Growth Drivers

Modern biotechnology is one of the most important key technologies of the 21st century. It ranks among the most attractive of all fast growing industries with an estimated annual growth rate of more than 10% p.a. Sector revenues amounted to USD 130 billion in 2014 and are forecast to more than USD 180 billion in 2017.

Increasing life expectancy

Higher life expectancy is one of the greatest achievements of our civilization. The United Nations estimates that the global population will rise by one-third between 2010 and 2050 to a total of 9.1 billion people. The proportion of people over 60 is set to treble from 760 million to 2 billion. On the down side, population aging is associated with an increase in age-related diseases, which puts an immense strain on healthcare systems. There is also a higher demand for treatment of age-related neurodegenerative conditions such as Alzheimer’s disease. Market demand is still not being met by the treatments available today, which means huge unexplored markets are waiting to be tapped.

An unhealthy lifestyle and its consequences

Alongside population aging, another factor driving growth in the biotechnology industry is the global spread of the western lifestyle. In 2008, 1.4 billion people – and rising – were overweight, according to WHO estimates. Pathological overweight (obesity) causes metabolic syndrome, a cluster of conditions including type 2 diabetes, high blood pressure, hardening and narrowing of the arteries, and blood lipid abnormalities.

Rising demand for healthcare services in the emerging markets

According to estimates published by the market research firm IMS Health, global spending on pharmaceuticals is set to rise from USD 965 billion to USD 1.2 trillion between 2012 and 2017, which corresponds to about 10 percent of global GDP. The growth is attributable in large part to developments in emerging market countries like China, Russia and India, which are expanding their national healthcare systems and whose growing middle classes are increasing their consumption of private healthcare services. While per capita spending has approximately doubled since 1995 in industrialized countries, it has increased almost 20-fold in China, albeit from a very low initial level. More than 2,000 new hospitals opened their doors in 2014, for example.

Friendly regulatory environment

The regulatory and political environment for biotechnology has seen a definite improvement on a global scale. The risk of clinical failures has declined as a result of more effective cooperation with regulatory bodies. In the US, receiving a so-called "priority designation" will shorten the drug review procedure by several months.

The GAIN Act for antibiotics and the Orphan Drug Act for rare diseases are good examples showing that regulatory incentives can have the effect of encouraging progress in certain therapeutic areas. Both pieces of legislation give companies longer market exclusivity and tax breaks, among other incentives. Similar legislation has now been passed in Asia and Europe, too.

Although high drug prices continue to fuel political debate from time to time, it is clear that drug manufacturers need to cover their development costs and that, while new therapeutic approaches may put a strain on healthcare bills in the short term, they help to generate savings in the long term by replacing more expensive therapies.

The continuing importance attached to innovation in the US is also evident in the 21st Century Cures Act, which is intended to expedite the approval of urgently needed therapies. This regulatory environment is one reason why more than half of all new drugs now originate in biotech labs.

Technological progress

In earlier times, the discovery of therapeutic treatments was often a matter of chance and serendipity. That has changed dramatically over the past few decades. Drug discovery has outgrown the classical screening-based "needle in a haystack" method. Advances in the understanding of biological processes are enabling the targeted creation and optimization of new medicines. There has also been a manifold increase in the range of treatment options available. In addition to small molecule therapies (a category to which most "old" medicines belong), we now have therapeutic antibodies, recombinant proteins, antibody-drug conjugates, and bispecific antibodies that recruit selected immune cells. Another promising approach is the modification of patients' immune cells to fight cancer more effectively. Advances in drug formulation are harnessing technologies such as RNAi and antisense for use as therapeutic options, and gene therapy and selective gene re-engineering are now being implemented in some areas. Expertise-sharing between academic centers, public institutes and industry is hugely important. Prime examples include Kite's alliance with the National Cancer Institute and Juno's collaboration with the Memorial Sloan Kettering Cancer Center in CAR-T therapies.