Global Industry Insight-biotechnolgy

Global Industry Insight -2006 Biotechnology

• The biotechnology industry includes firms that use cells and biological molecules for applications in medicine, agriculture and environmental management. • Medical biotechnology, agricultural biotechnology and bioindustry are the specific areas covered in this report • All currency figures are in USD as on Dec 31, 2005 • Estimates are provided wherever data for 2005 is not available

THEMES •

HIGHLIGHTS

•

INDUSTRY OVERVIEW

•

GROWTH DRIVERS

•

ISSUES & CHALLENGES

•

TECHNOLOGY

•

MAJOR MARKETS

•

MAJOR PLAYERS

•

REGULATORY ASPECTS

•

MERGERS & ACQUISITIONS

•

CRITICAL SUCCESS FACTORS

•

FUTURE OUTLOOK

HIGHLIGHTS • The global biotechnology industry is estimated at USD63.31 billion in 2005. This is an increase of around 16% over the year 2004. • Investment in biotechnology was extremely good in 2005 with USD3.5 billion raised from venture capital globally • During the last week of December 2005, the biotechnology index of the American Stock Exchange had hit a five year high • North America has a share of 83.7% of the total market in 2005 • There is a significant change in merger and acquisition trends in 2005 with more and more big pharma companies vying for biotechnology companies. • The Serious Organized Crime and Police Act, introduced in 2005 in the UK, aims to protect damage or economic loss to those connected with animal research organizations • Antibodies derived medicines, genomics, Bio-IT, nanomedicine, favorable regulations, expanding clientele, aging population and life style, financing abilities, positive growth of related industries, Contract Research Organizations are the major growth drivers Biotechnology shines in American stock exchange with the index recording a five year high in December, 2005

HIGHLIGHTS • Royalty stacking, data exclusivity, biopiracy, biosafety, bioterrorism are some of the major issues while food safety and security, sustainability of the environment, human health and medicine are major challenges • Major technologies: Polymerase chain reaction, radioactive tracer, bioprocess technology, monoclonal antibody, cloning, genetic therapy, bionanotechnology, microarray, transgenic plants, bioinformatics • In medical biotech, the top 10 companies in 2005 are Amgen, Genentech, Genzyme, Serono SA, BiogenIdec, Gilead, Chiron Corporation, MedImmune, Invitrogen, Millenium • FDA in the US, Patent Office in the UK, Ministry of Health, labour and welfare in Japan, Australian competition and consumer commission, Drug controller geberal of India are some of the important regulatory bodies across the globe • Chiron, one of the oldest biotech company gets acquired by Novartis in a deal value of USD5100 m • Government initiatives, research and development, entrepreneurial environment, spin-offs and start-up farms, effective commercialization, availability of funds, critical alliances are the critical success factors for the industry Royalty stacking, data exclusivity, biopiracy, biosafety causing wrinkles in forehead of the biotechnology industry manderins

INDUSTRY OVERVIEW

•Global biotech industry revenue in 2005 as estimated is USD63.31 billion against USD54.61 billion in 2004, marking a decline in growth rate to 15.9% • North America is the leading market, holding around 82% of the global share with the US market being the major contributor in the region with almost 80% share •The number of companies has increased by only 1.5% reaching 4483 against 4416 in 2004 •Market is flooded with biotech drugs with nearly 230 being available in 2005 out of which 13 are antibodies

Biotech Industry Revenues 2002-2005 Figure 3.1: Biotech Industry Revenues 70 65

17.0%

17.3%

15.9%

60 USD bn

Biotechnology Industry

20%

15%

55

10.6%

50

63.3

45 40 35

46.6

39.8

10%

54.6

30

5% 2002

2003 Revenue

2004

2005

Growth

Source: Cygnus Research

Global revenue breakup, 2005 Figure 3.1: Biotech Industry Revenues

12.2%

3.9%

4.1%

79.8% US

Europe

Canada

As ia Pac

Source: Cygnus Research

Global biotech revenue at USD63.31 billion in 2005 with North America constituting the major pie, Europe running second with 12%

INDUSTRY OVERVIEW Figure 3.4: Global Industry net loss, 2001-2005

• R&D investment is estimated to increase by 11% reaching USD23.20 billion in 2005

