BIO: debating value in Chicago
25.04.2013 - At the BIO International convention in Chicago, analysts have reported strong performance from the global biotech sector.
They pointed out that there is an urgent need for the industry to demonstrate value of products under development. For 2012, Ernst & Young’s industry report “Beyond borders” reports an increase in revenues by 8% to US$ 89.8bn, with the net income of US$5.2 bn, representing a record high. In Europe, revenues of public biotechs grew 8% to US$ 20.4bn. However, R&D expense decreased by 1 %, which is regarded as an indication that the firms remain in a cost-cutting mode.
A new survey amongst small and mid-size companies has revealed an “implementation gap” when it comes to gathering evidence to demonstrate the value of products at early stages of development. “Biotech companies can no longer afford to pursue an R&D strategy that only focuses on whether or not their drug works”, said Gautam Jaggi from the Ernst &Young Global Life Sciences Center. Strategic investors and pharma alliance partners would now consider such data to be key drivers of their product and company valuations. “Companies cannot afford not to rethink their R&D approaches and to invest in addressing questions of value”, he said.
In his talk, Steven Burrill presented similar view. The life science industry insider said in his “supersession”, that value of products is not a constant. “Instead, companies will need to be prepared to prove the value of their products in a world where value is transient, value is payer dependent and value is geographically different“, he said. And, as pressures on pricing intensify, companies will need to be creative in forging new ways to capture value. “Value, like beauty,” Burrill said, “is in the eye of the beholder.” Companies should have that in mind very early in development. Celebrating its 20th birthday, BIO International Convention was held in Chicago this year. The most important event for the global biotech industry has attracted over 2000 exhibitors this year, and will see more than 25.000 partnering meetings.