Biotech Sees Signs of Hope, Causes for Concern

Aug. 16, 2012
“Our analysis of trends across the leading centers of biotech activity reveals both signs of hope and causes for concern.”

So says London-headquartered Ernst & Young (—a global assurance, tax, transaction and advisory services provider—in its welcome message to its 26th annual issue of “Beyond Borders,” a report on the global biotechnology industry.

One sign of hope: stabilized revenues. “Companies in the industry’s established biotech centers—U.S., Europe, Canada and Australia—achieved revenues of $83.4 billion in 2011, a 10-percent increase from 2010 on a normalized basis, after adjusting for the acquisition of three large U.S.-based biotechs by non-biotech buyers,” the company’s June 9, 2012, press release states.

Another sign: research and development (R&D) rebound. “The industry grew R&D by a healthy 9 percent—on a normalized basis—in 2011,” Ernst & Young says.

However, “overall industry funding explodes, but ‘innovation capital’ stays flat,” the company reports. “Biotech companies raised a staggering $33.4 billion in 2011.”

But the $16 billion of capital raised by the rest of the industry – which Ernst & Young calls innovation capital – reflected little change from recent previous year, the company states. Initial-public-offering (IPO) buyers’ purchases slumped in 2011, to 16 IPOs and total proceeds of $857 million, compared to $1.3 billion in 2010, Ernst & Young says.

And while merger and acquisitions (M&As) were up, “big pharma [was] largely absent,” observes Ernst & Young. M&As involving either European or U.S. biotech firms increased to 57 in 2011 from 49 in 2010, though big pharma was the buyer in only seven of those, the company notes. “[This is] a potentially troubling trend given pharma’s critical role in supporting biotech innovation.”

C. Kenna Amos, [email protected], is an Automation World Contributing Editor. 

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