Part I: Life Sciences Overview

Transcription

1 Part I: Life Sciences Overview Biotechnology Introduction The Drug Development Process Genomics/Proteomics Agricultural Biotechnology Pharmaceuticals Market Size & Current Status Major Opportunities Major Players Government Policies Barriers of Entry Future Development

2 The Global Pharmaceutical Market: a critical survey Pantea Hadaegh Sherry Y Lin Luca Schenato Chi Wai Yiu

3 Part II: The European Pharmaceutical Market Six Wrong Beliefs about the Industry Subtle Indicators of European Competitiveness How Europe is Addressing the Problem

4 Biotechnology

5 Biotechnology: Introduction Exponential growth in the past four years, with funding boom in early 2000

6 Biotechnology: Introduction (2) However, boom is slowing : Biotech index logged 23.1% annualized gain 2001: Underperformed Dow and S&P (but outperformed NASDAQ) 2002: Industry shake-out expected, with the emergence of a few strong players --IDEC Pharmaceuticals --Vertex --Chiron --Immunex --Gilead --Amgen Genomics and proteomics promises to revolutionize drug discovery/development process

7 Biotechnology: The Drug Development Process FDA: Principle federal agency regulating the introduction of new drugs 1906: Pure Food and Drug Act Official purity standards and labels 1938: Food, Drug, and Cosmetic Act Evidence of product safety 1962: Kefauver-Harris Drug Amendment Good manufacturing practices Manufacturing facilities subject to FDA approval 1997 FDA Modernization Act Reduce approval time

8 Biotechnology: The Drug Development Process (2) Drug Discovery Target identification & Target Validation 43% of time before market introduction Pre-clinical Testing Phase I (healthy people) Phase II (patients with disease) Phase III (placebo) FDA Approval

9 Biotechnology: The Drug Development Process (3) years and $ 880 M for human therapeutic

10 Biotechnology: Genomics Functional genomics. The first step in new drug development is to identify the genes associated with the target disease. Once specific genes have been identified, the arduous task of determining the function of each gene becomes critical in the search for the cause and cure of a disease. Additionally, the activity of individual genes may vary among different tissues throughout the body, as well as between diseased and normal tissues, and tissues in different stages of development. Advances in functional genomics are enabling researchers to uncover starting points for therapeutic developments. 1 High Performance Drug Discovery, Accenture, 2001

11 Biotechnology: Genomics (2) Structural genomics. These are the genomics information companies, defining the structure of the human genome and its related proteins, providing must-have genomic sequence, variation, and function information in gigantic databases.

12 Biotechnology: Genomics (3) Pharmacogenomics. The objective of pharmacogenomics is ultimately to target drugs specifically to those patients with a genetic make- up (genotype) such that they will have close to 100% response with no side effects. The real long- term potential for pharmacogenomics is to stratify diseases by mechanism and develop therapies, or even preventative approaches, based on genetic risk factors. More immediately, pharmacogenomics can be used to improve the clinical development processes

13 Biotechnology: Genomics (4)

14 Biotechnology: Proteomics Proteomics. A subset of functional genomics, proteomics focuses on identifying and determining the function of an underlying gene s protein product. Genes act through their protein mediators, which are responsible for normal biological functions as well as for disease mechanisms. New developments in proteomics should help to identify how diseases start and progress. Researchers hope to be able to use this knowledge to design drugs to activate or inhibit cellular receptors associated with disease. 1 High Performance Drug Discovery, Accenture, 2001

15 Biotechnology: Proteomics (2) Bioinformatics: One of the major challenges for both producers and users of new proteomics technologies is how to manage the huge amounts of data that will be generated over the next few years. Bioinformatics expertise has to be a core competence. Enormous computer processing capabilities is needed to process the vast amounts of raw data generated by mass spectrometry instruments critical for the rapid identification of proteins from biological samples.

16 Biotechnology: Agricultural Biotechnology Applications: Strengthen crop, create food with enhanced nutritional value, create plants that produce novel products, bioremediation US is the dominant producer and consumer of GM crops, followed by Argentina and Canada Industry dominated by a few big players. Top five AgBio companies by world sales: Dupont (Pioneer) Pharmacia (Monsanto) Syngenta (Novartis) Groupe Limagrain Groupe Pulsar (Seminis)

17 Biotechnology: Agricultural Biotechnology (2) Current trends: the big get bigger proliferation of M&A activities in the past decade due to high sunk cost (R&D), increased complementary nature of products, and IP issues. Moving into molecular farming What? Using plants instead of animals as host to produce human protein Who? Small startups like Epicyte and CropTech, as well as established agbio firms Dow and Syngenta

