There’s been a lot of back-patting at BIO — the global biotechnology conference being held in Boston this week. People in the industry have been extolling Massachusetts as a rich research cluster, where government, nonprofits and drug companies come together to develop new therapies. But there’s also been a lot of hand-wringing about the industry’s future.
When you think about the billions of dollars that drug companies can bring in, you wouldn’t think they’d make a big deal out of shelling out less than $2 million on collaborative research efforts. But they did.
At the Massachusetts exhibition space at the convention, state officials touted a new team... of rivals. Seven biotech competitors are forming a consortium to share the costs of funding neuroscience research.
"We’re just looking for what’s the best way, the fastest way and safest and efficacious way to bring a product to market," said James Hoyes, president of EMD Serono in Rockland.
If these companies had their way, they would bring a new Parkinson’s disease drug to market all by themselves, and keep all the profits to themselves, the way they used to do.
"That model doesn’t work very well anymore," said Tom Watkins, and he should know. Watkins is a drug company CEO and also chairs the biotechnology industry trade group.
"We’re going to see more partnerships, not less," Watkins said. "We can’t think of this as we’re going to do it differently. We’re going to have to do it a lot differently."
Competing pharmaceutical companies are becoming bedfellows out of necessity. They’re running out of the blockbuster drugs that make big money. The next generation of therapies is harder to develop. It’s more expensive and can take longer.
At the same time, the pressure is growing on pharmaceutical firms to lower their costs.
"How do I get paid for taking on all of that expense and all of that risk?" asked Brian Atwood, a venture capitalist who funds biotech companies trying to come up with new drugs. "I have been thinking about DOTW — which is ‘diseases of the wealthy.’ I think that’s kind of where this industry is going to start to evolve."
Other industry players say that fear about future revenues keeps them up at night, too. But many disagree that the only viable drugs will be expensive ones in developed nations.
Chris Viehbacher, the CEO of Sanofi, the international drug giant that bought the Cambridge biotech firm Genzyme, says it’s good the market outside the U.S. and Europe is growing.
"As we start spreading the cost over a population of 7 billion people instead of over a billion people, we may be able to find returns on our investment in research and development on a different pricing structure," Viehbacher said.
Different, because Viehbacher says the business model is going to have to change. He says the current drug development cycle is just not financially sustainable.
"So I think we’re all under pressure to find new models in research, and are being driven into each other’s arms," Viehbacher said. "And it’ll cause us all to move further outside of our comfort zone."
So that’s why it is a big deal to see competing drug companies join together to share the same research. Even though, later on, if the research is promising, they may have to fight over who gets to bring it to market.
The Massachusetts biotech cluster is poised to benefit from the new trend of collaboration in drug development. But the Bay State could also become home to the frictions that arise when the competing interests of pharmaceutical companies are tied together.
This program aired on June 21, 2012.