u.s. biotechnology market - business sweden · pdf file · 2016-09-19global...
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CONFIDENTIAL
FOR INTERNAL USE WITHIN CLIENT COMPANY ONLY
U.S. BIOTECHNOLOGY
MARKET
Business Sweden in the USA
April 2015
Pharmaceuticals and drugs
Diagnostic testing
Dietary supplements
Cosmetics
Johnson & Johnson
Pfizer, Merck, Abbott, BD,
Procter & Gamble, Avon
BUSINESS SWEDEN 7 AUGUST, 2015 2
BIOTECHNOLOGY SOLUTIONS ARE GENERALLY USED IN
HEALTHCARE, FOOD, AND INDUSTRIAL APPLICATIONS
SOURCE: BIOTECHNOLOGY INDUSTRY ORGANIZATION
The BIOTECHNOLOGY industry comprises the institutions and companies engaged in the research,
development and marketing of varied products and solutions derived from living organisms and systems
Health
Herbicides, fungicides and
pesticides
Animal and livestock medicine
Genetically-modified crops
Food and Agriculture
Industrial enzymes
Biofuels
Chemicals
Waste treatment and disposal
Industrial
Examples of
U.S. firms
Examples of
applications
ADM, Cargill, Monsanto,
Zoetis, Dow AgroSciences
DuPont, Chevron, Renewable
Energy Group (REG), 3M
SWEDISH BIOTECHOLOGY IS MOST FOCUSED ON THE HEALTH MARKET, PARTICULARLY PHARMACEUTICALS AND DIAGNOSTICS
USA 30%
Europe 18%
China 14%
Japan 10%
Canada 2%
Rest of World 26%
GLOBAL BIOTECHNOLOGY MARKET SHARE
REVENUE PERCENTAGE, 2016 FORECAST
THE U.S. BIOTECH MARKET BY THE NUMBERS
7 AUGUST, 2015 BUSINESS SWEDEN 3
THE U.S. BIOTECHNOLOGY INDUSTRY ACCOUNTS FOR
NEARLY ONE-THIRD OF THE GLOBAL MARKET
SOURCE: IMS HEALTH CANADA, BIOTECHNOLOGY INDUSTRY ASSOCIATION (BIO), ERNST & YOUNG
Total number of public and private
biotechnology companies in the U.S. 2,349
Total number of bioscience-related
patents registered in the U.S. in 2013 24,939
Total amount of capital funding raised
by both U.S. public and private
biotechnology companies in 2013 25.3 BUSD
Total amount of academic spending in
the U.S. on biotech research and
development in 2012 38.1 BUSD
Average annual salary of workers in
the U.S. biotechnology industry –
nearly double the average U.S. wage 88 KUSD
SWEDEN'S BIOTECH INDUSTRY IS ESTIMED TO BE LESS THAN 3% THE SIZE OF THE U.S. BIOTECH INDUSTRY
PHARMACEUTICAL COMPANIES DOMINATE BIOTECH RESEARCH SPENDING
PHARMA IS THE LARGEST TARGET FOR R&D FUNDS TOP COMMERCIAL BIOTECH R&D SPENDERS
BUSD, 2014
0 2 4 6 8 10
AbbVie
Celgene
Gilead Sciences
Takeda
Amgen
Bristol-Myers Squibb
Eli Lilly
GlaxoSmithKline
Sanofi
AstraZeneca
Merck
Pfizer
Johnson & Johnson
Novartis
Roche
7 AUGUST, 2015 BUSINESS SWEDEN 4
THE U.S LEADS IN BIOTECHNOLOGY R&D INVESTMENTS
SOURCES: GENETIC ENGINEERING & BIOTECHNOLOGY NEWS (GEN); PHARMACEUTICAL RESEARCH AND
MANUFACTURERS OF AMERICA, BIOTECHNOLOGY INDUSTRY ASSOCIATION
Pharmaceuticals and surgical and medical devices were
the leading patent classes for the U.S. biotech industry
from 2009 to 2013
Between 2009 and 2013, U.S. agricultural- and
industrial-related discoveries accounted for less than
10% of all biotechnology patents in the U.S.