15

10%

5.8

5

4.5

10%

25%

32%

17%

16%

122%

100% 10

50% 10% 6.6

5.3

0% -50%

0

-100% 2001

2002

% change (loss)

2003

2004

2005

loss a % of rev

Net Loss

Source: Cygnus Research

Figure 3.5: R&D expenditure in the industry, 2001-2005 25

22.1 55%

USD bn

20

• BioMarin's Naglazyme, Tercica Inc.'s Increlex, Insmed's IPLEX, Amylin’s Byetta and Symlin, American Pharmaceutical’s Abraxane are some of the major biopharmaceuticals approved in 2005

150%

12.8

-65%

• In 2005, the industry incurred an estimated loss of USD6.2 billion and the overall industry has stumbled over years as its net loss increased by 15% in five years

Figure 3.1: Biotech Industry Revenues

USDbn

• Financing has been increasing over the years and is estimated to touch USD24.51 billion in 2005

15

16.5 46%

34%

23.2 18.6 40%

10

20.9 38%

37%

11%

12%

5

-16%

0 2001

2002

% change (R&D) Annual R&D

2003

2004

60% 50% 40% 30% 20% 10% 0% -10% -20%

2005

R&D as a % of revenue

Source: Cygnus Research

Biotech considered to be the golden goose of future proven by increasing availability of finance in spite of increasing net loss in the recent years

INDUSTRY OVERVIEW • 324 biotech drugs in the pipeline that include 154 medicines for cancer, 43 for infectious diseases, 26 for autoimmune diseases and 17 for AIDS/HIV Agricultural Biotechnology • Biotechnology contributes to agriculture through increasing the yield, lowering the cost of inputs( like pest resistant seeds) , higher quality foods (like lower fat meals) • 21 countries were cultivating genetically modified crops in 2005 all across the globe with France, Czech Republic and Iran accepting membership of the ‘transgenic club’ • Nutritionally-enhanced genetically modified rice is set to become a significant product in the near future, but till then soybean is likely to lead GM seeds sale until 2011 • Japan is the leader in production of amino acids and fermented food products

INDUSTRY OVERVIEW Bioindustry • Replacement of hydrocarbon-based materials with plant as well as microbes based renewable resources and estimates suggest that by 2010, this will affect the chemical industry to the tune of USD160 billion • Biodiesel and bioethanol are two areas showing immense potential and promise to give an alternative to the fossil fuel in future • Sources such as crops, grasses and municipal waste have the potential to reduce the energy dependency on fossil fuels to a great extent using biotechnology • Bioremediation sector is showing potential with companies experimenting the genetic modification of microbes to produce better microbial species for bioremediation • Scientists are combining nanotechnology with biotechnology (bionanotechnology) and getting encouraging results Biodiesel, bioethanol coming up fast to rescue from the ever decreasing fossil fuel reserve and bioremediation going to be an effective way to restore mother earth

GROWTH DRIVERS • Emerging therapy areas & technologies like antibody derived medicines, genomics, Bio-IT, Nanomedicine • Favorable regulations with many countries like India, China, Japan making regulations more in tune with the current needs • Expanding clientele and market hold • Aging population and life style • Financing abilities on the rise with greater market capitalisation (more than USD 300 billion in 2005) • Enhanced entrepreneurial culture • Positive growth of related industries • Growth of contract research organizations • Future could see some new drivers in terms of developing and co-developing companies, increased drug targets Aging population in some countries driving the biotechnology industry like never before with the opportunity to provide better health to the senior citizen making the industry vibrant

ISSUES & CHALLENGES Major challenges include providing alternative to the ever decreasing fossil fuel, food safety and security, sustainability of environment and food safety and security Biotechnology industry currently faces the following issues: • Bioterrorism (Spreading fear through Anthrax, Small pox, plague, botulism) • Human genome project (A mammoth project with gigantic goals) • Cloning and stem cell research giving rise to an ethical issue • Acrimonious environment with genetically modified crops (the US and EU at loggerheads) • Concern of environmentalists over the issue of biosafety with genetically modified crops • Concern of the animal rights activists over the use of laboratory animals Genetically modified crops turning out to be an acrimonious subject between some countries like the US and European Union

