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

Biotechnology Industry Biotech Industry Revenues 2002-2005

Figure 3.1: Biotech Industry Revenues

•Global biotech industry revenue in 2005 70

65 17.0%
17.3% 15.9%
20%

as estimated is USD63.31 billion against 60

15%

USD bn
55

USD54.61 billion in 2004, marking a

10.6%
50
63.3
45 10%
decline in growth rate to 15.9% 40
35 39.8
46.6
54.6

30 5%
• North America is the leading market, 2002 2003 2004 2005

holding around 82% of the global share

Revenue Growth

with the US market being the major

Source: Cygnus Research

contributor in the region with almost 80% Global revenue breakup, 2005
Figure 3.1: Biotech Industry Revenues
share
3.9% 4.1%
•The number of companies has increased 12.2%

by only 1.5% reaching 4483 against 4416

in 2004
79.8%
•Market is flooded with biotech drugs
US Europe Canada As ia Pac
with nearly 230 being available in 2005
Source: Cygnus Research
out of which 13 are antibodies
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

Figure 3.1: Biotech Industry Revenues
• Financing has been increasing over the 15
12.8
150%

years and is estimated to touch USD24.51 10

100%

25%
122%
USDbn
billion in 2005

17%
32% 50%
16% 10% 10%
10%
6.6
0%
5.8

-65%
5

• In 2005, the industry incurred an estimated 4.5

5.3
-50%

loss of USD6.2 billion and the overall industry 0

2001 2002 2003 2004 2005
-100%

has stumbled over years as its net loss % change (loss) loss a % of rev Net Loss

increased by 15% in five years Source: Cygnus Research

• R&D investment is estimated to increase by Figure 3.5: R&D expenditure in the industry, 2001-2005

11% reaching USD23.20 billion in 2005 25 22.1

23.2
60%
50%
20 55% 18.6 20.9 37%
40%

• BioMarin's Naglazyme, Tercica Inc.'s 16.5

USD bn
15 30%
34% 40% 38%
46% 11% 20%

Increlex, Insmed's IPLEX, Amylin’s Byetta and 10

12%
10%
0%
5
Symlin, American Pharmaceutical’s Abraxane 0
-16% -10%
-20%
are some of the major biopharmaceuticals 2001 2002 2003 2004 2005

approved in 2005
% change (R&D) R&D as a % of revenue
Annual R&D

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 (bio-
nanotechnology) 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

North America, Europe and Asia Pacific are the
major regions with the market share in 2005 being 100%
3% 3% 3% 4%
4%
83.7%, 12.2% and 4.1% respectively 80%
22% 20% 16% 14% 12%

60%
North America 40% 76% 77% 81% 82% 84%

• North America consisting of the US and Canada 20%

0%
have a market of almost USD53 billion in 2005 (US: 2001 2002 2003 2004 2005

USD50.36 billion and Canada: USD2.65 billion) North America Europe Asia Pac

Source: Cygnus Research

• It constituted 83.7% of the global market in 2005
North American Biotech Revenue, 2001-2005
• In 2005, the market grew by only 18.2% when
compared with 19.3% the previous year 30%
60 19.3%
23.2%

Revenue (USDbn)
25%
50
•The top nine companies of the world are from the 17.0%

% Change
12.3% 18.2%
20%
40

US 30 15%
15.9%

63.3
10%

46.6
20
10 5%
• Some of the major biotech clusters in North 0 0%

America are California, Maryland, Washington, 2001 2002

Global Revenue
2003 2004 2005
North America Revenue
Quebec, Alberta and Ontario Global growth 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 North American R&D Expenditure, 2001-2005

1866 20
2000 1886 1943 1916 1934 4%
19 60%
19
3%
No. of Companies

R&D (USDbn)
18
1500 17
Percent Change

2% 17 40%
3.0% 0.9% 16

Growth
1000 1% 16
20%
1.1% -1.4% 15 34%40% 14
0% 12%16% 11%14%
500 14 0%
412 406 -1%
433 407 395 13 -16%
-16%
12
0 -2% 12 -20%
2001 2002 2003 2004 2005 2001 2002 2003 2004 2005
% change (T otal) No. of Public companies
Global grow th in R&D North America R&D Grow th
T ot al No. of Companies North America R&D

