They came. They met. And they networked.
Executives with some of the nation’s top biotechnology companies joined industry leaders and healthcare practitioners in Atlanta, Ga., in May, at the 2009 BIO International Convention. The world’s economic woes cut into attendance (organizers estimate that turnout was down 35 percent to 40 percent compared with last year), but the four-day event still attracted 14,352 industry leaders from 58 countries and 48 states. The convention’s program consisted of more than 170 sessions in 22 breakout tracks, including discussions that focused on drug delivery, global biotechnology issues, translational medicines and vaccines.
Though attendance was down, sponsorship remained level, enabling attendees to mingle more closely with potential customers and partners. “In this challenging economy, it’s more important than ever to be able to meet face to face with potential customers and partners,” said Andrew Reaume, Ph.D, president and CEO of Melior Discovery Inc., a small biotechnology company based in Exton, Pa. “Exhibiting at BIO gave us the opportunity to do just that.”
Reaume wasn’t the only business executive to score a face-to-face meeting with potential partners: Representatives of 1,800 companies participated in 14,040 individual partnering meetings over the four-day span of the convention (May 18-21), according to organizers. In addition, 190 companies gave presentations during a business forum, and 1,827 exhibitors set up shop in the Georgia World Congress Center.
“The BIO International Convention provided Mexico and many other countries the opportunity to share innovations, challenges and opportunities,” said Fernando Quezada, executive director of the Biotechnology Center of Excellence Corporation, based in Waltham, Mass. “The colleague-to-colleague connections and the interactions we made with public officials proved to be invaluable for global progress in feeding, fueling and healing the world.”
Biotechnology Sector Navigating the ‘Perfect Storm’
Ways in which biotechnology can help feed, fuel and heal the world emerged as a central theme during the convention. BIO President and CEO Jim C. Greenwood pledged in his state-of-the-industry address to meet the formidable challenges of lowering healthcare costs and feeding the world’s hungry through bioengineered crops that contain more nutrients and fewer allergens than those currently grown.
He said companies such as Verenium (in Cambridge, Mass.) and Codexis (of Redwood City, Calif.) are working with global energy firms to perfect the process of developing biofuel from ordinary items such as corn cobs and wood chips. Codexis has partnered with Royal Dutch Shell in an effort to market a next-generation biofuel. In 2006 and 2007, Shell invested $33.5 million for a 13 percent stake in Codexis, and the company made an additional equity investment in March (the terms were undisclosed). Shell pays the costs of Codexis’ biofuels research and will pay a royalty upon commercialization.
In order for this kind of technology to evolve, however, the bond between academic research and commercial science must be strengthened, Greenwood claimed.
“The very sustainability of life as we know it on our planet relies on our ability to drive not only food but fiber and fuel from renewable plants and algae,” he said. “The innovative spirit that lies at the heart and the soul of every biotech company can and will provide solutions to disease, hunger, pollution and global warming. These are tasks at which we dare not fail.”
Greenwood is confident the biotechnology industry can help the world solve its most pressing problems—as long as it can weather the “perfect storm” of economic, political and scientific challenges.
The most troubling challenge is the economic tempest that has cut capital investment in biotech companies by 46 percent in the first quarter of 2009, Greenwood said. About 40 percent of publicly-traded biotechnology companies are down to their last 12 months of cash, and about one-third of BIO’s member companies ended 2008 with less than six months of cash.
The critically ill economy also has triggered the layoffs of thousands of biotech workers and forced firms to delay research projects, Greenwood noted. Bankruptcy filings are up considerably this year—a total of nine had been filed when Greenwood gave his speech, just two short of the total for all of 2008.
“I’m sorry to say we can expect things to get worse before they get better. Sadly, otherwise good innovative companies will fail as they capsize in this storm. Our capacity to finance the innovation of new treatments, cures and sustainables is, in fact, seriously at risk,” he said. “No one knows when the economy will turn around, and no one knows how this experience will change our industry. Big, big changes and great uncertainty indeed.”
That uncertainty also exists in the political arena, where policy reforms and ambitious new programs are being created by the Obama administration at warp speed. Though Congress has given $10 billion in additional funding to the National Institutes of Health (NIH) and $20 billion to jump-start progress in health information technology, threats to biotechnology innovation still exist, Greenwood charged. Proposals in the U.S. House of Representatives and Senate to limit the period of data exclusivity severely threatens the process of developing biologics, he argued. So do efforts to reduce reimbursements for new drugs and biologics.
