Biotechnology, Pharmaceuticals & Genetics Industry Market Research

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Biotechnology can be defined as the use of living organisms (such as bacteria), biological processes or biological systems to create a desired end-result or end-product.  Primary markets for biotechnology include:  1) Agriculture, where genetically-modified seeds are now in wide use in many nations.  These seeds deliver plants that have can much higher crop yields per acre, and often have qualities such as disease-resistance, resistance to herbicides and drought-resistance.  2) The manufacture of enzymes, including enzymes used in food processing (such as the making of certain dairy products) and in converting organic matter into ethanol for fuel.  3) Pharmaceuticals, where biotechnology creates such therapies as antibodies, interleukins and vaccines based on living organisms (as opposed to the chemical compounds that make up traditional drugs) that can target specific cellular conditions, often with dramatic results (such as the drug Keytruda that famously fought brain cancer for former U.S. President Jimmy Carter).

Biotechnology is a modern word that describes a very old science.  For example, bio-enzymes have always been essential in the production of cheese.  The modern difference is that much of the world’s cheese production today utilizes a bio-engineered version of an enzyme called microbial chymosin.  This chymosin is made by cloning natural genes into useful bacteria.  Another example:  For thousands of years, mankind has used naturally-occurring microbes to convert fruit juices into wine.

Plunkett Research estimates that combined biotech revenues for publicly-held firms headquartered in the U.S. and E.U. will be $160 billion during 2018, while the U.S. firms’ portion will be $123 billion.  Analysts at global accounting firm E&Y estimate EU and US combined biotech industry revenues for publicly-held companies at $139.4 billion in 2016 (latest data available), up from $130.3 billion in 2015 and $123.1 billion in 2014.  The firm also estimates that revenues of publicly-held biotech companies in the U.S. alone were $112.2 billion in 2016, up from $107.4 billion in 2015 and $93.1 billion in 2014.

Genetically-engineered drugs, or “biotech” drugs, represent roughly 11% of the total global prescription drugs market.  The U.S. Centers for Medicare & Medicaid Services (CMS) forecast called for prescription drug purchases in the U.S. to total about $360.1 billion during 2017, representing about $1,102 per capita.  That projected total is up from only $200 billion in 2005 and a mere $40 billion in 1990.

Estimates of the size of the drugs market vary by source, but it is generally accepted that the global prescription drugs market was more than $1 trillion in 2016.  Plunkett Research estimates the global pharmaceuticals market at $1.15 trillion for 2018.  By 2022, American drug purchases alone may top $495 billion, according to the CMS, thanks to a rapidly aging U.S. population, increased access to insurance and the continued introduction of expensive new drugs.

Advanced generations of drugs developed through biotechnology continually enter the marketplace.  The results may be very promising for patients, as a technology-driven tipping point of medical care is approaching where drugs that target specific genes and proteins may eventually become widespread.  However, it continues to be difficult and expensive to introduce a new drug in the U.S.

According to FDA figures, 46 new molecular entities (NMEs) and new biotech drugs (BLAs) were approved in the U.S. during 2017.  These NMEs are novel, new active substances that are categorized differently from “NDAs” or New Drug Applications.  NDAs may seek approval for drugs based on combinations of substances that have been approved in the past.  Also, a large number of generic drug applications are being approved each year.  That is, an application to manufacture a drug that was created as a brand name, and has now lost its patent so that competing firms may seek FDA approval to manufacture it.

Dozens of exciting new, biotech drugs that target specific genes are seeking regulatory approval.  Many of these drugs are for the treatment of specific forms of cancer.  In a few instances, doctors are making treatment decisions based on a patient’s personal genetic makeup.  (This strategy is often referred to as personalized medicine.)  New breakthroughs in genetically targeted drugs occur regularly.  An exciting drug for certain patients who suffer from the skin cancer known as melanoma is a good example.  Zelboraf, developed by drug firms Roche Holding and Daiichi Sankyo, will dramatically aid melanoma patients who are shown through genetic tests to have a mutated gene called BRAF.  In trials, about 50% of such patients saw their tumors shrink, compared to only 5.5% of patients who received traditional chemotherapy.

