PerspectivesAre you interested in submitting a Perspective Article? Be sure to read The Science Advisory Board's Editorial Guides for Perspective Articles. Click here. Blooming Biotech and Pharmaceutical Industries by Wim D'Haeze, Ph.D. Whoever regularly follows the news will recognize that the Biotech and Pharmaceutical Industry is still expanding – booming – in the United States and Europe, but also in major Asian countries such as India, China, and Japan. A pattern that is often observed for pharmaceutical companies is headquartering in a major location in the United States or Europe while branching elsewhere in the United States, Europe, and/or Asia. Those processes are highly dependent on how successfully drug candidates move through the drug development pipelines and on how the drug development process is organized, planned, and executed. Research and Development hubs are located at the East coast (e.g., New York, Boston, Philadelphia, Atlanta, and Northern and Central New Jersey) and West coast (e.g., San Francisco, Los Angeles, San Diego, and Seattle) of the United States and throughout major cities in Europe, but multinational companies have been or are stepping on land in countries throughout Asia as well. Reasons for the latter development may include substantial cheaper labor as compared to that in developed countries and the ability to produce medicines close to the market place. During recent years, India, for example, has become the home of a few hundred registered biotech and pharmaceutical companies and is now positioned within the top-5 producers of pharmaceuticals. Interestingly, the majority of its export (e.g., production of diphtheria, tetanus, pertussis (DTP) vaccine) goes to developing countries. Companies such as Biocon, Novo Nordisk, Aventis Pharma, Chiron Behring Vaccines, GlaxoSmithKline, Novozymes, Eli Lilly & Company, and Advanced Biochemicals are all represented in major Indian cities, including Bangalore, Calcutta, Hyderabad, Mumbai, Pune, and New Delhi. In 2005, Indian biotech and pharmaceutical companies represented a revenue of more than US$1 billion and the governmental goal articulated by the Indian Department of Biotechnology is to create a biotechnology and pharmaceutical industry generating US$5 billion in revenues annually and representing one million jobs by roughly three years from now. The government tries to achieve this goal in part by facilitating foreign-owned companies to establish in India, making it easier for investors by centralizing the process, creating at least ten new science parks by 2010, financially supporting new drug discovery proposals and research, and by supporting small biotech and pharmaceutical businesses and start-up companies. Another historical success story worth mentioning is the endeavor undertaken by the state of North Carolina in respect of its development towards the third largest biotech state with currently more than 350 bioscience companies that are either headquartered in North Carolina or maintain operations there, employing 48,000 individuals. This success story obviously started with forward thinking state officials and scientists who created in 1959 the Research Triangle Park in the heart of the state. Currently, Research Triangle Park occupies 7,000 acres, contains 19 million square feet of facilities, and is the home of 199 research and development organizations, including AlphaVax, Bayer, Biogen Idec, GlaxoSmithKline, Syngenta Biotechnology, and Talecris Biotherapeutics. It is remarkable how generations of governors of North Carolina have understood the importance of the biotech and pharmaceutical industry and implemented this to ensure a flourishing state. Not only does North Carolina develop strategies to increase the number of bioscience jobs to 125,000 by the year 2023, the governors have also created and supported plans to open additional high schools focused on areas such as health, life sciences, engineering, and computer technologies, throughout the state to lead their youth into a future deemed to be successful. Biotech and pharmaceutical companies are scattered allover the state of North Carolina and include BASF, Biolex Therapeutics, Blueridge Biologicals, Embrex, Merck, Metrics, Novartis Crop Protection and Novartis Vaccine, Novozymes, Syngenta Crop Protection, and Wyeth Pharmaceuticals. North Carolina is ideally suited to develop a leader position in regenerative medicine and is at the forefront with other states such as California that provides US$3 billion to be invested in regenerative medicine over the next 10 years through the newly generated California Institute of Regenerative Medicine. As outlined in an article published in the July 2007 issue of R&D Magazine, the overall construction costs keep escalating due to the active economy and increasing construction activities. Although biotech and pharmaceutical companies tend to lease existing facilities, constructing new ones within or nearby the Research and Development hubs may face construction cost increases in the range of 6-10%. More specifically, the following increases have been estimated relative to those in 2006 (costs benchmarked to those in the New York metropolitan area): animal research, including discovery-phase research, 10%; toxicology, including safety evaluation phase Research and Development and phase 1-4 testing, 9%; chemistry research, including organic and synthetic medicinal and structural chemistry, 10%; and Good Manufacturing Practices production as part of larger building or facility, 8-10%. These numbers are significant and will influence decision making within the biotech and pharmaceutical industries. The increase in construction costs is also translated into Europe and Asia. With construction costs predicted to stay the same as those in 2006 throughout Europe (relative to those in the New York metropolitan area), biotech and pharmaceutical industry-related construction costs in Brussels and Paris are expected to increase with 5%. Similarly, the construction