Slowdown in R&D spending set to end?
spending on drug discovery and other areas of R&D over the next
couple of years, which will be music to the ears of technology
companies hit by a reluctance to invest in research by the
pharmaceutical and biotech industry.
"One of the most persistent challenges facing manufacturers and distributors of research products is the slowed growth of R&D spending for all segments of the drug discovery market," according to Frost & Sullivan, the publisher of the report entitled World Drug Discovery Spending.
While pharmaceutical companies are affected by slow top line growth, biotechs need to become more product-oriented, reducing R&D spending. However, increased pressure on pharmaceutical companies to speed up discovery and development of new therapies, coupled with the critical need to expand market growth, is likely to drive R&D spending, the report notes.
Following a difficult 2002 - the result of the economic downturn, reductions in biotech/pharma R&D spending, and consolidations - a slight increase in R&D spending was experienced in 2003. There are now positive signs of recovering pharma budgets and enhanced outlays on products aimed at biowarfare and bioterrorism. Global drug discovery spending, which was $19.6 billion in 2002, is expected to reach $25.1 billion in 2006, according to F&S.
"With many of the top drug discovery biotechnology companies evolving into product-focussed pharmaceuticals businesses and capitalising on strong product pipelines, revenues are likely to continue to experience growth," says Isaac Meek, industry analyst at F&S's Drug Discovery Technology group.
The shift to data mining and computational techniques has been one of the factors affecting the drug discovery industry. This has influenced the sales of consumables, reagents and instruments. While there has been continued growth of separation products for nucleic acids and proteins, there has been a simultaneous decrease in purchase of capital equipment and related sequencing consumables.
As a rule, research tool manufacturers need to develop innovative technologies in genomics and proteomics and offer sophisticated research equipment with higher throughput and greater sensitivity. Such product innovation is also likely to offset the slowed growth of the US National Institutes of Health (NIH) budget. Cutbacks in NIH funding - one of the single greatest contributors to research product sales - is forcing academic and government research groups to manage R&D costs and decrease the average cost per experiment, overall limiting the growth of research product manufacturers, notes the report.
Today, customer priority in the drug discovery sector has progressed from the basic cost and availability to include ease-of-use, novelty, efficacy and miniaturisation and standardisation of equipment. "By catering to consumer demands, research product manufacturers can anticipate benefits and look to improving market share," predicts F&S.
