Biopharmaceuticals & Biotherapeutics Industry Trends

Privatized Scientific Research

Globalization

Antibody Therapy for Cancer

Much of the basic scientific research that underpins the drug industry was and is conducted in universities with public funding. But financial incentives have encouraged more research done by small companies spun off from universities when research reaches the stage of practical application.

Since the technology for producing many chemicals is well-known, production facilities are located all over the world, often near raw materials sources or markets. Developing countries in Asia and Africa are growing users of chemicals. While chemicals are a large US export, increased competition is coming from Asian producers.

Many human cancer cells multiply only after chemical receptors on the surface of a cell bind with specific signaling molecules in the cell's environment. By producing antibodies that attach to either the receptors or the signaling molecules, researchers have been able to block the growth signal. To produce antibodies that the body won't reject, but that can be grown in large quantities, researchers have fused human with cultured mouse cells to produce either human-mouse ("chimeric") antibodies or 100 percent human antibodies.

Industry Consolidation

High R&D Spending

Genomics

The high cost of research and the need for a steady stream of new products have encouraged mergers and acquisitions among drug companies in recent years. Mergers reduce a company's dependence on a single blockbuster drug and allow the combined company to shed overlapping research and sales staff. Some large companies have also acquired over-the-counter healthcare product lines to produce steadier earnings.

The development of new specialty chemicals and new manufacturing processes depends heavily on research spending. R&D spending can run to 10 percent of sales for many companies, more for small companies with just a few products. Research is especially important for companies that depend on a continuous stream of new products, such as drug manufacturers.

The complete sequencing of the human genome in 2001 (by Celera Genomics and the government-funded Human Genome Project) is expected to lead to the development of new therapies as researchers identify genes that control specific biological functions and as the interactions of genes and the proteins they produce become better understood. Identifying the estimated 30,000 protein-producing genes among the 3 billion coding elements is being done with the help of specialized computer programs.

Managed Care Companies Favor Generics

Electricity Cogeneration

Genetically Modified (GM) Foods

Managed care companies are increasingly using tiered co-payment systems to discourage patients from buying expensive drugs. While the co-payment for a generic drug might be $5, the co-payment for a brand name may be two or three times as much.

Because of the large amounts of heat needed in many chemical processes, many chemical plants operate their own steam plants, which can be fitted with turbines to produce electricity as a byproduct. The electricity can be used within the plant or sold to the local utility. Cogeneration (by all industrial plants) supplies more than 10 percent of total US electricity needs.

By introducing genetic material from one plant into another, researchers have produced plants with special characteristics, such as faster growth or resistance to insects and diseases. Monsanto has produced varieties of soybeans, cotton, and corn that are resistant to its Roundup herbicide, allowing the herbicide to be sprayed on fields without damaging the crop. Concerns remain about the effect GM plants will have on the ecosystem; regulators in some countries have prevented the use or import of GM foods.

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