“Think what a tragic irony it would be for Congress to have funded the human genome project and the NIH at the cost of billions and billions of dollars only to cut the legs out from under the dedicated scientists and drug discovery companies who are trying to convert basic research into treatments and cures for patients,” Greenwood noted. “Patent reform legislation has threatened to reduce the value of our intellectual property, jeopardizing continued advances in the life sciences.”
Greenwood promised to work with Congress on healthcare reform, but said he would insist that the “critical role of innovation is not overlooked” in the debate.
Healthcare Reform: Public Plan vs. Innovation
Greenwood’s concern is one that was shared by former U.S. Sen. William Frist (R-Tenn.) and Karl Rove, former senior adviser and deputy chief of staff to former President George W. Bush. Both Republicans participated in a healthcare policy panel on May 20 that included former Sen. Thomas Daschle (D-S.D.) and former six-term Vermont Gov. Howard Dean, who ran unsuccessfully for the 2004 Democratic Presidential nomination and then served as Democratic National Committee chairman from 2005 until 2009. The panel was moderated by Susan Dentzer, editor-in-chief of Health Affairs, a health policy journal based in Bethesda, Md.
Frist and Rove said healthcare reform legislation that creates a “big public plan” would kill innovation and creativity generated by private sector companies. Daschle and Dean, however, claimed that public plans could help lower healthcare costs and provide coverage to more people.
While no panel member disputed the need to lower healthcare costs, the group was split along party lines over reform proposals. Daschle called for a combination public-private plan that places a greater emphasis on wellness and disease prevention programs.
“When you look at healthcare in any society, it is like a pyramid. At the base of the pyramid, you have primary care and wellness and you work your way up until the money runs out at the very top with very sophisticated technological applications to health,” Daschle explained. “Every country starts at the base of the pyramid and they work their way up until the money runs out. We start at the top of the pyramid, and we work our way down until the money runs out, and it runs out. You want to invert that pyramid to make sure we can access that wellness care that everyone else in the world accesses.”
Frist predicted that current healthcare reform proposals (mostly proposed by Democrats) would leave taxpayers with three choices: a “Medicare-like” public plan; an administrative plan where risk is shared between the government and private sector; and a state-controlled plan. Taxpayers are wary of the public plan, Frist said, because they fear that companies will drop insurance coverage for their employees. And that would lead to a shrinking of the private sector, where innovation is born and important scientific research is conducted, he added.
Nonsense, argued Dean. A public plan would not only curb out-of-control healthcare costs. It also would help make American businesses more competitive in the global marketplace, he claimed. Dean used a real-life example to illustrate his point: During his tenure as governor, businesses in Vermont dropped workers from their health insurance plans after state officials opted to cover “virtually every child under 18” through Medicaid.
“The business people took folks off their plan and put them on our plan. So what?” asked Dean. “Our business community suffers in this country. We are losing jobs to Canada because our business people have to cope with [health insurance] costs that go up at three times the rate of inflation. Canadian companies don’t have to deal with that. This is a business proposition—it’s not just about the uninsured or the waste in our healthcare system. It’s about what we are going to do to make America more competitive.”
Rove said he wasn’t surprised by the results of Vermont’s healthcare reform experiment. “Of course companies are going to want to dump their [health insurance] costs onto the federal government. The federal government is financed by individual tax receipts, not corporate tax receipts. Do Americans want that? A recent poll showed that most Americans (60 percent vs. 27 percent) said they would reject healthcare for all if it meant changing their own coverage and joining a plan administered by the government. There’s that much hostility to plans administered by the federal government.”
There’s also a growing hostility from members of Congress over healthcare reform, as Republicans voice concern over its price tag and Democrats clash over details of the plan and its escalating cost. Last week, the Congressional Budget Office (CBO) estimated the cost of insuring 16 million of the approximately 50 million uninsured Americans to range from $1 trillion to $1.6 trillion over 10 years, figures that prompted sharp criticism from Republicans and left Democrats questioning whether they could fulfill President Obama’s promise to have a sweeping healthcare reform bill in place by October.
That deadline is looking less likely as Democrats make contradictory statements over the need to comprehensively overhaul the nation’s healthcare system when deficits are soaring and the economy is flatlining. Democrats doubt they can muster any support for their proposals from Republicans and have called the idea of a bipartisan bill “fool’s gold.”
While Daschle, Dean, Frist and Rove never used such terminology during their panel discussion, they agreed that bipartisan support for the administration’s healthcare reform proposals will be difficult to achieve. Already divided over the cost of the effort, each member of the panel suggested different ways of paying for the overhaul.
