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Game-Changing Strategies for the Future of the Biotech Industry

December 14, 2010
The biotechnology industry works to translate life science into solutions for healing previously untreatable medical conditions, feeding the world’s growing population, and fueling mobility and economic growth using cleaner manufacturing processes. These high aspirations have always brought unique challenges to biotechnology companies, and in the wake of the recent worldwide recession those challenges have become particularly difficult. But the need for innovation in health care is clear and present.

The number of unmet public health problems is growing at a dramatic rate. In 2010, the cost of treating heart diseases in the United States alone was $318 billion. If you count the loss of worker productivity, the cost was closer to $503 billion. Currently, 7.8 percent of adults and children in the United States – 23.6 million people – have diabetes, which costs the nation $174 billion. In 2009, Alzheimer’s afflicted 35.6 million people worldwide and cost $604 billion.

Despite the extraordinary hope offered by biotechnology to relieve the burden of disease, reduce hunger, clean the environment and develop clean, renewable energy alternatives, government policies that affect the capital formation environment are insufficiently conducive to help our industry fulfill this promise.

BIO has consistently succeeded in meeting the policy challenges at the federal, state and international levels. Our recent successes in the context of health care reform have been impressive. But it has become clear to me recently that the time has come to take our advocacy to a higher and more aggressive level. For example, biotechnology is the key to development of new medical therapies, but at the same time the industry is facing increasing uncertainty in rewards, thus reducing its appeal for sustained investments. The public and policy makers need to better appreciate these challenges.

To that end, I began a process last summer of interviewing thought leaders in our industry for the purpose of envisioning game-changing strategies. Ultimately, I decided to contract with Elias Zerhouni, the former director of the National Institutes of Health, to conduct an analysis of the challenges we face and to conduct a more comprehensive survey of industry and other life science thought leaders to suggest out-of-the-box big ideas to significantly enhance biotechnology’s chances to succeed. Dr. Zerhouni and his team at the Zerhouni Group spent several months interviewing and collecting input from biotech CEOs, venture capitalists, current and former government officials and other experts.

The Zerhouni Group has suggested a wide range of options intended to create a better policy environment for capital formation, regulatory review and reasonable reimbursement to promote success for our companies in offering hope for patients. No idea has been excluded because it is too bold, too hard or too revolutionary.

These options reflect the reality that our industry is facing a multi-factorial set of profound challenges that are not easily modifiable by any single approach. An actionable strategy must focus on ways to: reduce risk; enhance reward; reduce uncertainty; and reinforce the position of the industry as a major contributor to the solution to some of the public’s most pressing needs.

The options recommended by the Zerhouni Group focused on four major themes:

  • Re-engineering the economic model for biotechnology product development;

  • Re-inventing the discovery-to-market pathway;

  • Re-focusing on the national innovation imperative; and

  • Re-defining the industry’s relationship with patient groups.

We are at the first step in a multi-phase process. No one has yet found a “magic bullet,” but the Zerhouni Group has defined more fully the myriad challenges facing the industry. BIO intends to drill deeply into the options, identify additional suggestions, and evaluate the feasibility of all ideas. Our goal is to develop both short- and long-term plans to help the industry move forward and develop an agenda that will produce the optimal conditions for our industry to meet our promise to help heal, feed and fuel the world.