Challenges for a Maturing Biotechnology Industry: Evolve or Perish

Published by: Decision Resources

Published: Aug. 1, 2007 - 23 Pages

Table of Contents

Executive Summary

Strategic Considerations

Stakeholder Implications

Reality for Today’s Biotechnology Industry

Challenges in a Maturing Biotechnology Industry

Balancing Sales and Manufacturing Costs That Cannibalize R&D Budgets

Reliably Forecasting Manufacturing Capacity

Capturing Suffi cient Value from First-Born Products

A Startling Deduction About Blockbusters

Managing Defi cit Spending by Public Biotechnology Companies

Sepracor Makes Defi cit Spending Pay Off

Icos’s Prolonged Negative Income Leads to Its Acquisition

Ligand Pharmaceuticals’ Niche Markets Cannot Support Its Defi cit Spending

The Two Most Successful Biotechnology Companies Rarely Posted Net Losses

Two Platform Companies Hope for a Blockbuster to Reach Sustainability

Effectively Competing Against Increasingly Crowded Pipelines

OSI Pharmaceuticals

Biogen Idec

Future Projections

Codevelopment Partnerships and Better Drugs

Restructuring, Acquisition, and Collapse of Biotechnology Companies

Technology Platforms

Pharma’s Research Centers and Academic Collaborations

Ability to Adapt

Tables:

1. Essential Business Fundamentals for a Maturing Biotechnology Industry, Circa 2007

2. Value Capture from a Biotechnology Company’s First Product

3. Select U.S. Pharmaceutical Companies and High-Revenue-Generating Biotechnology Companies: History and Financials, 2005

Figures:

1. Sales and Manufacturing Cost Cannibalization of Icos’s R&D Budgets Following Product Launch, 2001-2005

2. Sepracor Financial Analysis, 1992-2006

3. Icos Financial Analysis, 1996-2005

4. Ligand Pharmaceuticals Financial Analysis, 1995-2006

5. Amgen Financial Analysis, 1988-2006

6. Genentech Financial Analysis, 1984-2006

7. Millennium Pharmaceuticals Financial Analysis, 1993-2006

8. PDL BioPharma Financial Analysis, 1992-2006

Abstract

• Today’s biotech market is increasingly crowded and competitive. What can companies do to differentiate
their products? What business fundamentals do they need to understand in order to plan a successful market strategy for their new products?
• Many successful biotech companies are surrendering their independence and merging with larger entities.
• What made these companies decide to give up their independence? Why have so many of them
struggled even after launching blockbuster drugs?
• In the rush to develop a marketed product, many biotech companies are defi cit spending. How do some
companies manage to make defi cit spending pay off? What makes others eventually collapse?
• Many biotechs have licensed away so many of the rights to their fi rst products that they do not reap substantial
fi nancial rewards once the products launch. Which companies have made this mistake? Why did they make deals that left them fi nancially vulnerable?

• Challenges facing the industry: operational, business, clinical development, and market risks.
• Business fundamentals: essential information biotechs need to run their business in today’s market.
• Defi cit spending: case studies of how several biotechs handled defi cit spending.
• Competing against crowded pipelines: effective strategies, case studies.
• Projections for the future: our projections on what the future holds for the biotech industry and its
synergistic relationship with the pharmaceutical industry.

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