Friday, 22 August 2014

Uncertainties over Biotech

While major pharmaceutical companies dominate industry R&D and new drug output it is important not to overlook the contribution that smaller companies make to their drug pipelines. In particular, the biotech industry has been an increasingly popular source of products for companies looking at licensing options. The need for new products has grown as some of the larger companies face several patent expiries for major products.

European governments also realised that a vibrant biotech sector could contribute to the economy and act as a generator of employment. Therefore, several governments attempted to boost the biotech sector through measures such as tax incentives. When R&D is at an early stage, investors can be hard to find and so government support measures are crucial for companies. Nevertheless, in the longterm, external funding from investors and deals with larger companies are the main requirements for biotech company growth. In these respects, European companies still struggle forfunding compared with their US rivals.

Sadly, the European sector has started to experience a decline in support because of the region’s economic problems. A number of national governments may be wavering in their commitment to the sector. This national government uncertainty is at odds with the official EU Strategy for 2020 which is focused on increasing productivity and specifically mentions small and medium enterprises (SMEs), such as those in the biotech sector, as playing a key role in achieving regional growth.

The clinical impact that the current generation of biotech products have had illustrate the exciting potential that biotechnology has to tackle disease. For example, before the advent of the interferon beta MS treatments, the condition had received inadequate attention, much to the disappointment of patients. However, the growing use of biotech drugs is also driving up the costs involved for medical treatment and some healthcare systems have shown a reluctance to provide the necessary funding.

In the current European economic climate, the funding of new biotech treatments has become a particularly contentious issue. Originator companies state that the high price of biotech therapies is because they must recoup their heavy R&D investment, but this argument has not been enough to satisfy politicians. As a result of rising costs, some European governments have been looking at controversial ways in which they can slow spending on these types of products. The impact of these types of interventions will have a strong bearing on the outlook for Europe’s biotech sector.

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