costs in Asian metropolitan areas such as Bangkok, Hong Kong, Kuala Lumpur, Shanghai, and Taipei are predicted to gain at least 5%. Generally speaking, it is becoming increasingly difficult to find a location worldwide that exhibits an advantage as it concerns the cost of construction of biotech and pharmaceutical industry facilities. Thus, it seems that one of the major advantages of going abroad might be the significant lower cost of labor – which may change in the future – although this needs to be viewed in a more global context, considering the need of Western-trained scientists and leaders, and upcoming educational development in developing countries. Somehow understandable, biotech and pharmaceutical companies, both start-ups as well-developed ones, need to explore ways to decrease the overall drug development cost because of the significant competitive character associated with this industry combined with the issues outlined above. Venture capitalists that support biotech and pharmaceutical companies may prefer to refine a drug-in-development rather than starting from level zero for the development of a new drug. Additionally, outsourcing – purchasing materials and services from other specialized contract research organizations rather than doing everything in-house – is becoming a common practice for many companies. Although this practice looks attractive, outsourcing may or may not be successful. Farming out tasks to contract research organizations or cheaper offshore companies may save a biotech or pharmaceutical company lots of dollars as there is less need to invest in expensive labor, labs, equipment, and experience. This is particularly true if the contract research organization is located in countries such as India or China. It might for instance be very efficient for a drug developing company to produce a given intermediate, the synthesis of which requires specialized equipment and experience, abroad. Not only should the reason be sought in cheaper labor, but also in the fact that contract research organizations may possess unique skills and perspectives. The latter may indeed be very efficient and effective; however, this may in the long run lead to significant job losses and so-called virtual biotech and pharmaceutical companies employing a hand-full of core employees while contracting with several contract research organizations throughout the world. Taken together, it is obvious that the biotech and pharmaceutical industries are blooming. The completion of the human genome and that of many prokaryotic and eukaryotic organisms combined with research at the systems biology level will provide scientists with a wealth of information that can be used to specifically target and understand diseases in humans, plants, and animals. Many more biotech and pharmaceutical companies will be needed to produce and characterize those compounds that are needed to prevent or ameliorate diseases. It is clear that academic observations are implemented more rapidly than before as the basis of start-up companies and it is, in my opinion, important that venture capitalists and/or governments support those developments. As demonstrated by the North Carolina success story, developing a life sciences platform may boost the economy of an entire state or country, bearing in mind that it can go wrong. There is, for instance, a long way between drug development and the approval and commercialization of a drug. Diversity and collaborations are deemed to be important for the success of biotech and pharmaceutical companies. Multinational biotech and pharmaceutical companies create jobs in other countries; however, their presence and, in some cases, will to monopolize may frighten local governments and stimulate the creation of local companies that will be in direct competition with the multinational branch. It is likely that the latter companies may be able to produce the product (e.g., a hepatitis B vaccine) at a lower cost and sell it at lower price than the multinational allowing widespread vaccinations in developing countries. Countries such as India are developing the biotech and pharmaceutical industry, at one hand by welcoming multinationals, and at the other hand by supporting local initiatives. It is nevertheless important that attention and support is reserved to ensure that local individuals get training, knowledge, and experience that are needed to perform top-level research. Although a certain level of competition may increase productivity, it is in the best interest of all of us worldwide that supportive collaborations between start-ups and developing biotech and pharmaceutical companies, and collaborations between multinationals and local foreign companies and governments flourish. Wim D’Haeze is Bio-Engineer in Chemistry and received his Ph.D. in Biotechnology at Ghent University (Belgium) in June 2001. His doctoral thesis work was focused on the understanding of several early steps of the symbiotic interaction between the Gram-negative soil bacterium Azorhizobium caulinodans and the tropical legume Sesbania rostrata. The initial steps require the production of bacterial compounds including signal molecules and complex surface polysaccharides that are pivotal for invasion of the plant tissue and the formation of new organ tissues. In the three subsequent years, he performed post-doctoral research at the Complex Carbohydrate Research Center at the University of Georgia (Athens, GA) dealing in part with the structural and functional characterization of azorhizobial extracellular polysaccharides. When employed as Science Writer, Wim D’Haeze focused on understanding the molecular basis of devastative neurodegenerative diseases, such as Alzheimer’s and Parkinson’s diseases, in order to screen for and develop new therapeutics. He is currently a Senior Technical Writer in the pharmaceutical industry. E-mail: wim.dhaeze@sbcglobal.net. ### << Previous Next >> [ View All Perspectives ] |
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