Biotechnology Research Services
Description
Companies in this industry engage in biotechnology research and development to produce processes or prototypes of new or genetically altered products using microorganisms and cellular and biomolecular techniques. Major US organizations engaged in biotechnology research include the Howard Hughes Medical Institute (HHMI), the Jackson Laboratory (JAX), and Scripps Research; institutes affiliated with government research agencies and major universities, such as the Whitehead Institute (MIT); and the research departments of large biotechnology companies such as Amgen, Genentech, and Sanofi Genzyme. Large organizations based outside the US include Babraham Institute and the Wellcome Sanger Institute (both based in the UK); Hong Kong Institute of Biotechnology (HKIB) (Hong Kong); and Flanders Institute for Biotechnology (VIB) (Belgium).
Top global spenders on R&D in science and technology include China, India, Turkey, Brazil, and Russia, according to World Intellectual Property Organization (WIPO). Biotechnology is expected to grow in emerging markets in Asia and Latin America as a rising middle class and greater economic development lead to the need for advancements in health care, agricultural production, and energy.
The US biotechnology research services industry includes about 3,000 establishments (single-location companies or units of multi-location companies) with combined annual revenue of about $25 billion. The industry does not include manufacturers or contract research organizations that test products for market.
COMPETITIVE LANDSCAPE
Demand for biotechnology research in the fields of agriculture (food and biofuel), medicine, and science is driven by the global need to produce more food for a rapidly expanding population, the need for alternatives to oil and gas, and scientists' desire to find solutions for complex scientific and medical issues. The profitability of individual companies depends on the discovery of potentially marketable new products. Large companies enjoy economies of scale in purchasing expensive equipment. But because the market for potential products is so large, small biotechnology companies can co-exist successfully with large ones if they have expertise in a particular line of research. The US industry is concentrated: the 50 largest firms account for about 60% of revenue.
Biotech firms face stiff competition from pharmaceutical and other companies seeking to be first with a new product or discovery. The increasing overlap of the biotech and pharma industries has resulted in many firms being described as biopharmaceutical researchers. The lure of patentable discoveries through research into biological processes is strong and motivates new companies to join the industry. Since biotech research may result in potentially lucrative new processes and prototypes applicable to several industries, funding is often provided by venture capital firms hoping to cash in on new products.
PRODUCTS, OPERATIONS & TECHNOLOGY
Biotechnology research is used primarily to produce drugs, therapies, vaccines, and medical diagnostic tests (also called red biotech). It's also used in industrial processes, such as biofuel production (white biotech), and in agricultural processes, such as the development of genetically modified plants and crops (green biotech). Other applications include DNA fingerprinting; water-recycling technologies; and environmental biotech products that aid in the cleanup of hazardous waste.
The biotechnology industry is characterized by the manipulation of living cells and their components to make new products. Fields of research include DNA microarray technologies, recombinant DNA, cloning, protein engineering, and nucleic acid chemistry. Companies may also engage in the related field of nanotechnology, which typically involves altering inorganic and manmade materials at a very small scale.
Some companies make only research tools that are sold to other biotechnology companies. Because they rely on advanced scientific knowledge, biotechnology companies frequently evolve from research departments at universities. Genentech, the first commercial biotechnology company, evolved from studies of bacterial cells at Stanford University and the University of California. Most biotechnology companies use a particular line of research begun at a university, and firms are often run by scientists with academic backgrounds.
Biotechnology gets about 60% of revenue from basic and applied research activities. About 10% of each sale comes from biological sciences, medical and health services, and pharmacology and pharmaceutical services.
Top global spenders on R&D in science and technology include China, India, Turkey, Brazil, and Russia, according to World Intellectual Property Organization (WIPO). Biotechnology is expected to grow in emerging markets in Asia and Latin America as a rising middle class and greater economic development lead to the need for advancements in health care, agricultural production, and energy.
The US biotechnology research services industry includes about 3,000 establishments (single-location companies or units of multi-location companies) with combined annual revenue of about $25 billion. The industry does not include manufacturers or contract research organizations that test products for market.
COMPETITIVE LANDSCAPE
Demand for biotechnology research in the fields of agriculture (food and biofuel), medicine, and science is driven by the global need to produce more food for a rapidly expanding population, the need for alternatives to oil and gas, and scientists' desire to find solutions for complex scientific and medical issues. The profitability of individual companies depends on the discovery of potentially marketable new products. Large companies enjoy economies of scale in purchasing expensive equipment. But because the market for potential products is so large, small biotechnology companies can co-exist successfully with large ones if they have expertise in a particular line of research. The US industry is concentrated: the 50 largest firms account for about 60% of revenue.
Biotech firms face stiff competition from pharmaceutical and other companies seeking to be first with a new product or discovery. The increasing overlap of the biotech and pharma industries has resulted in many firms being described as biopharmaceutical researchers. The lure of patentable discoveries through research into biological processes is strong and motivates new companies to join the industry. Since biotech research may result in potentially lucrative new processes and prototypes applicable to several industries, funding is often provided by venture capital firms hoping to cash in on new products.
PRODUCTS, OPERATIONS & TECHNOLOGY
Biotechnology research is used primarily to produce drugs, therapies, vaccines, and medical diagnostic tests (also called red biotech). It's also used in industrial processes, such as biofuel production (white biotech), and in agricultural processes, such as the development of genetically modified plants and crops (green biotech). Other applications include DNA fingerprinting; water-recycling technologies; and environmental biotech products that aid in the cleanup of hazardous waste.
The biotechnology industry is characterized by the manipulation of living cells and their components to make new products. Fields of research include DNA microarray technologies, recombinant DNA, cloning, protein engineering, and nucleic acid chemistry. Companies may also engage in the related field of nanotechnology, which typically involves altering inorganic and manmade materials at a very small scale.
Some companies make only research tools that are sold to other biotechnology companies. Because they rely on advanced scientific knowledge, biotechnology companies frequently evolve from research departments at universities. Genentech, the first commercial biotechnology company, evolved from studies of bacterial cells at Stanford University and the University of California. Most biotechnology companies use a particular line of research begun at a university, and firms are often run by scientists with academic backgrounds.
Biotechnology gets about 60% of revenue from basic and applied research activities. About 10% of each sale comes from biological sciences, medical and health services, and pharmacology and pharmaceutical services.
Table of Contents
- Industry Overview
- Quarterly Industry Update
- Business Challenges
- Business Trends
- Industry Opportunities
- Call Preparation Questions
- Financial Information
- Industry Forecast
- Web Links and Acronyms
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