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Emerging U.S. Biopharmaceutical Companies: New Drug R&D and Investment / Partnership Opportunities
Fuji-Keizai USA, Inc, April 2003, Pages: 162
The pharmaceutical industry is one of the most profitable sectors of the Fortune 500 with profits of approximately 18% of revenue compared to a median of 5% for other industry segments. However, this market is facing increasing competitive pressure due to escalating R&D costs, shortened patent life due to the long product approval process, increased sales and marketing costs, pricing pressures, and entrance of more competitors into the industry. It is estimated that large pharmaceutical companies (or Pharma as they are generally referred to in the industry) require 3-5 new lead drug candidates (defined as New Chemical Entities or NCEs) each year to sustain double-digit growth rates. Despite the fact that R&D costs have been increasing (typically $300-500 million per NCE), the average number of NCEs have been dropping over the last decade to under one per year across the industry. Thus, there is increasing pressure on Pharma to find newer discovery and development paradigms. Two of the strategies that have most successfully been employed to do this involve forming partnerships with non-competitive biopharmaceutical companies.
The first strategy used by Pharma to broaden their product pipeline is to identify and license promising lead compounds that are in mid- to late-stage clinical trials. Joint late-stage development and co-marketing of those drugs that benefit both the Pharma and biopharmaceutical companies because early-stage studies have established clinical utility and potential efficacy/safety. In addition, the cost of late-stage development (i.e. the 60% of R&D expenditure in clinicals) and marketing can be shared.
An alternative strategy to increase the numbers of lead compounds in late-stage development is to invest in newer technologies to address bottlenecks in the pharmaceutical discovery pipeline. Recent advances in genomic technologies have shifted the major bottleneck from discovery to high-throughput (HTP) screening of large libraries of small molecules (chemicals). The chemicals in these libraries are frequently in limited supply and may be unstable to repetitive freeze-thaw cycles required for sequentially testing and screening in different studies. Thus, for emerging technologies to improve HTP screening methods or to improve the handling of these large libraries of chemicals are highly desirable to Pharma.
This report profiles 92 emerging biopharmaceutical companies that are located in the United States and Canada. These companies are in 8 different market segments and represent a total market size of approximately $880 million in annual R&D expenditures. The primary therapeutic areas under active development include ones directed toward autoimmune/inflammation, cancer, CNS/neurology, cell/gene therapy, and infectious diseases. In addition, several of the emerging biopharmaceutical companies are focused on platform or technology areas to support the pharmaceutical discovery process. Those market segments include tissue engineering, enabling technology platform providers, and companies with novel approaches to HTP screening.
The emerging biopharmaceutical industry, while very young, has several aggressive players with broad product pipelines. The majority of these companies are less than five years old yet have an average of 3-4 products in their pipelines. Approximately half of the products in these pipelines are therapeutic agents (170 new chemical entities or drug leads) including several in late Phase I, Phase II or even Phase III clinical studies and represent key licensing opportunities for Pharma or for more established biotechnology companies.
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