Biotechnolgy Business Watch

Biotech companies in the established markets of the United States, Canada, Australia and Europe reacted to a cash-constrained 2009 by cuttingresearch and development costs and increasingefficiencies. the industry’s belt-tightening effortshelped to dramatically increase its year-on-yearprofits (see chart).

According to a 27 April review from analysts Ernst and young. the United States saw an impressive upsurge in profitability despite the acquisition of biotech company Genentech by roche, thus removing Genentech’s billions of dollars of profit from the analysts’ statistics. “Much of the cost-cutting in 2009 was precipitated by short-term thinking and the very real need to survive,” the report notes. A greater number of public biotech companies survived the year than industry observers had anticipated: 622 existed in established marketsas of December 2009 compared with 700in 2008, and those that remain have built upgreater reserves of cash this year. but, the report adds, “in seeking short-term survival, some companies may be hurting their long-term prospects”. For example, the industry’s research and development expenditures dropped 21%,from US$28.7 billion in 2008 to $22.6 billionin 2009. Meanwhile, biotech prospects in emerging markets such as China and Indiacontinued to blossom, although the report did not make quantitative comparisons.