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The North America Biotechnology Sectors : A Company and Industry Analysis (August 2006)
Mergent, Aug 2006, Pages: 36
This report updates the previous North American biotechnology report, focusing on the markets in Canada and the United States
Current Environment - Key Points
- Biotech continues to be a top priority in North America, with dozens of states investing money and resources into biotech R&D and offering attractive incentives to companies to invest
- Biotech performance was sluggish in North America in the first half of 2006 despite impressive performances delivered in 2005
The AMEX Biotechnology Index fell 3.8% while the NASDAQ Biotechnology Index fell by 7.25%, The S&P/TSX Capped Healthcare Index was down by 3.5%
Overall, the biotech sector underperformed the broader market during the period
- Based on a Mergent analysis, the market capitalization of leading companies fell by 10.6% in the US and 17% in Canada over the first six months of 2006
- In the first half of 2006, the US biotech sector saw 32 M&As valued at about US$3.3 billion
This was significantly lower than the US$11 billion recorded in the first half of 2005 due to several large acquisitions which took place during the period
In Canada, there were nine such deals totaling C$1.04 billion (US$0.92 billion)
Biotech partnering activities continued at a torrid pace in North America
- Biotech IPOs picked up in the first half of the year but only in the US
Ten biotech companies completed their IPOs, raising US$423.30 million against US$289 million raised by six biotech companies in the first half of 2005
Industry Profile - Key Points
- According to the Biotechnology Industry Organization (BIO), there are currently about 1,444 biotech companies in the US, employing about 187,000 people
San Francisco-based life sciences merchant bank, Burril & Co reported that in 2005, US public biotechs generated revenues of US$71.5 billion, an increase of 20% from the US$59.5 billion in 2004
- Canada ranks second after the US in terms of the number of biotech companies with nearly 500 altogether
The sector generates revenues of around C$4 billion (US$3.5 billion) annually and around C$1.5 billion (US$1.32 billion) is invested into biotech research and development (R&D) - Thirty-nine US biotechs raised about US$1,084.85 million in venture capital with another US$347.45 million raised through private placement and equity financing by sixteen companies
In Canada, biotech financing amounted C$343 million raised by twenty companies over the corresponding period
- On May 24, the US President proposed to pick up the pace of renewable fuel development through a US$150 million budget for Biofuels Initiative 2007, an increase of 65% over fiscal 2006
The Food and Drug Administration (FDA) has introduced new measures to improve the regulatory environment for biotech and speed the development of new effective therapies
- On March 17, the Canadian Government's Biotechnology Advisory Committee (CBAC) released a report which specifically recommends steps to enhance the current IP regime in Canada
Market Trends and Outlook - Key Points
- As biotech companies evolve into huge commercial enterprises, demand for human resource rises
The job fair hosted by BIO in Chicago in April attracted some 3,000 job seekers
About fifty companies took part, seeking to fill thousands of job openings
- The development of genomics combined with advanced in information technology presents greater opportunity to improve the monitoring of drugs already in the market
- Biotech's potential is growing in Canada as Canadians actively take steps to achieve the goal of healthy living
Consumers are searching for foods with additional health benefits and using natural products to combat common ailments or prevent and/or manage chronic disease
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