ISSUES & CHALLENGES • Biopiracy or the unauthorized procession or utilization of any biological entity which has a place of origin in a different country • Data exclusivity or the practice of safeguarding registration files of a product for some years from being used for a generic version of the product • Royalty stacking which involves a single product encompassing multiple patents in the process of its production The biotechnology industry is trying to address these issues through: • Making technology easily accessible and establishing biotech associations • Garnering financial resources and research organizations working in a tandem • Balanced and accurate dissemination of information • Adopting the methods of clearing houses, consortia and cross-licensing

Issues related to biotechnology industry need to be addressed through balanced and accurate dissemination of information and making technology easily accessible to more and more people

TECHNOLOGY Biotechnology industry runs on the wheels of the following technologies: • Polymerase chain reaction in which enzymes and ligases are used to separate macromolecules • Radioactive tracer used to measure the rate of chemical processes is a radioactive tracer • Bioprocess technology which involves developing specific products utilizing living cells or a physiological process • Biotechnology diagnostics for detecting diseases and genetic conditions • Monoclonal antibody for curing diseases, identification of tumor and others • Cloning (Includes DNA cloning, reproductive cloning, therapeutic cloning) • Genetic therapy which involves correcting disease causing defective genes • Biosensors which convert biological response into electrical signal Monoclonal antibodies finding increasing application in curing diseases and cloning technique providing the scientists with new opportunities in disease treatment

TECHNOLOGY • Biocomputer having immense scope in medical monitoring, healing, disease prevention, and prosthetics • Bionanotechnology which uses biological starting material to formulate devices and phenomena which are between atomic distances and the wavelength of visible light • Microarray technique useful to investigate differences in gene expression • Transgenic plants having artificially inserted genes to produce a desired effect • Nutraceuticals which are so much important in sustaining and enhancing life • Bioinformatics, bioremediation and antisense technology • Proteomics useful for analyzing how a particular protein malfunctions and causes a specific disease • Stem cell technology uses self replicating cells to develop into more specialized cells and has the potential to treat Parkinson’s disease Thanks to the stem cell technology- patients of Parkinson’s disease finding hope of getting cured

MAJOR MARKETS Major Region of Biotech Industry, 2001-2005

100% 80%

40%

• North America consisting of the US and Canada

• Some of the major biotech clusters in North America are California, Maryland, Washington, Quebec, Alberta and Ontario

4% 14%

4% 12%

22%

20%

76%

77%

81%

82%

84%

2001

2002

2003

2004

2005

0%

North America

Europe

Asia Pac

Source: Cygnus Research

North American Biotech Revenue, 2001-2005

50 40

19.3%

23.2% 12.3%

17.0%

30 20 10 0 2001 2002 Global Revenue Global growth

2003

30% 25% 18.2% 20% 15% 15.9% 10%

% Change

60

63.3

Revenue (USDbn)

•The top nine companies of the world are from the US

3% 16%

20%

have a market of almost USD53 billion in 2005 (US: USD50.36 billion and Canada: USD2.65 billion) • In 2005, the market grew by only 18.2% when compared with 19.3% the previous year

3%

60%

North America

• It constituted 83.7% of the global market in 2005

3%

46.6

North America, Europe and Asia Pacific are the major regions with the market share in 2005 being 83.7%, 12.2% and 4.1% respectively

5% 0% 2004 2005 North America Revenue North America Growth

Source: Cygnus Research

North America is the biggest market of biotechnology and harbors nine top most companies of the world

MAJOR MARKETS • Number of companies is estimated to have grown by 0.9% to touch 1934 in 2005 • The number of private companies will be 79% of the total • Being two decades old, the most of the big, well developed companies are from this region • R&D expense increased by 14% to USD23.1 billion in 2005 as compared with 16% in 2004 • Increase in R&D expense is due to the increase in ramp-up cost in bringing new products to the market Biotech Companies in North America, 2001-2005

3%

1500 0.9%

3.0%

1000

-1.4%

1.1% 500 433

407

0 2001 2002 % change (T otal)

395

412

2% 1% 0%

406 -1%

19

-2% 2003

T ot al No. of Companies

Source: Cygnus Research

20

1943 1916 1934 4%

2004 2005 No. of Public companies

19

18

17

17

40% 16

16 34%40%

15

14

14 13 12

60%

12%16% 11%14%

-16% -16%

12 2001

20%

Growth

1886

R&D (USDbn)

