By
Donald Zuhn --
On
Wednesday, while the biotech industry gathered in Chicago for the 2010 BIO
International Convention, Deloitte Touche Tohmatsu (DTT) released a white paper
suggesting that the global recession has likely permanently reshaped the life
sciences industry. To assess the
long- and short-term effects of the recession, and determine whether the
financial crisis was just a difficult but not insurmountable event for life
sciences companies or a turning point for the industry, Deloitte surveyed 281
senior industry executives and a number of industry leaders during the fall of
2009. The paper, entitled
"The future of the life sciences industries: Aftermath of the global
recession,"
was jointly prepared with the Economist Intelligence Unit, the
business information arm of The Economist Group, which publishes The Economist.
In the paper, DTT reports that 44% of respondents believe that 20 to 40% of existing
biotech companies won't exist in five years as a result of the global recession. Senior industry executives responding
to the survey were even more pessimistic, with 68% predicting the elimination
of between 20 and 40% of current biotech companies. More than 65% of the executives also indicated that the
recession had moderately to significantly negatively affected their companies.
The
survey respondents noted that companies making it past the five-year mark
post-recession, would do so by focusing on innovation. Unfortunately, 43% respondents
indicated that their companies had reduced R&D spending and were focusing
instead on products providing immediate returns. And almost a third of the respondents (32%) believed that
R&D spending would continue to drop in the future. The
paper also
suggests that the lines between biotech and pharmaceutical companies
will
become further blurred as major pharmaceutical players will expand more
aggressively into large molecule research.
In
a press release issued with the paper, DTT asks whether the recession is "[t]he end of biotech as we know
it?" Robert Go, DTT Global Life Sciences and
Health Care Industry Leader, noted that the recession had accelerated the
impact of health plans driving out costs, expiring patents, and evolving
generics legislation. "With
the dearth of
new entrepreneurial entries, the talent flight, and the encroachment of
large
pharma," Reynold Mooney, DTT Global Life Sciences and Health Care
Consulting Leader, predicted that "the future of biotech looks grim."
Of
the 281 executives responding to the survey, 30% were from pharmaceutical
companies, 16% were from medical device companies, 14% were from biotechnology companies,
and the remainder were from contract research organizations, health care
services, distribution, and health insurance.
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