CEO 2004 Keynote Address
If the situation were reversed, if I were going to introduce Carl, I would say that he has led this organization so ably because he is himself a true entrepreneur. His legacy is all around you, in the form of this conference, its energy and its relevance to our businesses. Don't think for a moment that BIO was an historical inevitability, that it was destined to become an essential and continuous presence in the biotechnology industry. It wasn't. BIO started from zero about a decade ago, and only through remarkable vision and exceptional performance has it reached its current levels, with an annual operating budget of $40 million, a leading advocacy role in Washington and a reach that extends internationally.
I have been privileged to work with Carl and the BIO staff for the last ten or so years, and it has indeed been a privilege. As I said in a closed session of the Board Monday, we owe Carl an enormous debt of gratitude. Our companies and our industry are more valuable because of him. He is a good man and a good friend and I wish him all the best.
With the meeting of our Board of Directors and Executive Committee this week, we are now fully underway in a process that will lead to our selection of Carl's successor. We expect to take our time, and we expect to encounter a remarkable group of candidates. Carl has said that his is the best advocacy job in Washington, because it is about topics that people care deeply about: their health, science and innovation, entrepreneurship and job creation, ethics and the meaning of life. It does not get much more interesting.
So we approach the process with a great deal of enthusiasm and we will see where we end up over the coming months.
Overview of the Industry
Let's take a moment to take a quick look at the biotechnology industry today versus a decade ago, quantitatively:
In 1993, there were 22 products from biotechnology companies on the market in the United States. At the end of 2003, ten years later, there were 187.
In 1993, there were 11 biotech companies with marketed products. At the end of 2003, 66.
Private investment in biotech firms in 1993 was approximately $3 billion. At the end of 2003, that number was approximately $17 billion.
And, as a proxy for the size of the industry itself, in 1993 attendance at BIO's annual meeting was 1,400 versus 16,000 in 2003.
The industry hasn't just grown; it has changed in other ways. Ten years ago, most biotechnology companies were developing products based on recombinant DNA technology. Today, they are increasingly discovering and developing small molecule drugs and specialty pharmaceutical products. In 2003, 8 of 25 biotech and biotech-related new drug approvals were biologics.
Biotech's pipeline is remarkably rich and focused on some of mankind's most devastating diseases.
In the field of cancer, biotech companies are involved in the development of over 450 new compounds. 125 in the field of CNS disorders. 88 in heart disease and stroke. 204 for women's health.
Over 350 drugs from the biotechnology are in late stage development.
From the early origins of the industry, where the excitement was based on the potential of the science, we have evolved to the point where the value of the science is self evident. With this many companies, this many product candidates and this many drugs approved an on the market, there is a sense of the inevitability of the continuing impact of biotechnology on human life.
We operate in a remarkably supportive public environment in the United States; about 70 percent of Washington-area opinion leaders have a favorable opinion of biotechnology, associating the research with exciting new therapies for previously intractable diseases.
Politicians at the highest levels endorse biotech as an economic engine and a source of new products to improve health and the environment. Public policy is largely supportive of the industry, though we have fought more than our share of political firefights.
Supporting cures and economic development is pretty easy to rally behind. What is amazing is the number of obstacles that present themselves.
If you think about it, building one of these companies is a preposterous proposition. Imagine the idea of building a company, hiring hundreds of highly trained people, spending ten years and a billion dollars in pursuit of the commercialization of scientific discoveries that have a reasonable probability of never reaching the marketplace.
In the case of those of us developing human pharmaceutical products, we operate in a highly complex and burdensome regulatory environment. Our business plans are dramatically and routinely influenced by any number of federal and state agencies: FDA, CMS, PTO, CDER, DDMAC, SEC, NASD.
Who the president is matters. Who the FDA Commissioner is matters. Medicare reform matters. A lot of things matter.
The principal way that we organize ourselves to influence outcomes with these agencies, the White House, Congress and the Judiciary is BIO.
Interestingly and perhaps predictably, a large majority of BIO's membership - the young companies - do not focus on this advocacy component of their business at all, for the precise reason that they do not, yet, see it as a part of their business. So most companies come to it late, which is a shame. It is this voice, the voice of the young, entrepreneurial, science and knowledge-based company that has so much potency. This is what we harness at BIO - the overwhelmingly appealing energy of young innovative companies trying to change the world. Not looking for handouts, but struggling to flourish in a highly complex environment. Sometimes, at best, a complex and burdensome environment. Other times, in the face of pending ill conceived legislation, a dangerous and potentially lethal environment.
