Thinking About the Sector's Future

Duff Wilson looks at some of the challenges facing the biopharma research sector in the years ahead.

PhRMA StaffFebruary 8, 2011

Duff Wilson over at the New York Times has an interesting and, as he says, sobering look at some of the challenges facing America's biopharmaceutical research sector in the years ahead.

Wilson focuses on the sector's business model in a changing economic and scientific environment and the pressures that innovative biopharmaceutical research companies face as a number of medicines go off-patent. The piece is worth reading, but as you do it is useful to keep in mind a number of key points.

Continuing research into new medicines is critical and many patients wait and hope for new, better treatments for their conditions. But the fact is that the science is incredibly difficult and increasingly more difficult. Today, as our understanding of the biology of disease and the human genome expands, researchers are struggling with new biological and genetic challenges and the creation of a more personalized approach to medicine.

This requires both an evolving scientific and business model.

But the commitment of America's biopharmaceutical research companies to finding new, innovative treatments remains strong.

R&D investments by America's biopharmaceutical companies remain strong in spite of the challenging economic environment. In 2009, for example, total biopharmaceutical sector R&D spending reached $65.3 billion, up from $63.7 billion in 2008. (And, stay tuned for the 2010 numbers coming soon)

PhRMA member company R&D spending as a percent of sales has remained consistently high since 2000 - nearly 18 percent of domestic sales. In 2009, R&D expenditures totaled 19% of domestic sales, and 16% of total sales, virtually unchanged since 2000. In fact, the Congressional Budget Office reports: "the biopharmaceutical industry is one of the most research-intensive industries in the United States. Biopharmaceutical firms invest as much as five times more in research and development, relative to their sales, than the average U.S. manufacturing firm."

Equally important, is to understand that the industry approach to R&D is evolving. While continuing to pursue traditional in-house research, the complexity of the science and the need for broader expertise is leading many biopharmaceutical research companies to build new research collaborative efforts. This allows them to diversify their portfolios and provide quicker access to new technologies. As a result, biopharmaceutical research companies increasingly support research through vehicles like corporate venture capital funds and licensing agreements with other companies as well as partnerships with academic institutions.

Finally, discovery itself is never a sure thing. Historically, for every 5,000 to 10,000 compounds examined as a potential new medicine, only one makes it all the way through the research and development process and then through FDA approval for patient use. Which is to say that research opens new doors and spurs new possibilities and that's all the more reason to continue the search for new treatments.

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