1866

Percent Change

No. of Companies

2000

North American R&D Expenditure, 2001-2005

0% -20%

2002

Global grow th in R&D North America R&D

2003

2004

2005

North America R&D Grow th

Source: Cygnus Research

Investment in research and development continues to be the hallmark of the biotechnology industry with 2005 witnessing 14% increase in R&D budget in North American companies

MAJOR MARKETS

Major companies in North America Amgen Genentech

North American biotechnology clusters Cluster

C oun try US

Cluste r

Cluster

Genzyme

Californi a (US)

Biogen Idec

Marylan d

US

New Jersey

US

Alberta

Gilead

Texas

US

Georgi a

US

Ontario

Washin gton

US

Florida

US

Nova Scotia

North Carolina

US

Pennsy lvania

US

New York

US

Conne cticut

US

British Columbi a Saskatc hewan

Source: Cygnus Research

Focus Areas: • Therapeutics like cancer, diabetes • Diagnostics and devices • Genomics and proteomics

Massac husetts

C oun try US

Source: www.bio.org

Quebec

C oun try C ana da C ana da C ana da C ana da C ana da C ana da

• Agri-biotech and marine sciences Cancer and diabetes still remains a major concern to the scientists with the biotechnology industry putting in a lot of efforts in these therapeutic areas

MAJOR MARKETS Europe • Biotech industry of different countries in Europe contributes 0.1% to European GDP • The total revenue in 2005 is estimated to be USD7.7 billion • Europe holds a share of 12.2% of the total market • R&D expenditure is hovering around USD4 billion over the last 5 years European Biotech Revenue, 2001-2005

7.7

7.7

6.5

17.3%

17.0%

7

2.2% 6

15.9%

7.5

3.5%

15% 10% 5% 0%

-6.0%

15%

-0.1% -5%

5.5 5

-10% 2001

2002

Global growt h

Source: Cygnus Research

2003

2004

2005

European Growt h

17.7%

10%

4.25

5.00

4.23

4.15

2001

2002

2003

-1.9% 2004

5% 0% -5%

-10%

-15.4%

-15% -20% Europe R&D

5.5 4.5 3.5 4.16 2.5 1.5 0.5 0.1%-0.5 2005 -1.5 -2.5 -3.5 -4.5 -5.5

Growth

7.5

20% R&D (USDbn)

7.8

Percent Change

8

20%

7.9

10.6%

Revenue (USDbn)

8.5

R&D Investment in Europe, 2001-2005

R&D Growth (Europe)

European Revenue

Source: Cygnus Research

Europe, though second largest biotechnology market, is way behind North America with the total revenue being USD7.7 billion

MAJOR MARKETS • In 2005, there were 1802 companies marking a steady decline from 1881 in 2003 • Major companies are Serono and Actelion (Switzerland), Elan Corporation (Ireland), Qiagen (Germany), Celltech (The UK) • The major clusters are London, Cambridge (The UK), The Greater Geneva Region (Switzerland), BioValley (France), RhineNeckar Triangle (Germany)

The UK biotechnology clusters Cluster

Cluster

London

Cambridge

Oxford

Surrey, Sussex, Kent

Manchester/Liverpool area

York/Sheffield/Leeds

Norwich

Glasgow

Edinburgh

Aberdeen

Dundee

Source: Cygnus Research

2000

1872

1881

1861

1815

1802

1500 0.5%

1000 500

106

103

2001

2002

-1.0% 96

0 2003

% change (T otal) T otal No. of Companies

Source: Cygnus Research

-2.5%

98 2004

-0.7% 97

4% 3% 2% 1% 0% -1% -2% -3%

2005

No. of Public companies

Major European companies % Change

No.of Companies

Biotech Companies in Europe, 2001-2005

Company

Country

Serono

Switzerland

Elan Corporation

Ireland

Qiagen

Germany

Celltech

UK

Actelion

Switzerland

Source: Cygnus Research

MAJOR MARKETS Asia Pacific • Total revenue in 2005 is estimated to be USD2.58 billion in Asia Pacific • Global market share of the region is 4.1% • Total number of companies in 2005 are 747 which is an increase of 9.1% over 2004 • Australia is the largest market in the region with China and India growing very fast • University research is commercialized in Japan and stem cell research gaining importance in Korea