Source: Cygnus Research 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

North American biotechnology clusters
Amgen Cluster C Cluste C Cluster C
oun r oun oun
Genentech try try try
Californi US Massac US Quebec C
Genzyme a (US) husetts ana
da
Marylan US New US Alberta C
Biogen Idec d Jersey ana
da
Gilead Texas US Georgi US Ontario C
a ana
Source: Cygnus Research da
Washin US Florida US Nova C
gton Scotia ana
Focus Areas: North US Pennsy US British
da
C
Carolina lvania Columbi ana
• Therapeutics like cancer, diabetes a da
New US Conne US Saskatc C
• Diagnostics and devices York cticut hewan ana
da
Source: www.bio.org
• Genomics and proteomics
• 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 R&D Investment in Europe, 2001-2005
8.5 20%
7.9 20% 17.7% 5.5
8 7.8 15% 15% 4.5
Revenue (USDbn)

7.5 7.7 7.7

4.25 4.23 4.15 4.16 3.5
5.00
Percent Change
7.5 10%

R&D (USDbn)
10% 2.5
15.9%
17.3%
17.0%

1.5
10.6%

5%

Growth
7
0.5
5% 0%
6.5 -1.9% 0.1%-0.5
2.2% -5% 2001 2002 2003 2004 2005 -1.5
3.5%
0%
6 -6.0% -10% -2.5
-0.1%
-15.4% -3.5
5.5 -5% -15% -4.5
-20% -5.5
5 -10%
2001 2002 2003 2004 2005 Europe R&D R&D Growth (Europe)
Global growt h European Growt h European Revenue

Source: Cygnus Research 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 The UK biotechnology clusters

a steady decline from 1881 in 2003 Cluster Cluster

• Major companies are Serono and Actelion London Cambridge

(Switzerland), Elan Corporation (Ireland), Oxford Surrey, Sussex, Kent

Qiagen (Germany), Celltech (The UK) Manchester/Liverpool area York/Sheffield/Leeds

Norwich Glasgow
• The major clusters are London, Cambridge Edinburgh Aberdeen
(The UK), The Greater Geneva Region Dundee
(Switzerland), BioValley (France), Rhine-
Neckar Triangle (Germany)
Source: Cygnus Research

Biotech Companies in Europe, 2001-2005

1872 1881 1861 1815 1802

Major European companies
2000 4%
No.of Companies

3% Company Country
1500
% Change

2%

1000
0.5%
-1.0% -2.5% -0.7%
1% Serono Switzerland
0%
500 103
-1% Elan Corporation Ireland
106 96 97 -2%
98
0 -3% Qiagen Germany
2001 2002 2003 2004 2005
Celltech UK
% change (T otal) No. of Public companies
Actelion Switzerland
T otal No. of Companies
Source: Cygnus Research
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
Biotech Revenue in Asia and Asia Pacific, 2001-2005 Biotech companies in Asia Pacific, 2001-2005

3 40% 747
800 667 685 20%
2.6
35% 700 602
2.5
Revenue (USDbn)

530

No. of Companies
2.1 30% 600 15%

Percent Change
2 500

9.1%
25%
% Change

1.5
1.3 400 10%
36.3%

1.5 1.0 20%

13.6%
26.0%

2.7%
10.8%
300
28.0%

15%
1
17.3%

15.9%

200 5%
17.0%
13.8%

10%
100
10.6%

0.5 109 120 131 147

5% 92
0 0%
0 0% 2001 2002 2003 2004 2005
2001 2002 2003 2004 2005 % change (T otal) Public companies
Global growth Asia Pac Growth T otal Companies
Asia Pac Revenue
Source: Cygnus Research 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

China & Hong

Australia Japan India
Kong
Takeda
CK Life Ranbaxy
CSL Ltd Chemical
Sciences Laboratories
Industries Global Bio-
Daiichi Chem Dr. Reddy’s
Novogen
Pharmaceutical Technology Laboratories
Group
SIIC Medical
Yamanouchi
Peptech Sci. and Tech. Biocon
Pharmaceutical
Group
Metabolic
Sumitomo Global Green
Pharmaceuti Serum Group
Chemical Tech Group
cals
Sino
Genetic Chugai
Biopharmaceut Panacea
technologies Pharmaceutical
ical
Source: Cygnus Research
 MAJOR PLAYERS

