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Biotechnology in Europe and
Elsewhere – an Overview
Simon Smith
Partner, Blake Lapthorn Linnell
16 May 2006
European Biotechnology
 Employed approximately 73,600 people (82,400
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including Switzerland)
Had 420 new drugs in clinical development or
awaiting approval
Generated €16.3 billion of revenue
Raised €1.3 billion of equity investment in 2003
Formed 100 new companies
European Biotechnology
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As in previous years, the UK was the single
biggest contributor to this picture. In 2003 the UK
sector:
Comprised 455 companies
Employed approximately 22,400 people
Had 224 new drugs in clinical development or
awaiting approval – half the European total
European Biotechnology
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The industry in the UK:
Generated £3.6billion of revenue - a 19%
increase over the 2001-2002 period
Raised £392 million of equity investment
Formed 36 new companies
Korean Biotechnology
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Grew from $1.4 billion in 2002 to $1.95
billion in 2004, an average YoY increase of
22.5%
The medical sector accounts for about 60%
of Korea’s biotechnology industry
Approximately 600 companies
Employ approximately 12,138 people, 54.4%
of who are in R&D, and 45.6% in production
Australian Biotechnology
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Approximately 370 biotechnology companies
and 600 medical device companies
54 biotechnology firms listed on the ASX
Approximately 6000 people employed
Market capitalisation of Australian
biotechnology firms listed on the Australian
Stock Exchange (ASX) is A$7.132 billion
(US$5.439 billion)
Indian Biotechnology
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265 firms registered in India, over 75% of
which were incorporated in the last five years
The top five companies were homegrown;
Indian firms account for 62% of the
biopharma sector and 52% of the industry as
a whole
Aiming to grow the industry to $5 billion in
revenues generated by 1 million employees
by 2009
Early stage pharma and biotech alliances
 Capital resources
 Clinical development
 Regulatory assistance
 Manufacturing
 Sales & Marketing
 Innovative drugs
Pharma
Biotech
 New technologies
Early stage pharma and biotech alliances
 Capital resources
 Clinical development
 Regulatory assistance
 Manufacturing
 Sales & Marketing
 Innovative drugs
Pharma
Biotech
 New technologies
Combining pharma-biotech expertise
Pharma
Biotech/Drug Delivery Company
 Access to technology
 Discovery/development resources
 Access to products
 Commercialisation resources
Combined innovation/value
 Validation of scientific approach
 Leverage time to market
 Ability to bring projects forward that could not exist without partnership
 Creation of new IP/technology/products
Challenges and Opportunities
Challenges
 Declining success rates
in new drug development
 Rising cost of drug
development and
commercialisation
 Increasing pressure on
return
 Increasing price
sensitivity and growing
reimbursement pressures
 Greater regulatory
scrutiny
Opportunities
 Rising disease incidence
globally
 High unmet, medical needs
eg Alzheimer’s, oncology
etc..
 New technologies for
research and development
 Expanding success, income
and insurance coverage in
key emerging pharma
markets
 Greater patient engagement
in health care decisions
The Market for Early Stage
Research Deals
1200
1000
800
600
No. of Drugs
400
200
0
Launched
Pre-registration
Phase II
Phase I
Preclinical
Recent Novartis early stage deals
Licence
Headline value
Rights acquired
Arakis & Vectura
April 2005
$15m each upfront. Up to $172.5m
each in milestones plus royalties
AD237 which is in Phase II trials as
a potential chronic obstructive
pulmonary disease treatment
Avanir Pharmaceuticals
April 2005
$2.5m upfront and eligibility for up
to $2.5, research funding per year
for 4 years plus milestones and
royalties with total value of up to
$200m
Develop orally active small
molecule therapeutics targeting
macrophage migration inhibitory
factor to treat inflammatory
diseases
Hybridon (now called Idera
Pharmaceuticals)
May 2005
$4m licence fee upfront and up to
$132m based upon achievement of
milestones, plus royalties
Develop and commercialise
immunomodulatory
oligonucleotides that are toll-like
receptor 9 agonists
Recent Novartis early stage deals
Licence
Headline value
Rights acquired
Anadys Pharmaceuticals
June 2005
$20m upfront. Up to $550m in
milestones
Agreement covers development,
manufacture and commercialisation
of ANA975 and additional TLR7
oral drugs
Arrow Therapeutics
June 2005
$25m upfront. Up to $232m, in
milestones
Development and commercial sale
of A6044 which is a small molecule
oral benzodiazepine in Phase II
trials for the treatment of
respiratory syncytial virus infection
Astex Therapeutics
December 2005
Upfront and deferred equity
payments of $25m with up to
$520m in fees and equity
payments, option payments and
milestones
Focuses on 2 experimental
onocology drugs of the cell cycle
inhibitor family, one in pre-clinical
and one in Phase I development
But Bear in Mind Collaboration Can
Be a Stepping Stone…
Acquiror
Target
Headline value
Deal
Novartis
Alnylam
Pharmaceuticals
Initial payments of
approx $56.8m
Develop RNAi therapeutics for pandemic
influenza. Collective payments could be
over $700m, not including royalties
Pfizer
Vicuron
$1.9bn
Gain access to pipeline of anti-infectives
for both hospital-based and communityacquired infections
GSK
Covixa
$300m
Partner for vaccine adjuvants and the
development of the oncology product
Bezzar for the treatment of non-Hodgkin’s
lymphoma
AstraZeneca
CAT
£75m for 20% stake
5 year discovery initiation phase for a
minimum of 25 discovery programmes
Merck licensing strategy results in high
value alliances
 Over $9.5 billion, or 44% of Merck’s sales, are
attributed to alliance products and patents
Key products:
 Fosamx
 Cozaar/Hyzaar
 Nexium
 Varivax
 Recombivax HB
Licensed products or
patents
44% of total sales
2005 Revenues : $22 billion
 In addition, through the partnership with Schering-Plough, Merck
shares in the profits of ZETIA and VYTORIN sales: $2.4 billion in 2005
Partnerships - of increasing importance to
Merck
# of alliances formed
60
47
50
50
44
38
40
30
22
23
2000
2001
20
10
10
0
1999
2002
2003
2004
2005
Questions?
[email protected]