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The North America Biotechnology Sectors : A Company and Industry Analysis (August 2007)
Mergent, Aug 2007, Pages: 40
This report updates the previous North American biotechnology report, focusing on the markets in Canada and the United States
Current Environment - Key Points
- Congress is close to creating a way to approve generic copies of biotech drugs. Some of the industry-s top products will run out of patent protection in seven or eight years
- Generic manufacturers that have long lobbied to get into the biologics business are now allied with health plans and legislators fighting to reduce health care costs
- In the first half of 2007, shares of traditional drug makers outperformed biotech, a reversed situation of the recent past, when investors favored the fast-growing but risky biotechs over major pharmaceutical stocks. - The NASDAQ and AMEX biotech indices both underperformed the NASDAQ Composite and Dow Jones Industrial by rising only 2% and 3.5% respectively as of July 11. US biotech giants, Amgen (NASDAQ: AMGN) and Genentech (NYSE: DNA) took a beating. Similarly, Canadian biotechs also saw a rocky first half. - The US biotech sector continued to see active consolidation and partnering activities with traditional large pharmaceutical companies. A Mergent analysis showed that in the first half of 2007, there were 21 biotech mergers and acquisitions (M&As) in the US, worth about US$28.2 billion. Over the same period in Canada, there was no major biotech M&A. - Despite the tough IPO climate, 11 American biotech companies completed their initial public offerings (IPOs) in the first half of 2007, raising US$609.8 million in total, according to a Mergent Analysis. No biotech IPOs were seen in Canada and two Canadian biotech companies withdrew their planned IPOs
Industry Profile - Key Points
- The US biotech industry continues lead the world in 2006 in terms of both products and revenues. According to professional services firm Ernst & Young, US public biotech company revenues stood at US$55.8 billion in 2006, representing 76% of the US$73.4 billion global total. - Ethanol production from cellulosic biomass has gained considerable attention thanks to dramatic advances in the development of cellulase enzymes
- In the first half of 2007, venture capitalists poured US$1,358 million into 44 American biotech companies, according to a Mergent Analysis, representing a 25% increase from the US$1,085 million raised by biotechs in the first half of 2006
- On April 18, 2007, bipartisan legislators in both the Senate and House of Representatives introduced patent reform measures in legislation known as the Patent Reform Act of 2007. - The expertise of emerging companies in Canada is pushing the nation forward in agriculture biotech, and propelling it to the next generation of biotech: industrial and environmental biotech. Market Trends and Outlook - Key Points
- According to the International Service for the Acquisition of Agri-Biotech Applications (ISAAA), global acceptance of biotech crops continued to climb for the tenth consecutive year, reaching 252 million acres in 22 countries in 2006. The US continues to be the main driver of growth in North America and globally
- Express Scripts, a leading pharmacy benefit manager, reported that spending on high-cost biotech drugs increased significantly in 2006 compared with traditional chemical-based pharmaceuticals, paving the way for generic biotech drugs
- Canadian biotech firms are generating a marked surge of interest among US venture capitalists. In the past six months, there have been an encouraging number of collaborative efforts between Canadian and US companies and an increasing number of Canada-based companies opening US divisions
- The commitment to renewable fuels continues to grow among the federal and provincial governments of Canada
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