Biotech buoyant – but fragile

Despite worldwide economic turmoil, the global biotechnology industry delivered a solid financial performance in 2008, according to a new report.

Downward spiral? A new business model is needed if biotech is to continue to thrive

Beyond borders: Global biotechnology report 2009 - Ernst & Young’s 23rd annual report on the biotech industry also warns however that the prolonged and systemic funding drought is placing the business model that fuelled biotech growth for the past 33 years under unprecedented strain.

“This is not business as usual for the biotech industry,” said Glen Giovannetti, Ernst & Young’s global biotechnology leader. “Unlike prior funding droughts, this crisis is systemic, deep and protracted. To thrive in this environment, firms will need to bring the creativity that has long been the industry’s hallmark to establishing more durable models for funding innovation.”

The report suggests the answer lies in four sweeping, paradigm-shifting trends that could lead to new, more sustainable ways of funding drug development: a wave of generic drugs based on today’s top blockbusters, the expansion of personalised medicine, fundamental healthcare reform in the United States, and the continued globalisation of the industry.

But these trends will also bring new market pressures from a higher bar on reimbursement to new sources of competition. “To seize the opportunities in these four drivers, companies need to be proactive,” said Giovannetti. “Firms should understand how these trends impact them, prepare for them, and where possible, help shape them.”