Trends in Biotech/Pharma and Biotech Patenting

1. The number of life science venture capital firms is decreasing in the US as reported by The Big Red Biotech Blog and Life Sci VC.

2. FiercePharma reports on 8 Aug 12 on fast-growing generics companies which are taking advantage of big pharma’s patent cliffs. Sagent Pharmaceuticals saw an increase of 106% in sales last year and Ranbaxy made $500 million from Lipitor in its the first 6 months on the market. On occasion big pharma have teamed up with the generics-maker to take advantage of their low cost production and access to markets in the developing world.

3. In the past big pharma would acquire biotechs in cash-based deal and then take control. Now most transactions are based on predetermined milestones allowing risks to be shared going forward (see techdirt).

4.  Patent Office always seem to get stricter.  The European Patent Office has in recent years become increasingly strict on added matter, priority entitlement, searchability, industrial applicability of gene sequences and polymorphisms and definitions of disease conditions.

5. Orphan drugs are becoming an increasingly important area. In the last decade the growth rate in revenue has been 25.8% (versus 20.1% for the non-orphan drug sector).  The market is now worth $50 billion and is expected to keep growing at a high rate.  The biggest disease category for orphan drugs is cancer. (see FierceBiotech)

6. Big pharma are using a lot of their surplus cash to buy back their stock.  However this does not seem to correlate with a rise in the value of their shares, and so it is questionable whether it is a good use of their money. $75 billion of stock purchases will have been completed between January 2011 and December 2012 by the top 15 big biopharma companies.  The money could instead be used to fund smaller biotech companies (see Life Sci VC).

7. According to a report by Shareholder Representatiive Services analysing 47 undisclosed pharma and medtech deals since 2008, nearly 50% of the near-term milestones have been paid or are likely to be paid.  It’s only a matter of time before milestone-buying funds get raised to monetise these payment streams (Life Sci VC).

8. In the US the chasm between small biotechs and large biotechs is increasing. 90% of small biotechs reported losses in 2011, whilst the sector grew from $76m from $62m (Big Red Biotech).


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