The future of biotech: Experts look at what's next
THE BIOTECHNOLOGY GURU
Robert S. Langer
institute professor
Massachusetts Institute of Technology
Biomedical technology is helping to relieve human suffering. Universities in the Boston area have played a significant role in creating these technologies and, in some cases, in helping launch them into companies.
One major challenge for the future is government funding for academic research. National Institutes of Health budgets are virtually stagnant, and that’s a big problem for sustaining the type of research that has enabled academic research to flourish and, in many cases, to provide the platforms for launching biotech companies. Early-stage resources for research have been vitally important. Government support has been the catalyst both for major discoveries and, in many cases, for start-up companies trying to make lifesaving products.
In his recent book, Senator Barack Obama discusses a conversation he and I had when both of us were receiving honorary degrees at Northwestern University. He also rightfully comments on how critical basic research, enabled by adequate government funding, is to the future of our country. Today, the average age of someone getting their first NIH grant is over 40 — a real concern for young people who want to have careers in the biosciences.
On the positive side, I think the next 5 to 10 years will see breakthroughs in many areas of medical biotechnology. For example, look for advances in DNA and SiRNA therapies, cell technology, stem cells, and the treatment of cancer and other diseases. We will also witness advances in convergence technology, where medical devices are combined with drugs to make new kinds of therapeutic systems, as well as in nanotechnology, which can have a great effect on drug delivery, imaging, and diagnostics.
THE RISK TAKER
Joshua Boger
chief executive, Vertex Pharmaceuticals Inc., and incoming chairman of BIO
A month’s worth of diabetes medicine for your mother: costly, but more costly if skipped. Your sister’s Alzheimer’s treatment — a to-be-discovered breakthrough fueled by a decade of research spending — becomes available when she is diagnosed 10 years from now. Is one more important? Is one more worth it? And why are today’s new medicines so costly anyway?
We hear stock explanations: Today’s medicines cost hundreds of millions to develop; drug discovery is risky and the risks demand high financial rewards for innovators; and today’s drug prices pay for the innovations of the future.
But the pills themselves only ‘‘cost’’ pennies to manufacture? Why can’t we have them for pennies? Or pennies plus 10 percent? This ‘‘paying for the risky investment’’ thing sounds theoretical. Maybe society just can’t afford that anymore. Maybe we should just call a halt to the 15- to 20-year quests for better drugs? Maybe we should tell all the biotechnology and innovative pharmaceutical companies that we can’t afford them anymore? Maybe we just want Mom’s diabetes medicine for cheap.
But if you ask Mom, I bet she votes for your sister to have a chance to remember her own grandchildren. And if there is a cancer drug, yet undiscovered, in your future, I bet it will be priceless to you.
But choosing between these is wrong. We all share the responsibility to make sure Mom has her diabetes medicine, whatever it takes. The problem isn’t the cost; the problem is the political will. Rearrange your priorities; next time you’re in a voting booth, vote for less money for you and more for people less fortunate.
Achieving a breakthrough in Alzheimer’s will require more than politics. It will require investment of unbelievable fortunes over a decade or more, all at total risk. Unless the return on that investment is competitive, investors will simply shift their money to Internet advertising engines, or hedge funds, or Asian car factories.
Finding a treatment for a disease like Alzheimer’s also requires decades of personal commitment from hundreds of talented and hypereducated people, with thousands of years of total effort, all at risk, to create even one new drug. Few people in biotech experience that kind of success even once in their career. The odds against it are overwhelming, but the best and brightest are drawn to the challenge. They are drawn to the hope for the future. Their future. And their mom’s. And your sister’s.
THE MONEY GUY
Glen Giovannetti
Ernst & Young
Global Biotechnology Center, Boston
In recent years, the biotechnology industry in the United States has enjoyed unprecedented numbers of product approvals, steadily increasing revenue, and strong financing totals. In turn, the market has rewarded some companies for introducing products and achieving revenue growth and profitability. The payoff, however, has not been as evident for early-stage companies and their investors.
Since the genomics-fueled IPO ‘‘bubble’’ of 2000, investor skepticism has raised the bar for companies trying to go public. Proof of concept in the lab is no longer enough, as most companies must now show positive results in human trials. Even with such data, the valuation of companies is often muted, resulting in venture capitalists being squeezed — they must fund early-stage companies for longer periods, but the payoffs at the time of the IPO don’t increase commensurate with the additional risk.
Last year brought some relief with an increase in mergers and acquisitions and values among the highest in history. Unlike other big merger and acquisition years in the industry’s history, the high deals weren’t driven by a single mega-transaction, but rather by a number of large deals, and a growing recognition among buyers of the value in biotechnology’s platforms and pipelines. Competition drove deal premiums to unprecedented levels in 2006 and, in a reversal of recent trends, big pharma buyers gravitated toward early-stage technologies, investing in the next generation of biotechnology innovation to improve their own drug-product pipelines.
The higher values paid by strategic buyers should bode well for the industry and lead more investors to recognize the value of innovation.
