OVERALL BIO/PHARMACEUTICAL TRENDS

These trends are, in large part, resulting from global shifts that continue to drive the bio/pharmaceutical industry. Below are broad industry trends we project in 2012.

Biopharmaceutical markets. The worldwide market for biopharmaceuticals continues to expand and at a more rapid rate than for pharmaceuticals in general. The world market for biopharmaceuticals is approximately $140 billion, with approximately $100 billion involving recombinant proteins and antibodies (2). The market includes over 430 biopharmaceuticals, including over 300 recombinant proteins and antibodies that are approved in the US and/or Europe. The biopharmaceutical market has been and is expected to continue to grow about 15–18% annually, well above overall economic growth rates. This steady overall growth rate is driving much current investment in biopharmaceutical R&D.

Table I: FDA full biopharmaceutical approvals in 2011.**

Approval-related innovation and progress. The good news, particularly for patients and the healthcare system, is that 2011 FDA biopharmaceutical approvals involved genuine innovation and advances, with nearly all products being approved w either new indications for which no treatments were previously available or for indications for which the last product approval was granted well over a decade ago. A record number (i.e., eight) products were approved with orphan designation. Recombinant antibodies are a leading area for biopharmaceutical development. The large number of recombinant monoclonal antibody and recombinat monoclonal antibody-like products that many companies are relying on for future products may finally be starting to enter the market.

Approval-related problems. Largely due to the limited markets for these orphan and other approved products, 2011 US approvals will not have as much industry economic impact as is likely needed in the long-term. Only two of the twelve approvals are expected to eventually reach blockbuster sales levels of $1 billion or more per year.

Company and country approval trends: Illustrating the trend towards internationalization of manufacturing, a record number of four, or 33%, of newly-approved US biopharmaceuticals are manufactured outside the US—in the United Kingdom. Germany, Mexico, and Italy. These products include the first product manufactured in Latin America that received FDA approval—a scorpion venom antitoxin (equine immunoglobulin F(ab) fragments), Anascorp, manufactured by a Mexican company.

Biosimilars (biobetters / biogenerics). With patents expiring for most established, successful, biopharmaceutical products, development of biosimilars is accelerating worldwide and will change the industry landscape. This emergence of biosimilars will likely involve the entrance of many new manufacturers. Most of this activity is targeted to introducing these products in the US and European markets, but many products are being developed by foreign companies, if only initially, for marketing in lesser-regulated domestic and international markets. There will likely be multiple biosimilars (as well as biobetters and biogenerics) for each currently successful biopharmaceutical. As a result, the number of biopharmaceuticals in the market and the number of biopharmaceutical manufacturing facilities will rapidly increase, perhaps doubling in the next five years.

Many biosimilar/biobetter/biogeneric developers are adopting state-of-the-art expression systems and other manufacturing platforms. Biosimilars are competing with products being manufactured using 20-year-old technology. Although biosimilar manufacturers will have technical advantages with newer technology, drug innovators of the the now biosimilars will have long off paid off manufacturing facilities. As a result, biosimilar/biobetter/biogeneric developers will have to compete on the basis of price and adopt aggressive cost-cutting technologies to effectively compete with the original biologic and other biosimilar manufacturers. Although over a dozen biosimilars have received European Union (EU) approval, no biologics have yet been approved as biosimilars by FDA. BioPlan analysis shows that biosimilar/biobetter companies are present in virtually every biotechnology-capable region, including Latin America, Korea, and other areas that have yet to be significantly involved in major Western biopharmaceutical markets (2). For example, of the nearly 400 organizations involved in biosimilars/biobetters development, more than 30 companies are based in India and 14 in China.

The economy. The worldwide economic downturn in recent years continues to affect the biopharmaceutical industry. Yet, with continuing growth in its underlying sales revenue, the industry has managed to remain largely insulated from severe economic problems. Financial issues continue to affect most companies, including the major international (i.e., Big Pharma) companies that are the source for most biopharmaceutical R&D, with many having to deal with their most profitable products coming off patent. Spurred, however, by their interest in new, profitable products, biopharmaceutical R&D continues to increase. R&D invesment includes a record amount of more than $70 billion being invested by the pharmaceutical industry in R&D, about 90% sponsored by the largest international companies, with an increasing number and percentage of pharmaceuticals in the development pipeline being biopharmaceuticals versus chemically manufactured drugs). Biopharmaceuticals provide more exclusivity, market monopolization, and are increasingly attractive to the Big Pharma-type companies.

One important trend, however, is the internationalization of R&D. Large international (i.e., Big Pharma) companies continue their expansion and/or off-shoring of R&D. Several companies have announced major, multimillion, investments in new R&D centers in China, such as Merck Serono's $225 million, four-year commitment in Beijing.

Mergers and acquisitions. The trend for industry mergers, acquisitions, and other corporate consolidation at all scales continued in 2011. This is particularly evident among large international companies that continue merging and purging (i.e., acquiring or merging companies and then downsizing the merged company). Some companies, such as Merck & Co., are moving from mergers/acquisitions in favor of more in-house and company-sponsored R&D. The continuing trend of pharmaceutical mergers, combined with off-shoring of certain jobs and facilities, has resulted in relatively high bio/pharmaceutical industry unemployment rates in the US.

Patent litigation. Patent-infringement suits can be expected to increase, particularly as a large number of biosimilars (and biobetters and biogenerics) approach filing in the US and other major markets. Major test cases, such as Classen Immunotherapies versus Biogen Idec, involve whether business methods patents include coverage of methods for determining the optimal dose of a therapeutic. Biopharmaceutical companies may soon need to consider yet another type of patent, in addition to those for composition-of-matter (e.g., sequences), formulations, uses, bioprocessing, and reference standards.