Daschle said the money would come from three “buckets”—new revenue streams, cuts in Medicare and federal programs and modernization efforts. He did not provide any details or specify the federal programs that could potentially be cut.
Frist claimed that taxpayers would foot the bill, while Rove proposed an employer tax exclusion program to absorb some of the cost. Dean contended that a carbon tax (he cited legislation recently introduced by Republican Reps. Bob Inglis of South Carolina and Jeff Flake of Arizona) and a 10-cent-per-gallon gas tax would pay for healthcare reform.
“If you ask the average working person who doesn’t have health insurance or who has a really crummy policy whether he would pay an extra 10 cents a gallon to get health insurance, he’s going to say yes,” Dean argued. “People in America don’t like taxes, but they’ll pay them if you tell them what it’s going to be used for.”
Daschle, however, warned against asking taxpayers to foot the healthcare reform bill. “If our message [to taxpayers] is that bottom line, this is going to cost you more money, then we’re going to lose this debate. We’re not going to win because nobody wants to spend more money for healthcare.”
The Race is On
BIO 2009 kicked off with a report from international intellectual property firm Marks & Clerk that said the U.S. biotechnology sector will progress further than its counterpart in Europe in the next year.
Ninety-three percent of the 365 executives who participated in the survey said the overall global climate for biotechnology has deteriorated in the past year.
Most respondents said the global financial crisis was behind the deteriorating biotechnology climate. And the crisis has prompted investors to shy away from risky business propositions, further eroding confidence, nine out of 10 survey respondents claimed. The financial crisis has affected timescales, too: Executives said the time it takes to grant patents and approve new drugs has increased in the last year.
The mood, however, was better in the United States than in Europe. Eighty-four percent of respondents believe Obama's administration has strengthened America's position in the biotechnology sector. Obama has accomplished this by increasing federal research spending and adopting a more permissive stem cell experiment policy, according to the survey.
“While the global outlook remains finely balanced for the industry, the United States is undeniably signaling that it is once again a friendly environment for the industry,” said Paul Chapman, a co-author of the report and a partner at Marks &Clerk. “Europe and the United Kingdom cannot afford to watch from the sidelines and should move speedily in terms of policy to ensure they are not left behind.”
Biotechnology executives believed the prognosis for the sector is worse in Britain than in any other European country. And more than half (53 percent) believed Europe is in “serious danger” of being left behind the United States.
Sixty percent of respondents said the outlook for biotechnology would start to improve over the next 12 months. But a large majority said they expect the independent sector to continue to shrink as biotechnology firms run out of money or are purchased by large drug firms.
Buckling Down in the Biosciences
Another report released at the convention concluded that states across the nation are failing to adequately prepare middle and high school students for eventual careers in biosciences.
The findings, included in a 64-page document titled “Taking the Pulse of Bioscience Education in America: A State-by-State Analysis,” provide a comprehensive look at middle and high school bioscience education in the 50 states, Puerto Rico and the District of Columbia. Released at the Biotechnology Industry Organization's (BIO) annual conference in Atlanta, the report found a wide disparity across measures of student achievement in overall science and biosciences. It also discovered that biosciences are not incorporated into state science standards equally across the nation.
“The biosciences are the great adventure of our time, and states that aspire to play a part, either as supporters or leaders, must nurture their life science education programs,” said Paul A. Hanle, president of the Biotechnology Institute, a biotechnology education organization based in Arlington, Va. “This report rates the states performance in life science education according to certain indicators of achievement. It also identifies best practices and programs throughout the nation. Both will be vital tools to help states wanting to strengthen their life science education efforts.”
Among the key findings in the report:
• Only 52 percent of 12th graders are at or above a basic level of achievement in the sciences, and for eighth graders, 57 percent are at a basic level of achievement.
• In states with the highest scores, fewer than half of the eighth graders are “proficient” in science. The percentage of eighth graders in each state that were determined to be “proficient” in science on the NAEP test ranged from a high of 43 percent to a low of 14 percent in 2005.
• On average, 28 percent of high school students taking the ACT, a national standardized test for college admission, reached a score indicating college readiness for biology. There was no state where half of the high school students were considered academically ready for college-level biology.
• Student performance was best in Connecticut, Massachusetts, Minnesota, New Hampshire, New Jersey, Ohio, Vermont and Wisconsin.
• Student performance was lagging in Arkansas, Florida, Georgia, Louisiana, Mississippi, Nevada, New Mexico, Oklahoma, Texas and West Virginia.
Independent research and development firm Battelle in cooperation with BIO and the Biotechnology Institute prepared the report.
The study and individual state profiles are available at: http://bio.org/battelle2009.