity for scientific investigation makes a wealth of applications in society for the alleviation of human suffering, the improvement of the human condition and our environment,” he said.