18 Pharmaceuticals

19 Pharmaceuticals: Market Size & Current Status Largest and fastest growing market Values of US$83.2 billion in 2000, 58.5% growth in five years Relatively free market Relatively short marketing delay Ethnic healthcare market Aging population R&D expenditures rose sharply

20 Pharmaceuticals: Major Opportunities Central Nervous System (CNS) e.g. Migraine treatments, Antipsychotics Cardiovascular e.g. Cholesterol Drugs, Antihypertensives Gastrointestinal/Metabolism e.g. Diabetes Drugs, Antiulcer Drugs

21 Pharmaceuticals: Major Players Merck and Company, Inc. GlaxoSmithKline Plc Bristol-Meyers Squibb Company Pfizer Inc. American Home Products Corporation

22 Pharmaceuticals: Government Policies Intellectual Properties Medicare Program

23 Pharmaceuticals: Barriers of Entry R&D Expenditures and Patent Pricing Liability

24 Pharmaceuticals: Future Development Aging Population R&D Spending Consolidation Direct-to-Customer Push Internet as Marketing Tool Managed Care Gets Sensitive on Drug Price New Role for Drugmakers

25 Pharmaceuticals: Conclusion Faces many challenges Still very profitable

26 The European Pharmaceutical Market

27 The European Pharmaceutical Market Is the European pharmaceutical industry losing competitiveness vis-à-vis its US counterpart? What is the role of US biotech in Europe?

28 6 Wrong Beliefs about the Industry (1) European global pharmas are losing market share relative to US pharmas Market share by origin of pharmaceutical corporation year World North- America Europe USA EU- 15 USA EU- 15 USA EU Source:IMS international

29 6 Wrong Beliefs About the Industry (2) Europe trade balance of pharmaceutical products with US is negative Worldwide export/import ratio of pharma products Year EU US Source:OECD World Trade Statistcs

30 6 Wrong Beliefs about the Industry (3) US pharmas invest more on R&D than its European counterparts Source:IMS international

31 6 Wrong Beliefs about the Industry (4) US pharmas introduce more drugs than European pharmas Source: CRIP-EPFIA

32 6 Wrong Beliefs about the Industry (5) Biotechnology drugs are the majority Source:CMR international

33 6 Wrong Beliefs about the Industry (6) Biotechnology is a profitable business Biotech in 2000 Indicator Number of companies (units) Profitable companies (units) Net loss (Euro million) Europe 1, ,570 USA 1, ,960 Source: Ernst&Young, Robertson Stephens

34 What Does this All Mean? Is the European pharmaceutical industry healthy? Are biotech and bio-informatics the next dot-com bubble? Let s look at more subtle indicators.

35 The Subtle Indicators of Competitiveness: Explosive US Market Growth US pharmaceutical market has grown faster than European market in the past 20 years Almost free-market competition + strong IP rights = 60% worldwide profit in US Mostly US pharmas take advantage of this aspect (regional advantage)

36 The Subtle Indicators of Competitiveness: Growth Strategies US: internal growth in US market Europe: merger and/or acquisitions in US to tap specific competencies Source:COPI IMS Health

37 The Subtle Indicators of Competitiveness: Drug Portfolio European industry is still living off its past success

38 The Subtle Indicators of Competitiveness: Success Rate of R&D Projects Higher success rate of in-house projects in US (%) H/L projs H success rate L success rate pha se I II III I II III US EU H: in-house L: licensed in/out I,II,III: Clinical Phase Source: EC report

39 The Subtle Indicators of Competitiveness: Employment EU is a labor-intensive industry: inefficient management of resources Source: European Commission Paper

40 The Subtle Indicators of Competitiveness: European R&D Goes to US Source: EPFIA

41 The Answers: European industry is loosing competitiveness and it will be evident in the near future Biotech and IT are changing the internal organization of global pharmas: Competitiveness advantage relative to competitors

42 These are the Reasons: Fragmented and price-controlled national markets Little financial and legislative incentives to promote entrepreneurial entities Static labor market Little interaction between universities and industry Vague product IP protection Parallel imports Process vs product patent Little investment from venture capital

43 How Europe is Addressing the Problem EMEA: equivalent of FDA for all EC European Venture Capital (EVC) and other venture funds have appeared EFPIA: industry consortium to promote free market in EC Emergence of secondary stock markets Fiscal and financial incentives Germany: matching funds for biotech France: financial and credit incentives

44 $ Univ. Labs Biotech and the Pharma Industry NIH (70s) PhDs Venture Capital $$ CEOs NBFs Regulatory Revolution: Biotech patent (83) Orphan Drug Act (84) FDA Broad IPRs PTR (+5y) CROs Government Bayh-Dole Act (80) $$ Licence R&D Global Pharmas (US +EC) Clinical Trials MKT HMOs HC systems License National Pharmas MKT