The report, compiled by Burrill & Company, a San Francisco based life sciences merchant bank, discusses biotechnology as fuelling a major transformation in the healthcare concept. The report particularly emphasises earlier disease detection, more targeted treatments, and adjunctive support through enhanced nutrition. Advances in genomics, proteomics and "systems biology," are gradually getting closer to understanding the underlying mechanisms of a number of diseases.
The 625-page publication states that chronic care accounts for almost 80 per cent of the nation's health care cost. Progress in systems biology is edging us closer to a personalised medicine world which an individual's genetic makeup can be determined and used to help tailor safer, more effective, cost-efficient treatments.
How this will be accomplished is one of the main themes of the report. This progress coupled with a growing capacity to better capture, integrate and utilise medical information, is facilitating a move toward predictability, from drug discovery to the development of accurate molecular diagnostics and targeted treatments and on to prevention.
"The focus on a one-size fits-all blockbuster drug is a strategy that may have run its course," said Steven Burrill, CEO of Burrill & Company.
"The successful pharmaceutical companies of the future will be those that marry both molecular diagnostics with targeted drug discovery and deliver effective personalised therapies," he added.
Further driving biotech's growth is big pharma's need to boost dwindling drug pipelines. Given the fact that in 2004 biotech companies enjoyed the best track record for approvals since 1999, pharma must look to this sector to help close this innovation gap.
The report is quick to point out that the biotech industry has not entirely escaped the controversy from recent drug safety issues. Coupled with the glut of disappointing trial results from biotech-derived medicines and the general investor frustration, the year could be interpreted as slightly unsettling for the sector.
However, it was revealed that the US biotech industry managed to raise more than $20 billion (€15.8 billion) in debt and equity capital and broke all previous records for cash generated through partnering $10.9 billion, debt transactions $8.4 billion and venture capital investment $3.7 billion.
The industry exited 2004 with a market cap of $400 billion, up 14.5 per cent over 2003, but still down from the nearly $500 billion during the market hyperactivity surrounding genomics in 2000.
The report, entitled Biotech 2005 - Life Sciences: A Move Towards Predictability, further identifies future industry trends such as the ongoing safety issues in the pharmaceutical industry. With public confidence at an all time low, several big pharma combinations will have no choice but to respond. Deals will be driven by the need to restore public confidence and to improve the bottom line In addition, pharma has demonstrated that it is comfortable with acquiring biotech companies as well as partnering with them and thus more acquisitions are expected in 2005.
Burril continued stating: "The emphasis on "blockbusterology" will continue to decrease as we see the migration to more niche products driven by pharmacogenomics and molecular diagnostics that can help to identify the right patients for the right treatments."
"Buyers with strong economic incentives are they managed care companies or the government, have a real interest in prevention. We're going to see a lot more than just rhetoric around preventative medicine with dramatically increased value for the diagnostics as a result," he added.
Biotechnology is no longer limited to the industrialised nations. There has been significant progress in recent years in the advancement of biotech in Brazil, Russia, India, China, (BRIC) and other nations who are implementing biotech to provide more appropriate and affordable solutions to their healthcare and agricultural problems.
Biotech 2005 reports that performance on the international stage was mixed in 2004. Europe enjoyed a stellar year, while the Canadian biotech industry struggled with its fund raising. The Pacific Rim countries continue to invest heavily in biotech and we are seeing growth in the number of biotech international collaborations in that part of the world.
While management are remaining cautious about the opportunities that are arising in these new regions, the report expects to see foreign biotech investments increase as the worldwide marketplace becomes stronger and more stable.