0

2001 2002 2003 Global growth Asia Pac Revenue

Source: Cygnus Research

10% 5% 0%

2004 2005 Asia Pac Growth

530

20% 15%

92

109

2001 2002 % change (T otal) T otal Companies

2003

10%

120 2004

5% 131

Percent Change

15%

602

685

9.1%

20%

747 667

2.7%

26.0%

36.3%

15.9%

0.5

17.3%

1

25%

1.5

17.0% 13.8%

1.0

1.3 28.0%

1.5

30%

800 700 600 500 400 300 200 100 0

10.8%

2.1

2

35% % Change

2.5

40% No. of Companies

2.6

10.6%

Revenue (USDbn)

3

Biotech companies in Asia Pacific, 2001-2005

13.6%

Biotech Revenue in Asia and Asia Pacific, 2001-2005

147

0% 2005 Public companies

Source: Cygnus Research

Asia Pacific is the rising star in the global biotechnology industry with countries like India and China emerging out of their slumber

MAJOR MARKETS • Major companies of this region are CSL Ltd., Novogen (Australia); Takeda, Daiichi and Sumitomo (Japan); CK Life Sciences, Sino Biopharmaceuticals (China); Ranbaxy, Biocon (India) • India in 2005 has framed a draft biotechnology policy • The number of biotechnology ventures in Japan is about 500 in 2005 • Agri-biotechnology, human therapeutics, genomics are the key focus areas of this region Major biotechnology companies in the Asia Pacific region Australia CSL Ltd Novogen

Japan Takeda Chemical Industries Daiichi Pharmaceutical

China & Hong Kong CK Life Sciences Global BioChem Technology Group SIIC Medical Sci. and Tech. Group

India Ranbaxy Laboratories Dr. Reddy’s Laboratories

Peptech

Yamanouchi Pharmaceutical

Metabolic Pharmaceuti cals

Sumitomo Chemical

Global Green Tech Group

Serum Group

Genetic technologies

Chugai Pharmaceutical

Sino Biopharmaceut ical

Panacea

Source: Cygnus Research

Biocon

MAJOR PLAYERS Top 10 biotechnology companies in 2005

Sl. No

Company

Country

1

Amgen

US

Revenue, 2005 (USDm) 12,430

2

Genentech

US

6,633

3

Genzyme

US

2,700

4

Serono SA

Switzerland

2,586

5

BiogenIdec

US

2,423

6

Gilead

US

2,028

7

Chiron Corporation

US

1,920

8

MedImmune

US

1,244

9

Invitrogen

US

1,198

10

Millennium

US

558

Source: Cygnus Research

Amgen, Genentech maintaing their position even in 2005 while Serono SA dislodged from third position by Genzyme

MAJOR PLAYERS Revenue earning of top 5 companies from 2003-2005

14000 12000

USDm

10000 8000 6000 4000 2000 0 2003

2004

Amgen

Genentech

Serono SA

BiogenIdec

Source: Company annual repors

2005 Genzyme

MAJOR PLAYERS Net profit of top 5 companies from 2003-2005

600 400

USDm

200 0 -200

2003

2004

2005

-400 -600 -800 -1000 Amgen

Genentech

Serono SA

BiogenIdec

Source: Company annual repors

Genzyme

MAJOR PLAYERS Financials of top companies from 2004-2005

Revenue FY 2003-2004 (USDm)

Revenue FY 2004-2005 (USDm)

%change

10550

12430

17.8

Genentech

4621

6633

Genzyme

2201

2700

Company

Amgen

Net profit FY2003-2004 (USDm)

Net profit FY 2004-2005 (USDm)

%change

1.81

2.93

61.8

20.12

0.74

1.2

62.1

43.5

86.5

441.5

410.4

Serono SA

2458

2586

5.2

481.3

BiogenIdec

2211

2422

9.5

25.1

Not applicab -105.3 le 160.7

540

MAJOR PLAYERS Financials of top companies from 2004-2005 Revenue FY 2003-2004 (USDm)

Revenue FY 2004-2005 (USDm)

%change

Net profit FY2003-2004 (USDm)

Gilead

1324.6

2028.4

53.1

449.4

813.9

364.5

Chiron Corp

1723.3

1920

11.4

78.9

187

137

Not applic 16.6 able

Company

MedImmu ne

2201

2700

22.6

-3.8

Invitrogen

2458

2586

5.2

88.8

Millenium

2211

2422

9.5

-252.2

Net profit FY 2004-2005 (USDm)

