Biotechnology in 2009

Earlier this year, President Obama made good on his commitment to allow federal funding for research on embryonic stem cells, an action that opened new doors for scientists seeking cures to diseases such as cancer, HIV/AIDS, and cystic fibrosis. The action was broadly applauded by the scientific community and has energized researchers and advocates alike. Allowing the National Institutes of Health (NIH) to fund such research, however, is only the first step toward developing new biomedical therapies and cures.

Jim Greenwood

As most individuals in the pharmaceutical industry know, much of the work of discovering new treatments and therapies falls to biotechnology companies. To help transform this research into innovative therapies, the public sector and private companies need to work in tandem. Public policies that govern research funding and guidelines, intellectual property protections, and investment and tax policies affect our industry's ability to grow and prosper. These are among the major topics to be discussed by industry leaders from around the world at this month's 2009 BIO International Convention, in Atlanta.

Increased research funding

Progressive increases in funding for NIH could very well usher in a new generation of government researchers, a priority for our industry and for the public. According to a 2008 survey conducted by Research!America, nearly three in four (73%) respondents said research to improve healthcare is part of the solution, not part of the problem. Despite this public support, research remains a small portion of our healthcare spending. In 2007, only 5.5% of the $2.25 trillion US health expenditures went toward medical and health research.

In 2010, the senior citizen population in the United States will reach 39 million (28% of the total US population) and will purchase approximately 75% of all traditional and biotech medicines. Today, nearly 133 million Americans live with one or more chronic diseases, and increasingly, they and their families are looking to biotechnology to develop new and better treatments.

Strengthening patent protection

A biotech company typically spends more than a decade on developing and bringing to market a new biomedical therapy. Patents that protect biotech research, therefore, are critical to a biotech company's financial well-being. Without strong and predictable patents to safeguard their investments, biotech investors shy away from investing in biotech innovation. Decreasing investment results in cessation or interruption of critical research projects and increases layoffs. In these tough economic times, we are already seeing companies forced to shelve promising new therapies and cut back on staff. Strong patent protections provide needed incentives to spur new thinking.

Supporting startups

Because of their size and the cutting-edge nature of their work, many small biotech companies face a life-or-death proposition in the stormy economic waters we're experiencing. A Biotechnology Industry Organization (BIO) analysis done in early 2009 found that 125 of the 370 US–based public biotech companies have less than six months of cash on hand, and approximately 40% of small private biotechs have less than one year of cash on hand.

Federal and state governments can support continued research and pursuit of new treatments by awarding Small Business Innovation Research (SBIR) grants to venture capital-backed biotech companies. These grants allow government agencies such as NIH to set aside a specific percentage of research and development (R&D) money for applicants doing cutting-edge research.

At the same time, Congress should provide greater flexibility to innovative small companies in the earlier stages of their work by allowing them to take advantage of tax credits, which can free up additional cash to fund R&D. State funding, combined with federal policies, can also help biotech companies continue their work.

Looking forward

Despite the challenging environment, biotech is poised for continued growth. A recent survey conducted by BIO and Thomson Reuters found that 57% of investors expect the US biotech industry to rebound this year, and 30% expect a rebound in 2010. Meanwhile, 70% of investors expect biotech to outperform the rest of the market this year. The biotech industry has potential to fuel scientific advances as well as economic growth that benefits society. I hope you will join me as our industry converges in Atlanta to discuss the ways we can best grow and share our discoveries with those who need them most.

Jim Greenwood is president and CEO of the Biotechnology Industry Organization, 1201 Maryland Ave. SW, Suite 900, Washington, DC 20024, tel. 202.962.9200, james.greenwood@bio.org