Global Biotechnology Industry Earns Record Revenues and Moves to Profitability

The global biotechnology industry earned record revenues in 2005 while moving toward profitability as it reduced its collective net losses.

Collective revenues of the world's publicly traded biotechnology companies increased by 18% in 2005, reaching an all-time high of $63.16 billion and crossing the $60-billion threshold for the first time, according to Ernst & Young's (New York, NY, www.ey.com) Global Technology Report 2006, released this week at BIO 2006, the Biotechnology Industry Organization's (Washington, DC, www.bio.org) annual meeting. The United States was the largest contributor, accounting for 76% of revenues or $47.79 billion. Europe followed at $9.78 billion, then Canada at $2.58 billion, and the Asia-Pacific region at $3.00 billion.

Despite reaching all-time revenues, the global biotechnology industry did not report a profit for 2005, although the industry's bottom line collectively improved in the United States, Canada, and Asia-Pacific. The global biotechnology industry reported a collective net loss of $4.39 billion in 2005, a 30% reduction year-over year, according to the Ernst & Young report. The United States accounted for $2.13 billion of that loss, Europe $1.94 billion, and Canada $324 million. Asia-Pacific was the only region reporting a profit $7 million in 2005.

The United States, Canada, Asia-Pacific, however, collectively improved their bottom line by close to $3 billion. The United States, in particular, showed strong improvement toward profitability, achieving an historic low in net loss, helped in large measure by industry leaders Amgen Inc. (Thousand Oaks, CA, www.amgen.com) and Genentech Inc. (South San Francisco, CA, www.gene.com), which added roughly $1.8 billion to the bottom line for the United States. Net losses increased by roughly $1 billion in Europe, although the increase was from the large number of initial public offerings, concludes the report.

On the product front, the US biotech industry gained 32 product approvals in 2005. Of this total, 17 were first-time approvals. Ernst & Young estimates that 58 biologic-based products are under review by the US Food and Drug Administration (Rockville, MD, www.fda.gov).