Wrap-up – brief overview of Pharmaceuticals/Biotech.
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Wrap-up – brief overview of Pharmaceuticals/Biotech
Biotechnology: One of the World’s oldest emerging industries
Most investors think Biotech is the newest whim on earth! From a historical perspective: NOT SO!
Biotech’s genesis go back to some 5000 BC when farmers noticed that certain crop grew better in some conditions than others
A follow-up took place around 1000 BC when farmers cross-bred the best of two breeds – the female horse and the male donkey – creating a new animal, the mule. The mule became the first genetically engineered species.
Modern biotechnology 1950 Watson and Crick discovered the structure of DNA
– not the secret of life, but a secret of life 1973 Boyer and Cohen recombined DNA 1978 Eli Lilly and Genentech announce they are
creating genetically engineered insulin 1980, the first IPO – Genentech 1982, FDA approval of synthetic insulin 2000 first Finnish IPO – Biotie Therapies 2001 mapping of the human genome .. ..
The Pharmaceutical
Industry
Industry Recipe X
Company Paradigm Y
Strategy Logic Z
The Agri
Industry
Industry Recipe X
Industry Recipe X
Industry Recipe X
The Food Industry
Industry Recipe X
Industry Recipe X
Industry Recipe X
The Pharmaceutical
Industry
Industry Recipe X’’
Company Paradigm Y’’
Strategy Logic Z’’
The Biotechnology
Industry
Industry Recipe X’
Company Paradigm Y’
Strategy Logic Z’
TechnologicalChange
Technology and Markets in Motion
Lead to… A myriad of POTENTIAL business
opportunities all along the entire R&D process Are they profitable? Are they real
A variety of NEW BUSINESS MODELS making FIPCOs (Fully Integrated Pharmaceutical Companies) dated
Product companies, Technology companies, and Hybrids To this should be added SERVICES
Discovery(2-10 years)
Preclinical TestingLaboratory and animal testing
Phase I20-80 healthy volunteers used to determine safety and dosage
Phase II100-300 patients used to lookfor efficacy and side effectsPhase III
1000-5000 patiens used to monitor adverse reactions to long-term use
Regulatory Review/Approval
Additional Postmarketing Testing Phase IV
Years
0 2 4 6 8 10 12
Preclinical
Clinical
Drug Development Process – ’the Staircase model’ – the
’FIPCO’ model
The Food Industry
Industry Recipe X
Company Paradigm Y
Strategy Logic Z
The Health Care Service Industry
Industry Recipe X
Company Paradigm Y
Strategy Logic Z
The Agri Industry
Industry Recipe X
Company Paradigm Y
Strategy Logic ZThe Pharmaceutical
Industry
Industry Recipe X’’
Company Paradigm Y’’
Strategy Logic Z’’
The Biotechnology
Industry
Industry Recipe X’
Company Paradigm Y’
Strategy Logic Z’
The Materials Industry
Industry Recipe X
Company Paradigm Y
Strategy Logic Z
New Therapeutic Cycles
New Drug Targets
Discovery to Market Process(as viewed by an bio-
entrepreneur)
AdvancedIntermediateEarlyNewMedicineProposal Target
Validation
LeadIdentification
LeadDevelopment
LeadOptimization
EIHEnabling
EarlyClinicalSafety
DevelopmentPortfolioPreparation
EarlyClinicalEfficacy
PhaseII
PhaseIII
Launched
MIL
ES
TO
NE
MIL
ES
TO
NE
MIL
ES
TO
NE
MIL
ES
TO
NE
MIL
ES
TO
NE
MIL
ES
TO
NE
MIL
ES
TO
NE
TargetValidation
ClinicalCandidateSelected
StartPhase III
NDA
Discovery Development MarketM
ILE
ST
ON
E
MIL
ES
TO
NE
MIL
ES
TO
NE
MIL
ES
TO
NE
MIL
ES
TO
NE
MIL
ES
TO
NE
MIL
ES
TO
NE
MIL
ES
TO
NE
Marketer 65-75 %
Developer 10-25 %
Innovator 10-15 %
Sharing the income in the pharmaceutical business
RESEARCH GROUPS
MARKETING PARTNERS
DEVELOPMENT PARTNERS
MANUFACTURING PARTNERS
TRANSFER OFPROPRIETARY
RIGHTS
LISENCE,SUPPLY OFPRODUCT
PAYMENTSROYALTY
MILESTONE PAYMENTS,ROYALTY, PART OFGROSS MARGIN
OUTSOURCED RESEARCH AND DEVELOPMENT
COST-EFFICIENT INDUSTRIAL SCALE MANUFACTURING
