Placeholder Banner

Biotech Depends on Policies that Promote Innovation

February 15, 2010
The biotechnology industry’s endeavor to transform science into therapy for a previously untreatable disease is the subject of a new movie, “Extraordinary Measures.” The movie is the story of John Crowley, founder of Novazyme, and his struggle to find funding to develop a therapy for Pompe disease. The story, though, may not seem so out of the ordinary to those in the biotechnology industry who conduct vital research and development on products that will help treat previously untreatable diseases, grow more crops on available land, and prevent pollution and environmental degradation at the source.

The movie’s premise is especially poignant at this point in time. Last year’s economic recession had a tremendous impact on the biotechnology industry, forcing companies to curtail projects, lay off workers and in some cases close their doors. Even at the start of 2010, biotech companies with promising research continue to have difficulty securing investment funds, though there are renewed signs of hope. Thankfully, policymakers who recognize the value of biotechnology also recognize that the right policy environment can help the industry thrive.

Biotechnology companies produce innovative health, agricultural, industrial and environmental technologies. Today, there are more than 250 biotechnology healthcare products and vaccines available to patients, many for previously untreatable diseases1. More than 13.3 million farmers around the world use agricultural biotechnology to increase yields, prevent damage from insect pests and reduce farming’s impact on the environment2. And more than 50 biorefineries are being built across North America to test and refine technologies to produce biofuels and chemicals from renewable biomass, which can help reduce greenhouse gas emissions.

The industry continues to strive to fulfill the promise to heal, fuel and feed the world. More than 600 new biotechnology medicines are currently being developed and tested for more than 100 diseases3. Drought-tolerant crops are being developed that will help farmers maintain yields while conserving water resources. And industry scientists are deploying new tools, such as synthetic biology and genetically enhanced microbes that require only sunlight and carbon dioxide, to enable bioprocesses for biofuels and chemicals.

The research and development of innovative biotech products is an expensive and uncertain process, and companies require substantial resources if they are to translate basic science into products. For instance, the development of a new biotech therapy can cost $1.2 billion over a decade or more from the time research begins until a drug is prescribed for patients4. And, one estimate of the cost of building enough advanced biofuel plants to meet the Renewable Fuel Standard is more than $100 billion5.

Biotech companies depend on investor capital and other financing sources to fund their development efforts. And when investment dollars are limited, startup companies in our industry are often among the first casualties in the fight for assets. As of January 2010, for example, 38 percent of publicly traded U.S. biotechnology companies had enough cash on hand to fund one year of operation, and 24 percent had only six months’ worth of cash in reserve6.

If biotechnology companies are forced to delay promising projects for lack of funding, we risk losing innovations that can improve health, increase food production, reduce reliance on oil, and help create high-wage innovation-economy jobs. Policymakers can play an important role in bolstering the biotech industry. And throughout 2009, BIO helped define a number of such policies.

In the unfinished healthcare legislation, both the House and Senate followed the bipartisan votes in three key Congressional committees and included an approval pathway for biosimilars that will strike the critical balance among promoting patient safety, expanding access, lowering costs and promoting continued innovation. A number of patient, physician and academic groups joined BIO in supporting this critical legislative language. Also included in the Senate version of the legislation, the therapeutic discovery project tax credits  would provide a tax credit to small and emerging biotechnology companies to help offset a portion of resources spent on therapeutic development activities, including hiring scientists and conducting clinical studies. These credits would help sustain projects that promise new therapies while also creating and saving thousands of U.S. jobs.

In September 2009, the Obama Administration launched a its Global Hunger and Food Security Initiative, which will focus on addressing the root causes of hunger by investing in technologies and infrastructure that will make farming more productive and profitable in developing countries. Agricultural biotechnology has an important role to play in these efforts. BIO met with the State Department on this initiative, which recognizes the contributions biotechnology can make to feed the world.

In formulating proposed rules for the Renewable Fuel Standard in May 2009, the U.S. Environmental Protection Agency explicitly recognized the improvements biotechnology brings to biofuel production, finding that use of biotech enzymes in biofuel production can significantly reduce transportation emissions compared with gasoline. Also, the American Recovery & Reinvestment Act included $800 million for biomass projects and $500 million for loan guarantees for biofuel projects. In December 2009, the U.S. Department of Energy announced grants totaling $600 million for construction of 19 advanced biorefineries to produce both biofuels and chemicals, the largest single federal investment in advanced biorefineries to date.

BIO will continue to engage with leaders in Washington to ensure that policies support an economic environment that encourages innovation. For instance, a balanced pathway to biosimilars will give biotech investors greater confidence in taking the financial risks of funding the research of biotech startups.

BIO will continue to meet with the administration and other officials to help them recognize that agricultural biotechnology is integral to the goal of enhancing global food and energy security because it enables sustainability and productivity in crop production, animal husbandry and forestry. BIO seeks to ensure that this is reflected in the federal regulatory process governing biotechnology-derived products.

In the industrial section, BIO will advocate for tax credits that promote early-stage research in biofuels and biochemicals by rewarding innovation and first commercialization. BIO will also advocate expanding grant programs for both biofuels and chemicals, and a tax credit that incentivizes adoption of bio-based products and that gives parity to algae-based biofuels and products.

Supportive policies can create the right environment to help sustain biotechnology researchers and their investors, so that they can continue to translate scientific discovery into useful products. Millions of people are waiting, some for a new treatment or a hoped-for cure, others for tools to enable economically and nutritionally sustainable food production, and nearly everyone for a more livable environment. Biotechnology provides the best chance we have to end the waiting and fulfill the promise of modern biomedical innovation.



1) Strickland, D., ed. 2007. Guide to Biotechnology 2007. Washington, D.C.: Biotechnology Industry Organization (BIO).

2) International Service for the Acquisition of Agri-biotech Applications (ISAAA). 2008. “Global Status of Commercialized Biotech/GM Crops: 2008.” ISAAA Briefs 39-2008,

3) Pharmaceutical Research and Manufacturers of America. 2008. “2008 Report: Medicines in Development: Biotechnology.” Washington, DC: PhRMA.

4) DiMasi, J.,  and H. Grabowski. 2007. “The cost of biopharmaceutical R&D: Is biotech different?” Managerial and Decision Economics 28: 469–479.

5) Riese, Jens, analyst, McKinsey & Co. “Biotechnology Industry Organization: Journalist Roundtable to Discuss the Implications of the Energy Independence and Security Act of 2007.” Unpublished transcript, December 20, 2007.

6) Biotechnology Industry Organization (BIO). Unpublished data analysis.