The Booming Business of Biotechnology

Barbara Lano Rummel Lindquist & Vennum PLLP

©2006 Lindquist & Vennum

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Biotechnology

“Biotechnology could have more impact on the world economy than information technology.”

“Biosciences are going to change our lives in the next 20 years the same way computer sciences changed our lives in the past 20 years.”

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Our Program

• Barbara Rummel What Is Biotechnology and Why Is It so Important?

• Simon SmithAn Overview of Biotechnology in Europe and Elsewhere

• Kevin CunninghamBiologics in the Pharmaceutical Industry and Legal Work for Biologics

• TAGLaw Life Sciences Specialty Group

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Biotechnology

• The science of developing and manufacturing new products by manipulating living organisms or parts of living organisms (e.g., cells, genes or proteins) for the purpose of modifying human health, food supplies or the environment

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Biotechnology—History

• Bacteria long used to process cheese and beer

• 1940s—penicillin made from living organisms

• Dramatic increase in past 10 to 20 years

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Types of Biotechnology

• Agri-biotech seeks to develop crops that are resistant to insects and drought, have extended shelf lives and offer increased nutritional value

• Industrial/environmental biotech includes bioremediation (cleanup of hazardous waste) and energy production (biofuels)

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Types of Biotechnology

• We will focus on pharmaceutical applications

– Industry looking to biologics for predictable and preventative treatments at lower cost and to counter threat of bioterrorism and pandemics

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The Booming Part

• Industry, academia and government are all chasing the action

• Industry players– Companies range from small startups to

multibillion-dollar firms

– Over 5,000 companies globally

– S&P reports 350 biotech companies listed on major U.S. stock exchanges

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Industry, Academia and Government

• Universities

– Seeking revolutionary advances

– Abundant NIH funding for sponsored research

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Industry, Academia and Government

• State, local governments hope to create high-paying jobs, promote economic development

– In 2005, 41 states reported biotech as target industry

– Widespread state funding to develop bioscience development zones

– Need venture capital support

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Industry, Academia and Government

• Industry– R&D spending in biotech is among

highest of U.S. industry groups (Amgen–$2.2 billion in 2005)

– Global revenues/spending estimated at:• $80 billion in revenues in 2005• $160 billion invested between 2000 and 2005• $34 billion in U.S. financing/partnering among

firms in 2005

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Trends Fueling the Boom

• Demographics and disease trends– Longer life spans– Higher percent of elderly– Growing populations in developing nations

• Top four causes of death are disease-related

• Large pharmaceutical companies looking for biologics to replace block-buster drugs with expiring patents

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Trends Fueling the Boom

• In 2004, PhRMA reported 800 experimental meds in R&D for application in elderly

• U.S. awarded $1 billion in flu-vaccine contracts to five companies to develop cell-based vaccine technologies for seasonal and pandemic influenza viruses

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A brief introduction to biologics

• Traditional “drugs” are typically small molecules developed in a chemical process

• Biologics are large molecules developed from manipulating a natural source such as a cell, protein or gene

– E.g., therapeutic proteins, monoclonal antibodies

– Far less predictable than chemical means

Pharmaceutical Biotech

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Legal Services

• Development, manufacture, sale of biologics involves myriad legal services

– IP and patents just the beginning

– Longer, less productive R&D requires more funding; extensive licensing, partnerships and M&A between small biotech companies and large pharma

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Legal Services (cont.)

– Global industry heavily regulated by FDA and foreign authorities; complex reimbursement issues

– High failure rates: disputes, workouts and bankruptcies

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Life Sciences Specialty Group

www.taglaw.com

Life Sciences Specialty Group

• Member list

• Firm experience