• WisBusiness

Wednesday, May 05, 2010

 12:39 PM 

Signs of biotech industry stress still apparent

CHICAGO -- Has the much-anticipated "BioCentury" ended after only a decade?

That unspoken question has rippled through the 2010 BIO International Convention, where the shock waves caused by the collapse of the financial markets, regulatory issues and even health-care reform have left some observers nervous about what will come next for an industry that had grown accustomed to rapid growth.

The annual BIO convention is traditionally a time when scientists, business leaders, major pharmaceutical companies and investors come together to celebrate what has been another banner year. And, for many of the 15,000 or so participants on hand in Chicago's McCormick Place, that's still true.

But some surveys, reports and regulatory updates at the convention have sounded alarms about specific threats to the biotech industry -- and particularly those segments that are more dependent on venture capital or subject to long regulatory delays.

A paper released by Deloitte Touche Tohmatsu went so far as to declare biotech's future "grim" if a convergence of threats continue, not the least of which is a shortage of early stage companies in the pipeline in some sectors. Deloitte also surveyed 281 biotech executives in late 2009, and 70 percent said they feared 20 percent to 40 percent of all biotech companies existing at the time would be gone within five years.

At a Monday news conference unveiling the 2010 industry report by the Battelle Memorial Institute and BIO, speakers and audience members cited a litany of challenges: less venture capital due largely to the collapse of the financial markets, continued patent backlogs, more regulatory delays at the U.S. Food and Drug Administration, the delay in reauthorizing the federal Small Business Innovation Research grant program, attacks on the Bayh-Dole bill that accelerated transfer of university research, and even some provisions of the health-care reform bill.

That bill could reduce federal reimbursement payments over time to physicians and health-care centers that use newer drugs, medical devices and other products to treat patients. As the government increasingly looks over the shoulders of prescribing physicians, some speakers said, they will be less willing to adopt innovation.

Others think the future remains bright for biotech, especially over the long term. Biotechnology has only begun to search for diagnostics and cures for most major diseases, and opportunities to create more and better foods, fuels and environmental solutions are also relatively new.

One relative optimist is Wisconsin native G. Steven Burrill, who spoke at a Wisconsin reception and also unveiled his 24th annual report on the state of the industry.

"It's a fabulous time to be alive in the industry," said Burrill, founder of Burrill & Co., a merchant bank that has invested heavily in the sector. He said biotechnology is poised to solve some of the world's most pressing problems and its companies are, by and large, adapting to change.

"Many were writing our obits last year and we simply proved them wrong," Burrill said.

The "Bio-Century" marches on, but some of the problems facing biotechnology will continue to challenge the industry it as the decade continues.



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