The development process for pharmaceuticals is both
expensive and complex, taking an average of 10 to 15
years from initial discovery to final product introduction
The average R&D cost (not including marketing) to bring
a drug to market is 1.2 BUSD, with costs rising annually
Each new medicine brought to market in the U.S. is
typically tested on more than 1,000 volunteers before it is
approved by the Food & Drug Administration (FDA)
U.S.-based firms Non-U.S.-based firms
TOTAL COMMERCIAL BIOTECH R&D EXPENDITURES
BUSD, 2011 – 2014
BUSINESS SWEDEN 7 AUGUST, 2015 5
U.S. COMMERCIAL BIOTECHNOLOGY RESEARCH AND
DEVELOPMENT IS GROWING AT A STEADY RATE
SOURCE: ERNST & YOUNG, BATTELLE BIO
*TOP 10 STATES LISTED IN ORDER OF TOTAL ACADEMIC BIOSCIENCE EXPENDITURES: CALIFORNIA, NEW
YORK, TEXAS, PENNSYLVANIA, NORTH CAROLINA, MARYLAND, ILLINOIS, MASSACHUSETTS, OHIO, FLORIDA
0
5
10
15
20
25
30
2009 2010 2011 2012 2013 2014f 2015f
U.S. Europe
U.S. COMMERCIAL R&D EXPENDITURES ARE NEARLY 5 TIMES HIGHER THAN EUROPEAN BUDGETS
Universities
Bioscience R&D expenditures at colleges
and universities in 10 U.S. states* totaled
22.5 BUSD, with academic institutions in
California alone spending 5.1 BUSD
Startups
Since 2004, oncology and neurology
startups attracted the largest amount of
investment among biotech startups
Corporations
The largest biotech companies in the U.S.
increased their R&D spending by 20% from
2013 to 2014
0 1,000 2,000
Los Angeles
Washington, DC
North Carolina
Chicago
Seattle
Philadelphia
New York
San Diego
San Francisco
Boston
National Institutes of Health grants Venture capital funding
TWO SOURCES HELP SPUR BIOTECH INNOVATION BIOTECHNOLOGY FUNDING BY REGION
MUSD, 2014
7 AUGUST, 2015 BUSINESS SWEDEN 6
NIH GRANTS AND VENTURE CAPITAL FUND BIOTECH
R&D; BOSTON IS THE TOP RECIPIENT OF BOTH
SOURCES: GENETIC ENGINEERING & BIOTECHNOLOGY NEWS (GEN), NATIONAL INSTITUTES OF HEALTH,
FIERCE BIOTECH
The National Institutes of Health (NIH),
a public agency based outside of
Washington, DC, is a leading source of
research funding in the U.S.
NIH grants totaled 22 BUSD in 2013,
with most allocated to academic labs
National
Institutes
of Health
Venture capital funds specialize in
commercializing and “scaling up” the
research done in labs
Examples of major biotech-focused
venture capital funds include
HealthCare Ventures and MPM Capital
Venture
Capital
Funds
NIH GRANTS SIGNAL ACADEMIC R&D CLOUT, WHILE VC FUNDS SHOW THE STRENGTH OF STARTUP ENVIRONMENTS
STATES LEADING IN BIOTECH PATENT FILINGS*
2009 – 2013
EMPLOYMENT CLUSTERS VARY BY SPECIALIZATION
7 AUGUST, 2015 BUSINESS SWEDEN 7
BIOTECHNOLOGY INNOVATION IN THE U.S. IS
CLUSTERED, DEPENDING UPON FUNCTIONAL AREAS
SOURCES: HARVARD BUSINESS SCHOOL CLUSTER MAPPING, BIOTECHNOLOGY INDUSTRY ORGANIZATION
(BIO), COMPANY WEBSITES, FORBES
• Chicago‡
• Memphis
• Houston
• Tampa
• Indianapolis
Agriculture
• New York/New Jersey
• Los Angeles
• Chicago
• Miami
• Dallas
Bioscience-
Distribution
• New York/New Jersey
• Chicago
• San Francisco Bay Area†
• Philadelphia
• Los Angeles
Drugs and
Pharma
• Boston
• New York/New Jersey
• San Francisco Bay Area†
• Philadelphia
• Los Angeles
General
Testing and
Research
NOTES: *MULTIPLE STATES TIED; †INCLUDES SAN JOSE AREA; ‡INCLUDES DECATUR/CENTRAL ILLINOIS
Top 5 across patent classes 11-15th across patent classes
6-10th across patent classes 16-20th across patent classes
Midwest Abbott, AbbVie, ADM,
Medtronic, Eli Lilly,
Baxter, Proctor & Gamble
California Amgen, Genentech,
Gilead, Theranos
Northeast Pfizer, Merck,
Johnson &
Johnson,
Celgene, IBM,
Biogen Idec
ACADEMICS, SUPPORTED BY PUBLIC GRANTS, CONDUCT INITIAL RESEARCH INTO NEW APPLICATIONS