132.4

%chang e

49.9

Not applic -198.2 able

MAJOR PLAYERS

USDm

Financials of top 2 agri biotechnology companies from 2003-2005

9000 8000 7000 6000 5000 4000 3000 2000 1000 0 2003 Monsanto

Source: Company annual repors

2004

2005 Syngenta

MAJOR PLAYERS

USDm

Net profit of top 2 agri biotechnology companies from 2003-2005

900 800 700 600 500 400 300 200 100 0 2003 Monsanto

Source: Company annual repors

2004

2005 Syngenta

REGULATORY ASPECTS Major biotechnology regulators worldwide Particulars North America United States Food and Drug Administration (FDA) Environment Protection Agency (EPA) United States Department of Agriculture (USDA) Foreign Agricultural Services (FAS) Animal and Plant Health Inspection Service (APHIS) United States Trade Representatives (USTR) EUROPE European Patent Office (EPO) European Agency for Evaluation of Medicinal Products (EMEA) Committee for Medicinal Products for Human Use (CHMP) JAPAN Pharmaceutical and Food Safety Bureau Health Policy Bureau Pharmaceutical Affairs and Food Sanitation Council (PAFSC) INDIA Department of Biotechnology (DBT) Ministry of Environment (ME)

REGULATORY ASPECTS Laws Governing Biotechnology Industry • The US: Plant Protection Act, Federal Insecticide Fungicide and Rodenticide Act, Federal Food Drug and Cosmetic Act (FFDCA), Toxic Substance Control Act (TSCA), Virus-SerumToxin Act • European Union: Legal Protection of Biotechnological Inventions, Contained Use of Genetically Modified Organisms • Japan: Japan Patent Law, Food Sanitation Law, Food Safety Law • India: Environment Protection Act, Rules for the Manufacture, Use/Import/Export and Storage of Hazardous Microorganisms/Genetically Engineered Organisms or Cells, Revised Recombinant DNA Safety Guidelines, Biological Diversity Act, National Seed Policy New Laws introduced in 2004 and 2005 • The Serious Organized Crime and Police Act, the UK • Patents Act 2004, the UK • Patents (Amendment) Ordinance, 2004, India • National Biotechnology Development Strategy (Draft), 2005, India • New Law on GMO, 2005, Croatia Violent agitations by animal rights activists expected to be controlled through The Serious Organised Crime and Police Act in the UK

MERGERS & ACQUISTIONS Drivers for M&A • Product and market extension • Acquire new technology

Total value of M&A deals (USD bn)

• Operate in new geographies • Wide and cost effective research and development • Finance from investment • Implementation of core capability

Trends in M&A, 2005 • Pharma big brothers becoming more and more interested in biotechnology companies • Total value of deals increased by 80% to 19.8 billion in 2005

20 Value (USD bn)

• Gaining critical mass

25 19.8 14.8

15

11

10 5 0 2005

2004

2003

T otal value (USD bn)

Source: Securities Data Corp

Biotech industry becoming increasingly appealing to the pharma big brothers and as a result promises fast growth in the near future

MERGERS & ACQUISTIONS Top 10 deals of 2005 Target / Merger Partner

Value(USD m)

Country

Bidder / Merger partner

Country

Novartis

Switzerland

Chiron Corporation

US

5,100

Allergan Medco Health Solutions

US

Inamed

US

3200

US

US

2,300

Pfizer Inc

US

Accredo Health, Inc. Vicuron Pharmaceuticals, Inc.

US

1,900

Omnicare Inc.

US

Neighborcare, Inc.

US

1,800

Novartis Ag ADS Shire Table 10.1Cont’d Pharmaceutic als

Switzerland

EON Labs, Inc.

US

1,700

UK

US

1,600

Genzyme Corporation

US

Transkaryotic Therapies Bone Care International, Inc.

US

600

Pfizer Inc

US

Angiosyn Inc.

