It's time for a change in biotechnology
PwC warns: the global biotechnology industry needs a new strategyDespite some notable successes, the global biotechnology industry has failed to meet expectations over the 30 years of its existence, failing to reduce the risks associated with the search and development of new drugs.
According to the results of the new PwC report "Restructuring of the Biotechnology industry", in order to survive, companies must now more actively develop cooperation within the industry.
The report says that for more successful functioning, organizations need to share assets and knowledge that were previously reserved for internal use. In turn, investors will be required to change the financing model and revise the profitability standards in the long term.
Simon Friend, Head of the PwC International group for providing services to pharmaceutical and biomedical companies, commented on the situation as follows:
"The business model used today in the biotechnology industry has a number of disadvantages. Due to the low payback, the flow of investments has dried up, and there are no more external factors that previously ensured the prosperity of the business. It's time for a change. The research base is moving to the east. Developing countries are competing more aggressively, and financial investors are becoming more cautious."
Also, a number of rapidly developing countries are actively improving the development of their national biotechnology industries. In 2000, an Initiative for the Development of Biomedical Sciences was adopted in Singapore and a powerful biopharmaceutical base has already been created. South Korea applied a similar scheme in the late 1990s and has already allocated $14.3 billion for the implementation of its "Bioconception 2016" program. Over the past 18 months alone, China has invested $9.2 billion in research and development in technology, including biotechnology. And India is now considering becoming one of the world's top five manufacturers of biosimilars by 2020. Moreover, many of the companies in developing countries are not just imitating the West, but also learning from its mistakes. They dispense with expensive burdensome infrastructure, which allows them to create new more cost-effective and highly efficient business models and stimulates the creation of innovative products and processes. So the USA is gradually losing its leadership as a center for biomedical research. However, they are still ahead, and are likely to maintain their leading positions over the next five years.
The report also notes that the boundaries between the biotechnology and pharmaceutical industries remain unclear. This is also evidenced by the fact that several large pharmaceutical companies have already created corporate venture capital units specifically for strategic (and not exclusively financial) investments in biotechnology. Many pharmaceutical companies also focus on the development of biologics and special therapies for rare diseases. It is these products that provide a faster and more targeted market entry. Some of the oldest biotech companies are now positioning themselves as biopharmaceutical companies. In addition, several pharmaceutical companies are restructuring their R&D departments in such a way as to adopt an entrepreneurial approach to the development of new medicines from the biotechnology industry. So biotechnologies and pharmaceuticals are actually merging into a single biopharmaceutical industry.
Joe Pisani, Partner of the PwC International Group for providing services to pharmaceutical and biomedical companies, noted:
"A game called efficiency is unfolding on the global stage, and adopting a more active cooperation strategy could be the key to harnessing this potential. Collaboration accelerates and promotes innovation processes, which, in turn, can reduce costs and bring benefits to both large and small companies. Even minor changes could provide significant savings."
According to the results of the PwC study, taking into account the average costs of product development and production time, a 5% increase in the success rate for each transition from phase to phase of research and a 5% reduction in product development time could provide a reduction in R&D costs by almost $ 160 million, as well as accelerate the withdrawal products on the market for almost five months. In fact, only one 5% increase in the success rate during the transition from phase to phase of research would lead to a reduction in total costs by approximately 111 million US dollars (Estimates are based on the average cost of development in the amount of 1.24 billion US dollars and the average time of their implementation 97.7 months.)
Alina Lavrentieva, Head of Consulting Services for Pharmaceutical and Biomedical Companies, PwC Russia, noted:
"The governments of many countries are now trying to solve the problem of increasing demand for health services from the growing population and the consequences of demographic changes. Now, more than ever, more effective and cost-effective medicines are needed, and only in conditions of cooperation will the industry be able to meet the needs of modern society."
On the PwC website, you can download the full text of the report “Biotech reinvented: Where do you go from here?” (pdf, 0.6M, 24 p.).
Portal "Eternal youth" http://vechnayamolodost.ru based on the materials of the PwC Russia press center29.11.2010