As an example, many of you will recall the early 90's, when during Clinton's first term health care reform was the central topic, and ideas such as a breakthrough drug pricing committee were being considered to impose price controls on exactly the type of drugs our industry is focused on developing. The financial markets reacted immediately and decisively, sending the biotech index sharply lower and dramatically shifting the flow of new capital away from our industry.
So these are the things we concern ourselves with here at BIO - the reason the industry has self assembled into a collective and powerful voice. The BIO board is an incredible group of people. As I often say, 44 alpha males and females, CEO's and senior executives from large and small companies, all used to getting their way and not afraid of anybody saying no. We compete against each other and we work together. The output is phenomenal and measured by such milestones as the Food and Drug Modernization Act under Commissioner Kessler. PDUFA I, a landmark agreement, followed by PDUFA II and PDUFA III.
So where are we focusing our energies today? Here is a brief overview:
Capital Formation. Chaired by Lou Lange of CV Therapeutics and Steve Mento of Idun Pharmaceuticals.
When small biotechnology companies get together, the top topic is capital formation. How do we raise the money we need to execute our business plan? It is this instinct that has led to meetings such as this, investor outreach meetings, partnering meetings with pharmaceutical companies as well as thoughtful initiatives relating to NOL legislation.
Regulatory Environment. Chaired by Jim Mullen of Biogen/Idec and Fred Telling of Pfizer.
Obviously here we are focused primarily on FDA. This has been a very interesting year. In just over a year in the job, Dr. Mark McClellan reenergized the FDA, bringing a science based approach to regulation that emphasized getting safe, effective new medicines to patients as expeditiously as possible. We saw his impact where it counts, in the predictability and number of new drug approvals.
Just as important as the number of approvals are the steps the Commissioner took to expedite and lower the cost of the entire development process and reduce the number of multiple cycle reviews. We met frequently with the Commissioner over the past year, and I can say from personal experience that he is a remarkable person. One of the keys to his success, in my opinion, is that he is incredibly smart. The biotechnology industry is based on good science. We do best when we are dealing in an environment of intelligent, science based regulation.
As you know, Dr. McClellan was tapped last week by the President to head the Centers for Medicare and Medicaid Services. The New York Times reports today that certain Senators may try to hold up that appointment in order to have a more complete discussion on the topic of drug reimportation, so we will follow this closely.
At FDA, we see it as a good sign that Dr. Lester Crawford has been appointed acting Commissioner, a position he held in 2002 prior to McClellan's appointment. He well known to us as is his senior staff at FDA, and one of our top priorities is to ensure that the initiatives begun and implemented under McClellan continue.
Reimbursement. Chaired by Sue Hellman of Genentech and Hollings Renton of Onyx.
The focus here is implementation of the Medicare bill and the work has just begun. We understand that on the order of 30 new laws will be passed by 2006, each one having potential impact on the way our products are reimbursed by the government.
Intellectual Property. Chaired by Rob Chess of Nektar and Dennis Fenton of Amgen.
Intellectual property is the foundation of our industry. The IP committee is focused on issues relating to patents and patentability of biotechnology inventions, the financing and workings of the PTO, and international IP issues.
Public Awareness. Chaired by Stewart Parker of Targeted Genetics
Public awareness is part of the process of forming and articulating BIO's positions and public face on matters before the media. This includes conducting focus groups, research and polling.
Food and Agriculture and Industrial and Environmental.
BIO is also comprised of a large and growing number of companies focused on food and agricultural biotechnology and the growing field of industrial and environmental biotechnology. Our focus here continues to be on rigorous, science based regulation.
So, you can get a sense of the breadth of the scope of BIO's activities. And I will finish here.
It is interesting. You may not think that you are in the business of cloning, or in the business of stem cells, or gene therapy, or cancer treatment. But you are, in the public's eye, by virtue of your association with the world of biotechnology.
We are drawn to this industry by the seductive allure of achieving something meaningful -- often expressed in units of human life and well being. Instead of being daunted by the complexity, or improbability of the task, we are attracted to it. The intellectual challenge is no small part of the satisfaction.
BIO's job is to continue to address the issues most important to us and the public, and to do so in a way that has come to represent our persona: that is, informed, principled, energetic, reflective and consistently modest, cognizant of the remarkable opportunity and responsibility we face.