BUSINESS SWEDEN 7 AUGUST, 2015 8
UNIVERSITIES AND RESEARCH INSTITUTIONS PLAY A
KEY ROLE IN THE BIOTECHNOLOGY VALUE CHAIN
SOURCES: FOUNDATION CENTER, FDA, MASSACHUSETTS BIOTECHNOLOGY COUNCIL (MASSBIO)
ACADEMIC RESEARCH TECHNOLOGY TRANSER DEVELOPMENT, APPROVAL,
COMMERCIALIZATION
Public funding sources include:
National Institutes of Health (NIH)
National Science Foundation (NSF)
Department of Defense (DoD)
Private foundations, including the
following, also support research:
Charitable organizations, like the
Alfred P. Sloan Foundation
Various corporate foundations, like
the Intel Foundation
Determining commercial viability:
University Technology Transfer or
Research Policy divisions
Incubators and accelerators, both
for-profit and nonprofit
Municipality- or state-owned
economic development authorities
R&D departments of corporations
Venture and seed capital firms or
angel investor groups
Stakeholders help reach the market:
Lenders or investors, primarily banks,
but also venture capital, angel
investors and private equity firms
Reimbursement and clinical trials
consulting experts
Administrative resources, including
insurance agencies, attorneys,
accounting firms and recruiting firms
FDA, often through its Center for Drug
Evaluation and Research
PAIRING WITH A U.S. UNIVERSITY OFFERS FIRMS ACCESS TO LEADING RESEARCHERS AND FUNDING SOURCES
BIOTECHNOLOGY PRODUCTS MAY REQUIRE FDA APPROVAL BEFORE BEING SOLD IN THE U.S.
BUSINESS SWEDEN 7 AUGUST, 2015 9
FDA APPROVAL IS A MAJOR HURDLE, AND BIOTECH
PRODUCTS ARE OFTEN THE MOST COMPLEX CASES
SOURCE: FDA, BUSINESS SWEDEN INTERVIEWS
FDA APPROVAL, WHILE NECESSARY TO SELL A PRODUCT, DOES NOT RELIEVE COMPANIES FROM LIABILITY
• Cosmetics, natural and herbal
formulas, dietary supplements
and Class I medical devices
• Over-the-counter drugs,
veterinary drugs, Class II medical
devices such as clinical
laboratory tests
Co
mp
lex
ity
• Prescription drugs, Class III
medical devices such as surgical
instruments and artificial implants
High-Complexity
Products
Mid-Complexity
Products
Low-Complexity
Products FDA approval
not required*
FDA approval
required
Timeline for
approval(s)
2 – 10 years
Timeline for
approval(s)
6 months – 2
years
No approval
required*
NOTE: FDA APPROVALS MAY BE REQUIRED IF THE MANUFACTURER MAKES CERTAIN HEALTH CLAIMS
Defective design
Example: Cough syrup caused heart attacks because
of its normal ingredients
Defective manufacturing
Example: A tainted batch of cough syrup containing a
poisonous substance
Defective labels or warnings
Example: A cough syrup does not include on its label
a warning that it may cause dangerous side effects if
taken in combination with another drug that is
commonly taken, or ingredients are not correctly listed
LAWSUITS ARISE FOR ONE OF THREE REASONS BUT RESOURCES EXIST TO PROTECT COMPANIES
7 AUGUST, 2015 BUSINESS SWEDEN 10
LEGAL COMPLIANCE AND LIABILITY ISSUES ARE ALSO
HURDLES, SO PROFESSIONAL GUIDANCE IS NECESSARY
SOURCE: FDA, BUSINESS SWEDEN INTERVIEWS
“Companies must get product liability insurance in the U.S. It also
limits the fear of being sued later on. I would advise Swedish
clients to first look into their current policy in Sweden and see
whether they can extend it to the U.S. market”
Senior Vice President, Partner
San Francisco-based insurance company
Insurance Agencies
“If you take appropriate measures, the risk of a lawsuit can be
minimized. The risk didn’t deter us from entering the U.S. My best
tip is to have clear contracts done by lawyers. Since we mainly
use partners in the U.S., we’ve managed to transfer some of the
liability to them”
Export Manager
Swedish pharmaceutical company
Attorneys
