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Banking on biotech

Posted 04/05/2010 by RoseS

Writing this blog from across the Atlantic in Chicago, US, the UK’s general election seems very far away. This year’s BIO International Convention runs from 2-6 May 2010, and is estimated to have attracted somewhere in the region of 15,000 registered attendees, with a stellar line up of speakers including past US presidents Bill Clinton and George W. Bush and former vice president Al Gore. All of them are here with one common goal: to promote biotechnology.

In the UK, as in the US, expectations for biotech – red (pharma), green (agro) and white (industrial) - have never been higher. Politicians on both sides of the Atlantic are calling for new ‘green technologies’ as a way of filling the gaps left by older manufacturing industries, many of them now redundant or otherwise simply relocated to lower cost regions.

Many of those green technologies – biorefineries and biofuels, synthetic biology - will inevitably rely on biotechnology, a point acknowledged by Gordon Brown in the final TV debate ahead of the UK election when he talked about the ability of biotechnology to create in the region of 100, 000 jobs for the UK.

Banking on biotechnology, however, can be a risky business, as many shareholders know to their peril. Alongside the dotcom crash of 2000, many investors lost cash as the so-called biotech bubble also burst. This time around things may be a little different. The good news is that biotechnology has at last turned in a profit. According to Ernst & Young’s latest annual Beyond Borders report, in 2009 the industry as a whole made a profit of $3.7bn – in the black for the first time since the mid-1980 and after a $1.8bn loss in 2008.

But while increased revenues for some products and improved efficiencies are partly responsible, Ernst & Young points out that reduced spending on R&D has also played a part in the upturn. R&D spending fell 13% in the US in 2009, after accounting for the ‘megadeal’ takeover of Genentech by Roche. In Europe, 60% of biotech firms reduced their research budgets.

‘The data shows that even in these times of worldwide credit crunch the biotech industry is resilient and robust,’ said EuropaBio chairman Andrea Rappagliosi, commenting on the report. ‘Biotechnology will have a huge role to play in meeting Europe’s future goals for 2020 on Innovation, Employment and skills, Competitiveness and the creation of a knowledge based bio-economy...But this growth must also be sustainable.’ It is a message that whoever wins, or has won the UK’s general election by the time you read this, would do well to heed.

Cath O’Driscoll – Deputy Editor

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