INTRODUCTION 3 to employ about 190,000 people in publicly traded firms. These are impressive results given that, in 1992, bio-industries were estimated to have generated US$8.1 billion and employed fewer than 100,000 persons. The main beneficiaries of the current ‘‘biotechnology revolution’’ and the resulting bio-industries are largely the industrialized and technologically advanced countries, i.e. those that enjoy a large investment of their domestic product in R&D and technological innovation. Thus, the United States, Canada and Europe account for about 97 per cent of the global biotechnology revenues, 96 per cent of persons employed in biotechnology ventures and 88 per cent of all biotechnology firms. Ensuring that those who need biotechnology have access to it therefore remains a major challenge. Similarly, creating an environment conducive to the acquisition, adaptation and diffusion of biotechnology in developing countries is another great challenge. However, a number of developing countries are increasingly using biotechnology and have created a successful bio-industry, at the same time increasing their investments in R&D in the life sciences. According to the Frost & Sullivan Chemicals Group in the United Kingdom, some 4,300 biotechnology companies were active globally in 2003: 1,850 (43 per cent) in North America; 1,875 (43 per cent) in Europe; 380 (9 per cent) in Asia; and 200 (5 per cent) in Australia. These companies cover the gamut from pure R&D participants to integrated manufacturers to contract manufacturing organizations (CMOs). The United States has the largest number of registered biotechnology companies in the world (318), followed by Europe (102). In 2002, the annual turnover of these companies was US$33.0 billion in the United States and only US$12.8 billion in Europe. Some US$20.5 billion was allocated to research in the United States, compared with US$7.6 billion in Europe (Adhikari, 2004). US biotechnology and bio-industry The consultancy firm Ernst & Young distinguishes between US companies that produce medicines and the others. The former include pioneers such as Amgen, Inc., Genentech, Inc., Genzyme Corporation, Chiron Corporation and Biogen, Inc. The annual turnover of these five companies represents one-third of the sector’s total (US$11.6 billion out of US$33.0 billion); in addition, their product portfolio enables them to compete with the big pharmaceutical groups in terms of turnover and stock value. For instance, Amgen, with US$75 billion market capitalization, is more important than Eli Lilly & Co., and Genentech’s market capitalization is twice that of Bayer AG (Mamou, 2004e).
4 MEDICAL BIOTECHNOLOGY In 2002, Amgen, had six products on the market producing global revenues of US$4,991 million. Genentech was in second place with 11 products on the market and revenues worth US$2,164 million. The remaining places in the top five were filled by Serono SA (six products, US$1,423 million), Biogen (two products, US$1,034 million) and Genzyme Corporation (five products, US$858 million) (Adhikari, 2004). Over the past decade, a clutch of companies has amassed significant profits from a relatively limited portfolio of drugs. There is, today, heightened recognition that lucrative opportunities await companies that can develop even a single life-saving biotechnology drug. For instance, Amgen’s revenues increased by over 40 per cent between 2001 and 2002 owing to the US$2 billion it made in 2002 from sales of Epogen and the US$1.5 billion earned from sales of Neupogen. Over US$1 billion in sales of Rituxan – a monoclonal antibody against cancer – in 2002 helped Genentech record a 25 per cent growth over its 2001 performance (Adhikari, 2004). In California, there are two biotechnology ‘‘clusters’’ of global importance: one in San Diego–La Jolla, south of Los Angeles, and the other in the Bay Area, near San Francisco. A cluster is defined as a group of enterprises and institutions in a particular sector of knowledge that are geographically close to each other and networked through all kinds of links, starting with those concerning clients and suppliers. In neither biotechnology cluster does it take more than 10 minutes to travel from one company to another. The San Diego cluster is supported in all aspects of its functioning, including lobbying politicians and the various actors in the bio-economy, by Biocom – a powerful association of 450 enterprises, including about 400 in biotechnology, in the San Diego region. The cluster relies on the density and frequency of exchanges between industry managers and university research centres. For instance, one of its objectives is to shorten the average time needed to set up a licensing contract between a university and a biotechnology company; it generally takes 10 months to establish such a contract, which is considered too long, so the cluster association is bringing together all the stakeholders to discuss this matter and come to a rapid conclusion (Mamou, 2004e). The clusters have developed the proof of concept, to show that from an idea, a theory or a concept there could emerge a business model and eventually a blockbuster drug. Such an endeavour between the researchers and bio-industry would lead to licensing agreements that rewarded the discovery work. A strategic alliance between politics, basic research and the pharmaceutical industry (whether biotechnological or not) within the cluster would be meaningless without capital. In fact, bio-industries’ success is above all associated with an efficient capital market, according to David Pyott, chief executive officer of Allergan,