Healthcare

The case for constant innovation in Australian biotech

12 Oct 2010, by Informa Insights

Melbourne – 12th October 2010 – The sales contribution from internally developed products is expected to decline from $284 billion in 2009 to $274 billion in 2014, by which time the majority of sales will be derived from externally sourced products.

Pharma’s continued need to restock pipelines in order to secure future growth—in the face of ongoing patent expiries—maintains ongoing merger and acquisition (M&A) and licensing activity. In addition, Big Pharma has long used R&D outsourcing as a cost-saving strategy. While outsourcing deals may have been put on hold during 2009 in response to the economic downturn, a rise in the number of such deals is expected in 2010 as companies concentrate on driving innovation while cutting costs. As a result, the sales contribution from internally developed products is expected to decline from $284 billion in 2009 to $274 billion in 2014, by which time the majority of sales will be derived from externally sourced products.

In addition to the renewed focus on outsourcing, there is a growing reliance on revenues from biologics, as well as an increasing number of biologics in company pipelines. Given the cash-rich position of many Big Pharma players, these companies will continue to look for bargain acquisitions among the struggling biotech firms in particular. Reflecting this, 80% of R&D and co-development deals made by the top 10 pharma companies during 2009 were with biotech and small pharma companies, with 7% attributed to partnerships with universities and academic institutions.

This bodes well for international collaboration, licensing and acquisition activity in the Australian biotechnology industry. Australia has a strong history of quality innovation, which has been supported by a range of government programs. However, with the current government in place, it will be interesting to see whether R&D and innovation continue to be supported well enough to ensure that future opportunities in the global biopharmaceuticals market are maximized.

Dr. Bornadata (Bonnie) Bain, Director of Healthcare Research and Analysis, Datamonitor will be a plenary speaker at the AusBiotech 2010 national conference held on 19-22 October 2010, Melbourne Exhibition Centre. Bonnie will focus on recent market trends and indicate the likely future direction of the pharmaceutical and biopharmaceutical industries.

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