US

527

Crucell

Netherlands

Berna Biotech

Switzerland

448

Top 10 deals in 2005*

MERGERS & ACQUISTIONS Top 10 deals of 2004 Target / Merger Partner

Country

Bidder / Merger partner

Country

Value (USD m)

Celltech

UK

UCB

Belgium

2,747

Tularik

US

Amgen

US

1,457

ILEX Oncology

US

Genzyme

US

1,050

Atrix Laboratories

US

QLT

Canada

833

Pfizer’s Nerviano R&D Centre

US

Congregazione dei Figli dell’ Immacolata Concezione

Italy

372

Ascent Pediatrics

US

BioMarin Pharmaceutical

US

190

Bioglan Pharma

US

Bradley Pharmaceuticals

US

183

Monsanto

US

Channel Bio Corp

US

120

Shire Biologics

Canada

ID Biomedical

Canada

116

Dharmacon

US

Fisher Scientific

US

80

MERGERS & ACQUISTIONS Top 10 deals of 2003 Target / Merger Partner

Country

Bidder / Merger partner

Country

Value (US D m)

Biogen

US

IDEC pharmaceuticals

US

6,830

Scios

US

Johnson and Johnson

US

2,323

Esperion Therapeutics

US

Pfizer

US

1,281

Powder Ject Pharma

US

Chiron

US

881

SangStat Medical

US

Genzyme

US

614

Applied Molecular Evolution

US

Eli Lilly

US

418

Idenix Pharma

US

Novartis

Switzerland

255

Novuspharma

Italy

Cell Therapeutics

US

237

Axovan

Switzerland

Actelion, Switzerland

Switzerland

191

Ribapharma

US

ICN Pharmaceuticals

US

168

Source: *Pricewaterhousecoopers & **Burrill & company, 2005

CRITICAL SUCCESS FACTORS

Critical success factors of biotechnology industry • Government initiatives all across the globe in general and some countries like Singapore, China, India in particular • Research and development which is marked by increasing amount of R&D investment (Global R&D investment in 2005 was USD23 billion, an increase of 11%) • Vibrant entrepreneurial environment with the presence of more and more entrepreneurs in the biotechnology industry • Mix of companies in value chain and their proportionate distribution marked by the presence of companies at different stages of growth • Spin-offs and start-up firms forming incubators like Massachusetts Biotechnology Research Park

More and more countries realizing the potential of biotech in solving some of the national issues of health, environment and industry all across the globe

CRITICAL SUCCESS FACTORS • Effective commercialization with importance of operational performance, validation of scientific concept and mobilization of funds • Increased finance from venture capital and IPO with USD17.2 billion dollar raised globally in 2005 • Critical alliances and partnerships Future success factors • Cheap and affordable biotechnology products • Reduction in development time with increasing utilization of bioinformatics and cheminformatics

Future will demand cheaper and more affordable use of biotechnology innovations and further access to the common people of the globe

FUTURE OUTLOOK Biotechnology market is growing at a compounded annual growth rate (CAGR) of 15.2% till 2010 Global Biotechnology Market, 2005-2010 140

128.46 111.51

Value (USDbn)

120

96.79

100 80

72.93

84.025

63.31

60 40 20 0 2005

2006

2007

2008

2009

2010

Market value Source: Cygnus Research

Biotechnology is set for an explosion with increasing global market, more number of players and more benefits coming out from it

FUTURE OUTLOOK By 2010, Asia Pacific market is expected to grow to 6% with the share of North America dropping to 76% Market share of different regions

12%

Estimated Share 2010

Market Share 2005 4% 18%

6%

84% North America

Europe

Source: Cygnus Research

Asia-Pacific

76%

North America

Europe

Asia-Pacific

FUTURE OUTLOOK • Issues and challenges of future in terms of shortage of skilled work force and patent related litigations • Biotechnology companies would be calling the shots in the future merger and acquisitions all across the globe • Amgen is collaborating with Abgenix on Panitumumab that showed positive results in early tests for the treatment of colon cancer • Genentech has three promising products: Herceptin, Rituxanand Avastin • Future of biotechnology booming with about USD21 billion worth of branded drugs losing their patents in 2006 and a total of USD100 billion becoming off patented in the next five years • India is set to be one of the five emerging biotech leaders in Asia Pacific, along with Singapore, Taiwan, Japan and Korea • Future of genetically modified crops seems to be turbulent but acerage going to increase Future biotechnology industry is running the risk of facing the grevious problem of shortage of skilled workers- a wake up call for policy makers of all countries