Biopharma's Growing Momentum

Gaining both mass and velocity, Biopharma is an industry on the move

By Steven E. Kuehn, Editor-in-Chief

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Few industries, that is, the ones that actually make something, seem to have attained the luster and momentum than Biopharma has over the last decade or so. The category has really gone upscale since the days when vaccine manufacture had more of an agricultural feel to it rather than the high-science, high-tech aura that makes it shine today, a luster attracting billions in recent capital investment, while producing dramatic gains in successful therapeutic care and patient outcomes across several important categories.

Pharmaceutical enterprises associated with biotechnologies are widely acknowledged to be engines of economic prosperity and a driver of high-paying jobs. The number of states fielding biotechnology-based economic development bureaus, agencies and initiatives is growing as well, with folks working ever harder to bring the industry to their communities.

According to Biotechnology Industry Organization (BIO), the bioscience industry is one of the most innovative and important economic drivers in the United States, accounting for more than 1.6 million jobs and an additional 5 million due to the economic multiplier effect. A significant number of those “biotechnology” jobs are associated with pharmaceutical development. The U.S. Chamber of Commerce also notes that more than 810,000 people work in the biopharmaceutical industry and that the industry supports another 3.4 million jobs across the U.S. economy.

Each year Bioplan Associates Inc. publishes the comprehensive font of biopharmaceutical market intelligence. In its 11th annual “Report and Survey of Biopharmaceutical Manufacturing Capacity and Production,” author Eric S. Langer frames the value and scope of the market, which Bioplan Associates pegs at about $190 billion. “This includes all biopharmaceuticals, i.e., biotechnology-derived pharmaceuticals, including classic biologics, such as vaccines and blood/plasma products,” says Langer.

Not surprisingly, recombinant proteins/antibodies have passed a milestone, “now constituting >50% of biopharmaceutical revenue/sales and with sales now crossing the =$100 billion/year threshold,” notes Langer. Among these products, says the report, monoclonal antibodies (mAbs) account for the largest portion, or about $50 billion in sales. “The biopharmaceutical market now constitutes =15%, approaching 20%, of the world’s total pharmaceutical market, which is now essentially at $1 trillion/year,” explains Langer, with growth projected overall to be “approximately twice that experienced by non-biopharmaceutical products, e.g., small molecule-based drugs.”

Bioplan Associates’ research says we can assume that future growth in biopharma sales will likely continue at an approximate 15 percent rate.

The advent of biosimilars will certainly have an accumulating impact on the market as well, once regulators settle on policies that they feel will address consumer safety concerns. Langer covers this important topic more thoroughly in “Risks and Rewards in the U.S. Biosimilars Pipeline,” on page 17. But to summarize, Langer notes in the study that contractions due to biosimilars and cost controls in the U.S. and other major markets will be more than compensated for by organic growth in the market.

In its March 2014 Securities and Exchange Commission filing, Quintiles, self-described and widely acknowledged as the world’s largest provider of biopharmaceutical development services and commercial outsourcing services, estimates total biopharmaceutical spending on drug development was approximately $93 billion in 2013, noting that it expects its Product Development services group will see a CAGR of 6-8 percent through 2016 “as a result of increased research and development, or R&D, spending by biopharmaceutical companies and the increased outsourcing of this spending as compared to 2012.”

Quintiles estimated that R&D spending was approximately $137 billion in 2013 and is likely to grow to ~ $145 billion by 2016, “with development accounting for approximately 68% of total expenditures. R&D spending trends are impacted as a result of several factors, including major biopharmaceutical companies’ efforts to replenish revenues lost from the so-called “patent cliff” of recent years, increased access to capital by the small and midcap biotechnology industry, and recent increases in pharmaceutical approvals by regulatory authorities.”

In 2013, notes Quintiles’ filing, approximately 4,060 drugs were in the Phase I-III pipeline, an increase of 19 percent since 2008. In 2013, 27 New Molecular Entities (NMEs) were approved by the U.S. Food and Drug Administration, the highest number of approvals since the late 1990s.

Bioplan Associates’ report finds that as of February 2014 there were more than 460 biopharmaceutical products approved in either the U.S. and/or European markets (primarily, the European Union), including >180 recombinant proteins and >40 monoclonal antibodies. In the U.S., there were >385 biopharmaceuticals approved, including >145 recombinant products and 30 recombinant monoclonal antibody products. There were >355 biopharmaceuticals approved in Europe, including >150 recombinant proteins, including 28 recombinant monoclonal antibody products. Nearly 50 products are either pending at FDA or have applications expected to be filed in the coming months.

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