DISCOVERY RESEARCH
DISCOVERY RESEARCHDRUG DEVELOPMENTOWNER OF PATENTSCOMMERCIALIZATION OF DEVELOPMENT ROJECTSMANAGEMENT OF OUTSOURCED RESOURCES
PHASE III DEVELOPMENTMARKETINGSALES
Biotech Company
Pharma Outsourcing of R&D
Marketing Authorisation
Clinical Phase I -III
Discovery
Outsourcing
The US vs. Europe – the whole industry vs. listed co’s (June 12,
2002)
THE WHOLE INDUSTRYUS EUROPE
2001 2000 Ch.% 2001 2000 Ch.%
30,0 27,0 10,9 Turnover 14,4 10,4 3516,5 14,4 14,6 R&D exp. 7,9 5,8 357,3 6,3 15 Loss 1,6 1,9 -161457 1374 6 # Co’s 1879 1734 8191,000 176,000 8,5 # empl. 87,182 67,445 29
LISTED CO’S
26,6 23,9 12 Turnover 7,2 4,9 4610,9 9,7 13 R&D exp. 4,5 3,0 485,1 4,3 17,1 Loss 0,58 0,36 60342 344 -0,6 # Co’s 104 107 -3141,000 130,000 8,5 # empl. 34,180 25,964 32
Biotech Global Product Sales and Forecast 2000-2010 (Millions of
Dollars)
Key Sectors Base Year Forecast Years ‘00-’10 Growth2000 2005 2010 ppa
Human Therapeutics 11,700 20,600 36,300 12Human Diagnostics 2,500 3,700 5,400 8Agriculture 780 1,950 4,200 18Specialities 550 1,170 2,400 16Non-Medical Diagn. 320 480 700 8
TOTAL 15,850 27,900 49,000 12WORLD TOTAL 25.000 35.000 85.000
Source: Consulting Resources Corporation
Porter’s five forces in BIOTECH
INDUSTRYCOMPETITORS
Internalrivalry
SUPPLIERS
POTENTIALENTRANTS
BUYERS
SUBSTITUTES
Bargainingpower of
Bargainingpower of
Threat of
Threat of
Government regulation
Globalmarket demand
ConstantlyChanging
Issues important in Strategic Market Management
Not only technological, regulatory, and financial science and getting scientific results availability of R&D funding; public and private regulatory; FDA, EMEA, KOSEISHO
You need to understand – on a long-term basis: Medical and Healthcare system related
treatment changes diagnostics changes reimbursement changes which are national
who is paying and how much health economics
The regulatory focus areas of the biotech industry – Legal gates to market entry
USA(FDA) Japan
(Koseisho/OPRS)
EU(EMEA/CPMP)
Issues important in Strategic Market
Management Other issues
demographic changes changes in disposable income changes in society cultural diversity
treatment praxis varies between countries what is seen as good in one country is seen as
bad in another ethical issues
varies between countries
Market estimations
are not only quantitative estimations of market potential
require equally much qualitative assessments
It is a combination of BOTH
Future major issues affecting market entry and success
Expanding healthcare market nutraceuticals complementary and alternative medicines
New drug delivery systems New diagnostic methods
validation procedure! Biomaterials Changes in patent regulations
Future major issues affecting market entry and success
Rx to OTC switching a way to cut healthcare costs
Branding Empowered consumers
Direct-to-consumer advertising In the US since 1997 In New Zeeland since 1981 The rest of the world is watching – Europe is
about to try a restricted version Direct-to-consumer branding
Conclusions Biotechnology is truly the future horn of plenty.
However, achieving success will require business management capabilities.
It is not just enough with top technology and some money.
It is not enough to know your way in the regulatory jungle
Biotech is a global business, moving fast knowledge grows and stuns markets change all the time
Companies have to master market management – it is a strategic issue to them
“If you think research is expensivetry disease”
Mary Lasker “evangelist” for medical research,as quoted by Nobel Prize-winning DNA scientist
Arthur Kornberg in the Golden Helix
IT WILL BE EVEN MORE EXPENSIVEIF YOU DON’T KNOW YOUR MARKET(S)!
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