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The North America Biotechnology Sectors : A Company and Industry Analysis (March 2004)
Mergent, March 2004, Pages: 28
Current Environment - Key Points
- The US biotech sector recovered rapidly in the second half of 2003 following encouraging product news and an improved outlook for the US economy
- The American Stock Exchange Biotech Index and the NASDAQ Biotech Index gained approximately 45% each in 2003
- Consolidation continued in 2003 with numerous M&A deals among biotech companies taking place during the year
- The Canadian biotech sector has grown significantly in recent years
The number of biotech companies grew 48% from 282 in 1997 to 417 in 2003
- Canadian biotech companies more than quadrupled their revenues between 1997 and 2002, from C$813 million in 1997 to C$3.6 billion in 2002
- The CBN Biotech Index gained 11.63% in the first nine months of 2003
Industry Profile - Key Points
- As of mid-April 2003, the market capitalization of publicly traded biotech companies in the US was $206 billion
- Biotech companies in the US raised $16.4 billion in new financing in 2003, an increase of 56% compared with the previous year
- The top five biotech companies spent an average of $133,600 per employee on R&D, equivalent to approximately 20% of their revenue
- The number of biotech companies in Canada grew by 11.2% in 2003, with 20% of them being publicly traded
- Canadian biotech companies spent C$1.3 billion on R&D investments in 2002, an increase of approximately 36.8% over R&D expenditure of C$950.5 million in 2001
- They raised C$527 million in 2002, a decline of about 60% compared with C$1.3 billion in 2001
Market Trends and Outlook - Key Points
- The increase in the world's population, a slowdown in crop rate improvement through conventional cultivation and a decline in the area of land available for food production have caused the rapid adoption of biotech by farmers around the world
- The ageing population has driven the increase in global healthcare expenditure, which has expanded the market opportunities for biotech drugs and treatments
- Expiring patents on biotech drugs will benefit generic drug makers
The growth of the generic drug market will, in turn, pose a threat to biotech companies as intense competition will lead to decreasing revenue and profits, with less funding available for R&D programs
- IT spending by biotech companies is expected to escalate over the next few years
Hence, leading IT companies are customizing solutions for biotech to capture a piece of the life science industry's growing IT market
- The outlook for the North American biotech sector should remain positive throughout 2004, with a growing and ageing population continuing to fuel growth
Accelerated pace of world economic recovery will help improve profitability and stock performance as well as promoting growth of investments in the sector
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