Business and Science for BD & others
#66, December 2011
Big pharma R&D productivity falls; Roche CEO believes “me too’s” will be squeezed
Deloitte finds that the top 12 research-driven pharma companies have dropped in the IRR (internal rate of return on their R&D) from 11.4% in 2010 to 8.4% in 2011. There is a big variation from company to company, with IRR ranging from -5% to 12.2%. I would like to see the consistency of better than cohort performance, to see if it is luck or management that makes for that variation.
It is costing more to develop drugs ($1048M per drug approval in 2011 counting the cost of failures), but the forecast values of the assets have not increased. The biggest factor in the drop of IRR has been an increase in the failure to get late stage drugs approved. A small change (5.6%) in late stage success can make a significant (10%) difference in the IRR. Deloitte expects this means there will be increased scrutiny of R&D returns and more emphasis on collaborations. Deloitte Webinar Nov 15, 2011.
Roche’s CEO believes that declining R&D productivity, slow economic growth, and regulatory conservatism means that payers will only reward true innovation and cheap generics, squeezing those who pursue a “me too” strategy. In contrast, Glaxo sees value in diversification of businesses across generics, over the counter and innovative prescription drugs. EP Vantage Dec 6, 2011.
Life Science Venture Capital down 21% for 3rdquarter
Life Science companies secured $1.9 billion in venture capital financing during the third quarter of 2011, representing a decrease of 21% versus the previous quarter. The funding was allocated between 201 companies, a 14% decrease versus the previous quarter. VentureDeal.com
Biotech building boom in Boston/Cambridge, Bay Area
A belief that putting scientists in areas with leading academics, hospitals and other life science companies, will lead to better science and better products means that a few clusters are in a biotech building boom. Boston and Cambridge are expected to get a 15% increase in new lab space, in a time when overall construction is down. The vacancy rate in San Francisco Bay Area life sciences has fallen to 15.9%, down from 19.9% a year earlier. http://online.wsj.com/article/SB10001424052970204531404577054612465799788.html?mod=WSJ_hpp_MIDDLE_Video_second
Clearing the body of senescent cells could slow aging
As cells age and telomeres are shortened, or as cells are damaged, some become senescent – aging but not dividing, preventing replication of damaged cells and development of cancers. Senescent cells with irreversible cell arrest also acquire a complex phenotype that includes the secretion of many cytokines, growth factors, and proteases. These may drive inflammation or other tissue dysfunction.
Now investigators at the Mayo Clinic have removed p16-INK-positive senescent cells through construction of an inducible suicide-gene construct. With life-long elimination of these cells in mice, there was delay of age-related pathologies; mice purged of senescent cells could run much longer on a treadmill, had larger fat deposits - fat disappears from the skin as people age, causing wrinkles - and developed cataracts much later. With late onset elimination of the cells, there was a slowing in progression of these age pathologies. http://www.ncbi.nlm.nih.gov/pubmed/22048312 http://mobile.nytimes.com/2011/11/22/science/in-bodys-shield-against-cancer-a-culprit-in-aging-may-lurk.xml
Small IPOs decline from 80% to less than 20% of all IPOs
It is not just biotech suffering from a lack of IPOs. From 1991 to 1997, nearly 80 percent of U.S. IPOs were below the $50 million threshold. But, by 2000, their share had declined to 20 percent (or less) of all IPOs, and in 2009 and 2010, IPOs of under $50 million appear to have constituted only around 17 percent and 18 percent, respectively, of the number of all IPOs. http://bioworld.blogs.bioworld.com/2011/11/21/the-small-ipo-not-dead-yet-regulation-a-debated/
See you at the next meeting?
I enjoy writing the newsletter and hearing from many of you. I really appreciate all who used my services or gave me a referral. I love the community of biotech business. Thank you for all the good things in 2011.
Wishing you all a great holiday! May we all enjoy a bright biotech year in 2012!
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