CONTRACTS, INSURANCE, AND PROPER LEGAL GUIDANCE CAN DRAMATICALLY MINIMIZE RISKS
SWEDEN’S LIFE SCIENCE INDUSTRY
PERCENTAGE, BASED ON TOTAL EMPLOYEES
SWEDEN IS STRONGEST IN DRUGS, DEVICES
7 AUGUST, 2015 BUSINESS SWEDEN 11
SWEDISH BIOTECH IS DIVERSIFIED, BUT DEVICE AND
PHARMACEUTICAL COMPANIES ARE MOST PROMINENT
SOURCES: VINNOVA, OECD
Drugs and Pharma
44%
General biotech*
15%
CRO 3%
Devices and facilities products
32%
Other* 6%
NOTE: *GENERAL BIOTECH INCLUDES DIAGNOSTICS, GENERAL RESEARCH AND DEVELOPMENT, TOOLS
AND BIOPRODUCTION; OTHER INCLUDES AGRICULTURAL, FOOD AND INDUSTRIAL BIOTECH PROJECTS
Strengths
Nearly half of Swedish healthcare and life sciences
employees work in pharmaceuticals
This includes discovery, development, production,
delivery and related activities
Another one-third of Swedish employees in the industry
focus on devices and products for healthcare facilities
Weaknesses
Agricultural- and industrial-related projects together
account for less than 6% of all Swedish employment in
the biotechnology industry
Swedish start-ups lack sufficient access to early-stage
financing, including venture capital, particularly
compared to North American industry peers
CONSOLIDATION WITH FOREIGN COMPANIES CONTINUES TO SHAPE THE SWEDISH BIOTECH SCENE
Pharmaceuticals and medical devices are Sweden’s
leading areas of expertise within biotechnology, and each
segment corresponds to different U.S. geographic clusters:
RESEARCH AREAS WITH INCREASES IN VC FUNDING*
7 AUGUST, 2015 BUSINESS SWEDEN 12
THERE ARE MANY OPPORTUNITIES IN THE U.S. FOR A
VARIETY OF SWEDISH BIOTECHNOLOGY FIRMS
SOURCES: BIOTECHNOLOGY INDUSTRY ORGANIZATION, VINNOVA
Disease Category Change, 2004-2013
Metabolic
(metabolic syndromes, obesity, lipids) +25%
Ophthalmology +10%
Platform
(antibodies, genetics, stem cell therapy) +8%
Other
(dermatology, allergy, renal, osteoarthritis,
musculoskeletal disorders, others)
+6%
NOTE: *ONLY INCLUDES U.S.-BASED VENTURE CAPITAL FUNDING
“The fact is that obesity is one of America’s costliest diseases:
nearly one of every five dollars spent on healthcare in the
United States will be attributable to obesity and obesity-related
conditions within the next decade”
Statement, Campaign to End Obesity
U.S. House of Representatives
UNDERSTANDING U.S. GEOGRAPHIC AND FUNDING PATTERNS WILL HELP SWEDISH BUSINESSES SUCCEED
Pharmaceutical
clusters in the U.S.
Medical device
clusters in the U.S.
BUSINESS SWEDEN’S MISSION IS TO MAKE IT EASIER FOR SWEDISH COMPANIES TO GROW INTERNATIONALLY
This support can include preparing for market entry with assessment of market potential, finding potential partners,
evaluating market entry scenarios and practical support with establishing a local presence
BUSINESS SWEDEN 7 AUGUST, 2015 13
BUSINESS SWEDEN CAN SUPPORT ESTABLISHMENT
AND GROWTH IN THE U.S. MARKET
EVALUATE U.S.
MARKET ENTRY
PREPARE U.S.
ENTRY STRATEGY
ESTABLISH U.S.
PRESENCE
DEVELOP U.S.
BUSINESS
Evaluate if the U.S. is the
right market to enter for
your business.
- Analyze top markets of
interest
- Initial U.S. market
analysis
Find partners for you on
the U.S. market to help in
your entry and expansion
- Evaluate U.S. market
potential
- Build network through a
meeting program
Outsource administration
to enable full focus on
your business.
- Decide corp. structure
and create U.S. Inc.
- Set up business support
functions
Examine opportunities to
develop and grow your
U.S. business.
- Analyze U.S. growth
scenarios
- Merger and acquisition
support
WH
AT
E
x.
su
pp
ort
TALK TO OUR U.S. OFFICES, IN CHICAGO, NEW YORK, AND SAN FRANCISCO, ABOUT HOW TO GET STARTED
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