Wednesday, June 20, 2012
BOSTON -- The bioscience industry has financially rebounded from the 2008 recession. But the industry, which requires huge financial investments in research, development, and clinical trials in order to bring new products to the marketplace has an unclear future, according to the 26th annual Ernst & Young financial analysis of the bioscience industry in the United States and Europe.
The report, issued this week at the BIO International Convention, shows that the bioscience industry's revenues in the United States and Europe is up 10 percent, research and development spending is up 9 percent and the number of employees in the industry has increased 4 percent.
Merger and acquisition activity also rebounded with 37 deals last year compared to 26 the year before. And financing has also rebounded with bioscience business activity drawing $29.8 billion in funding, the second most in the history of the 26-year-old report.
But the positive report overshadows some troubling trends, the report added.
Net income dropped from $5.2 billion in 2010 to $3.3 billion last year, which is one reason investors are shying away from biotechnology which is expensive to fund and which has long lead-times between the discovery of an idea and the commercialization of products.
In addition, it said, more than half of that "financing'' wasn't used to fund new ideas, it was funding that went to several very large corporations that were taking advantage of lower interest rates to refinance or take on new debt.
"That lack of mid-stage investments, such as venture capital, is one of the major challenges in getting promising discoveries from the initial investment stage to commercialization in Wisconsin,'' said Tom Still, president of the Wisconsin Technology Council. "We have to address it. We have a lot of great ideas and products that will prove to be very successful. We need the capital to help these companies succeed.''
The industry needs dramatic new ways to streamline the expensive process of developing new products, testing them, and winning regulatory approval, the report said.
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