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The Biotechnology Market Outlook: Growth Opportunities and Effective Strategies for Licensing and Collaborations
Business Insights, Nov 2005
In 1982 the US Food and Drug Administration (FDA) approved the first biotech drug, human insulin, which was produced in genetically modified bacteria; since Genentech went public back in 1980 the biotech sector has been marked by periodic boom-and-bust cycles in the stock market. The reason for the volatility of the sector is due to the nature of the field, which holds great promise and yet requires enormous risk-taking. These boom-and-bust cycles may never end, but they could be moderating, primarily because biotechnology is maturing.
The biotech sector has shown rapid growth in the last 5 years, with global revenues rising from $22.7bn in 2000 to $44.3bn in 2004. This is currently the strongest growth sector in the pharmaceutical market. 47% of industry executives surveyed for this report believed that the biotech sector would show an annual growth of greater than 10% over the next 5 to 10 years, while a further 35% of those surveyed indicated a growth rate of 6-10% to be most accurate. Overall, the biotech sector has a more positive outlook than pharma, specialty pharma and generics.
Although the biotech sector remains a relatively small proportion of the total drug market (8% globally in 2004), approximately 27% of new medicines in active development are now biotech products. However, a large proportion of these are in preclinical trials, so there is still a large risk associated with the developments of these compounds. The gap in small molecule drug approvals versus biological approvals is reducing year-on-year. In 2004, 11 of the 76 blockbuster products were biologicals, and there are several other products (Humira, Rebif, Avastin and Erbitux) that are forecast to attain blockbuster status by 2005.
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