Risk-averse investors threaten drug development
Monday 16 June 2008
New drug development by the biotechnology industry is threatened by increasingly risk-averse investors and intensifying competition from generic rivals, a survey shows.
A major cause of investor wariness is the growing caution of the US Food and Drug Administration in granting marketing approval for new drugs. This in turn cuts into the time that the treatment is protected by patent, the survey, by the law firm Marks & Clerk, found.
Of the biotech and pharmaceutical executives surveyed, 90 per cent said that secondary and further funding would become harder to secure. Investors will instead focus on less-risky, later-stage drug development in an attempt to limit their risk exposure, prompting biotech companies to switch to these activities, the survey found.
Where capital is available, the terms are set to become more onerous for companies seeking investment.
The survey found that 80 per cent of respondents expected key investors to seek a bigger equity stake or to look to secure their capital against drug-makers' intellectual property assets.
Some 78 per cent of respondents stated that the climate for biotech innovation had got worse over the past year, with 89 per cent predicting that small or early-stage companies would either fail or be bought out at unattractive levels.
Competition from generic drugs manufacturers is also putting the industry under pressure, with three-quarters of respondents reporting that patents are harder to protect against generic producers than in the past.
Dr Gareth Williams, partner at Marks & Clerk and co-author of the report, said: "Biotechnology represents the future of modern medicine, where yesterday's innovators now struggle with dwindling pipelines, generic competition and a chequered R&D record.
"Whilst the long-term view has not changed, we are seeing a short to mid-term funding gap in the current climate, which poses a genuine risk to essential, early-stage research and development."
The survey is based on the views of 484 responses from senior executives in the industry, mainly in the US and the UK.
- 1 What happens to your body when you give up sugar?
- 2 Have sex with your iPad thanks to the new sex toy no-one asked for
- 3 Bali nine: Welcome to 'Execution Island' – the Indonesian holiday resort where foreigners are sent to die
- 4 The 'sex selfie stick' lets you FaceTime the inside of a vagina
- 5 Why you're almost certainly more like your father than your mother
Mark Zuckerberg: Facebook CEO's one simple test for who to hire
Bali nine: Welcome to 'Execution Island' – the Indonesian holiday resort where foreigners are sent to die
'A girl is more responsible for rape than a boy': The statement that shocked the world... except India
The 'sex selfie stick' lets you FaceTime the inside of a vagina
Saudi Arabia executions now at 'unprecedented rate' after kingdom kills four more in two days
Durham Free School: 'Creationism taught at' free school facing closure
Nearly 100,000 of Britain's poorest children go hungry after parents' benefits are cut
Ukip would cut billions from Scottish budget to fund English tax cuts
End of the licence fee: BBC to back radical overhaul of how it is funded
Ukraine crisis: Top Chinese diplomat backs Putin and says West should 'abandon zero-sum mentality'
Boris Nemtsov shot dead: Outspoken Putin critic who had expressed fears for his life is killed near the Kremlin
iJobs Money & Business
£8 per hour: Recruitment Genius: This Pension Specialist was established early...
£30 - 35k + Bonus & Benefits: Guru Careers: We are seeking an Executive Assist...
£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...
Voluntary post, reasonable expenses reimbursed: Reach Volunteering: Would you ...