Emerging Business Models in the Pharmaceutical Industries ...

Long Term Strategies - Biotech and Genomics
Biotech and Big Pharmas
While most biotechs have stopped marketing drugs themselves,
they often try to retain US marketing rights. Lacking the resources
and funding required, they are leveraging their R&D by outlicensing
or entering into strategic alliances with big pharmas who
have global reach.
By 2003 only Amgen, Biogen, and Genzyme achieved integrated
global operations. Amgen was the only serious global player and
other leading shops (Genetech, Chiron, Genetics Institute) were
partly owned by larger firms.
Biotech Projects in the Pipeline
Corporation Total Biotech In-house Licensed-
projects
in
Roche 53 32 40%
Aventis 45 16 64%
GSK 45 10 78%
J&J 29 21 28%
Pfizer 27 3 89%
BMS 24 5 79%
AstraZeneca 23 2 91%
Merck & Co 22 3 86%
Novartis 21 4 81%
Abbott 13 5 62%
TOTAL 302 101 67%
Source: JSB Intelligence
Biotech and Capital Market
Biotech investors are expecting higher returns from
their investments. Total new equity in biotech in the
capital market showed a great surge in 2000 but
decreased in 2002. However there was a recovery in
2003 with a surge of 50% on the Nasdaq Index.
Major biotech M&A activities are taking place in US,
Canada, Germany, UK, France, Australia, Sweden,
Switzerland and Finland. M&A activities between
biotech and pharma worth approximately $10 billion
have taken place.
The average value per transaction was $20-$25
million in 2002-2003 with a total of 400 to 500
transactions taking place. The average has now risen
to $100 million in 2004.
Market Speculation - Biotech
The equity markets are demanding that biotech
companies come up with successful clinical tests.
While these drugs are slated to replace block busters,
they will not reflect their revenues. Biotech companies
have shown a higher beta factor in stocks.
Strategic Analysis of the Pharma Market, Future Revenue Models and Key Players 27