C&EN: TODAY'S HEADLINES - Biotech Industry Continues To Grow

ANN THAYER

The latest annual biotechnology industry report from Ernst & Young, “Beyond Borders,” offers for the first time a comparative global analysis. By many measures,
the industry continued to grow in 2002, even if somewhat more slowly than in recent years. The bleak economic environment for financing and stocks has had serious repercussions, however.

“Companies from Singapore to San Francisco grapple with a market depression that is changing the face of the 25-year-old biotechnology industry,” bringing the first significant consolidation in the industry’s history, Ernst & Young reports. In the long run, the consultants believe, this consolidation “should yield a stronger, more economically viable sector.”

Although the number of companies increased by 2% in 2002—to 4,362—those publicly traded fell by 3% to 613. Global employment slipped 1%. Europe was in decline, with no growth in companies and 6% fewer jobs, while the number of companies in the Asia-Pacific region climbed by 17%, with 24% more workers.

Having solid fundamentals, the industry will recover, the consultants assert. In 2002, total revenues gained 15% to $41.4 billion, and R&D spending increased 34% to $22.0 billion. However, the overall net loss ballooned by 116%, reaching $12.5 billion. Still, profitable companies are multiplying, particularly in the U.S.

On the basis of revenue growth, robust pipelines, more efficient product development, and belt-tightening during this current cash crunch, the industry could reach a major milestone within five years: namely, its first profitable year, says Michael Hildreth, Ernst & Young’s Americas biotechnology director.

GLOBAL U.S. continued to lead in biotechnology in 2002
($ BILLIONS)	U.S.	EUROPE	CANADA	ASIA-PACIFIC	TOTAL
Revenues	$30.3	$8.3	$1.5	$1.4	$41.4
R&D spending	16.3	5.0	0.6	0.2	22.0
Net loss	9.4	2.8	0.3	0.1	12.5
Employees	142,900	33,304	7,785	9,764	193,753
Public companies	318	102	85	108	613
Total companies	1,466	1,878	417	601	4,362