Stem cell research is also moving ahead briskly on a global basis.  The Obama administration relaxed limitations on federal funding of stem cell research that were established by the preceding administration.  In 2009, the National Institutes of Health set new guidelines for funding that will dramatically expand the number of stem cell lines that qualify for research funds from a previous 21 to as many as 700.  However, research into certain extremely controversial stem cells, such as those developed via cloning, will not be funded with federal dollars.  There is evidence of the potential for stem cells to treat many problems, from cardiovascular disease to neurological disorders.

Despite exponential advances in biopharmaceutical knowledge and technology, biotech companies enduring the task of getting new drugs to market continue to face long timeframes, daunting costs and immense risks.  By one count, of every 1,000 experimental drug compounds in some form of pre-clinical testing, only one makes it to clinical trials.  Then, only one in five of those drugs make it to market.  Of the drugs that get to market, only one in three bring in enough revenue to recover their costs.  Meanwhile, the patent expiration clock is ticking—soon enough, manufacturers of generic alternatives steal market share from the firms that invested all that time and money in the development of the original drug.

The FDA is attempting to help the drug industry bring the most vital drugs to market in shorter time with programs that include:  Fast Track, Priority Review, Breakthrough Therapy Designation and Accelerated Approval.  The benefits of Fast Track include scheduled meetings to seek FDA input into development as well as the option of submitting a New Drug Application in sections rather than submitting all components at once.  The Fast Track designation is intended for drugs that address an unmet medical need, but is independent of Priority Review, Breakthrough Therapy Designation and Accelerated Approval.  Priority drugs are those considered by the FDA to offer improvements over existing drugs or to offer high therapeutic value.  The priority program, along with increased budget and staffing at the FDA, is having a positive effect on total approval times for new drugs.  Breakthrough therapies show early clinical evidence of very important improvements over currently available drugs.

The FDA quickly approved Novartis’ new drug Gleevec (a revolutionary and highly effective treatment for patients suffering from chronic myeloid leukemia).  After priority review and Fast Track status, it required only two and one-half months in the approval process.  This rapid approval, which enabled the drug to promptly begin saving lives, was possible because of two factors aside from the FDA’s cooperation.  First, Novartis mounted a targeted approach to this niche disease.  Its research determined that a specific genetic malfunction causes the disease, and its drug specifically blocks the protein that causes the genetic malfunction.  Next, thanks to its use of advanced genetic research techniques, Novartis was so convinced of the effectiveness of this drug that it invested heavily and quickly in its development.

Generally, Fast Track approval is reserved for diseases that are life-threatening and have no current therapies, such as rare forms of cancer.  However, new policies are setting the stage for accelerated approval of drugs for less deadly but more pervasive conditions such as diabetes and obesity.  Approval is also being made easier through the use of genetic testing to determine a drug’s efficacy, as well as the practice of drug companies working closely with federal organizations.  Examples of these new policies are exemplified in the approval of Iressa, which helps fight certain types of cancer in only a small percent of patients but is associated with a genetic marker that can help predict a patient’s receptivity; and VELCADE, a cancer drug that received initial approval in only four months because the company that makes it worked closely with the National Cancer Institute to review trials.

Personal genetic codes are becoming less expensive and more widely attainable.  Today, the cost of decoding the most important sections of the human genome for an individual patient has dropped dramatically.

Although total drug expenditures are currently small in developing nations such as India, China and Brazil, they have tremendous potential over the mid-term.  This means that major international drug makers will be expanding their presence in these nations.  However, it also means that local drug manufacturers have tremendous incentive to invest in domestic research and marketing.

Significant ethical issues face the biotech industry as it moves forward.  They include, for example, the ability to determine an individual’s likelihood to develop a disease in the future, based on his or her genetic makeup today; the potential to harvest replacement organs and tissues from animals or from cloned human genetic material; and the ability to genetically alter the basic foods that we eat.  These are only a handful of the powers of biotechnology that must be dealt with by society.  Watch for intense, impassioned discussion of such issues and a raft of governmental regulation as new technologies and therapies emerge.

The biggest single issue may be privacy.  Who should have access to your personal genetic records?  Where should they be stored?  How should they be accessed?  Can you be denied employment or insurance coverage due to your genetic makeup?