Top 10 biotechnology companies in 2005

Sl. No Company Country Revenue, 2005

(USDm)
1 Amgen US 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
10000
8000
USDm

6000
4000
2000
0
2003 2004 2005
Amgen Genentech Genzyme
Serono SA BiogenIdec

Source: Company annual repors

 MAJOR PLAYERS

Net profit of top 5 companies from 2003-2005

600

400

200

0
USDm

2003 2004 2005

-200

-400

-600

-800

-1000
Amgen Genentech Genzyme
Serono SA BiogenIdec

Source: Company annual repors

 MAJOR PLAYERS

Financials of top companies from 2004-2005

Revenue Revenue Net profit Net profit FY

FY 2003-2004 FY 2004-2005 FY2003-2004 2004-2005
Company (USDm) (USDm) %change (USDm) (USDm) %change

Amgen 10550 12430 17.8 1.81 2.93 61.8

Genentech 4621 6633 20.12 0.74 1.2 62.1

Genzyme 2201 2700 43.5 86.5 441.5 410.4

Not
applicab
Serono SA 2458 2586 5.2 481.3 -105.3 le

BiogenIdec 2211 2422 9.5 25.1 160.7 540

 MAJOR PLAYERS

Financials of top companies from 2004-2005

Revenue Revenue Net profit Net profit FY

FY 2003-2004 FY 2004-2005 FY2003-2004 2004-2005 %chang
Company (USDm) (USDm) %change (USDm) (USDm) e

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
MedImmu applic
ne 2201 2700 22.6 -3.8 16.6 able

Invitrogen 2458 2586 5.2 88.8 132.4 49.9

Not
applic
Millenium 2211 2422 9.5 -252.2 -198.2 able
 MAJOR PLAYERS

Financials of top 2 agri biotechnology companies from 2003-2005

9000
8000
7000
6000
5000
USDm

4000
3000
2000
1000
0
2003 2004 2005

Monsanto Syngenta

Source: Company annual repors

 MAJOR PLAYERS

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

900
800
700
600
500
USDm

400
300
200
100
0
2003 2004 2005

Monsanto Syngenta

Source: Company annual repors

 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-Serum-
Toxin 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
Total value of M&A deals (USD bn)
• Acquire new technology
• Operate in new geographies
• Wide and cost effective research and
25
development 19.8
20
• Gaining critical mass

Value (USD bn)

14.8
15
• Finance from investment 11
10
• Implementation of core capability 5

Trends in M&A, 2005 0

2005 2004 2003
• Pharma big brothers becoming more and more
interested in biotechnology companies T otal value (USD bn)

Source: Securities Data Corp

• Total value of deals increased by 80% to 19.8
billion in 2005

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 Value(USD

Partner Country Bidder / Merger partner Country m)
Top 10 deals in 2005*
Novartis Switzerland Chiron Corporation US 5,100
Allergan US Inamed US 3200
Medco Health
Solutions US Accredo Health, Inc. US 2,300
Vicuron Pharmaceuticals,
Pfizer Inc US Inc. US 1,900
Omnicare Inc. US Neighborcare, Inc. US 1,800
Novartis Ag ADS Switzerland EON Labs, Inc. US 1,700
Shire
Table 10.1Cont’d
Pharmaceutic
als UK Transkaryotic Therapies US 1,600
Bone Care International,
Genzyme Corporation US Inc. US 600
Pfizer Inc US Angiosyn Inc. US 527
Crucell Netherlands Berna Biotech Switzerland 448
 MERGERS & ACQUISTIONS

Top 10 deals of 2004

Target / Merger Value

Partner Country Bidder / Merger partner Country (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 Congregazione dei Figli dell’

Centre US 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

Value
(US
Bidder / Merger D
Target / Merger Partner Country partner Country 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
120 111.51
96.79
Value (USDbn)

100 84.025
72.93
80
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

Market Share 2005 Estimated Share 2010

4% 6%
12% 18%

84%
76%

North America Europe Asia-Pacific North America Europe Asia-Pacific

Source: Cygnus Research

 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