The debate over biologics moved toward compromise recently with the introduction of a bi-partisan bill that won the approval of the
If enacted, the legislation—introduced in March by Rep. Anna Eshoo (D-CA) and Rep. Joe Barton (R-TX)—would establish a blueprint for the
“The question of approving follow-on biologics is an important one, and I would imagine it would receive significant attention in the next Congress and the next administration,” says Frank Young, a partner at
Essex is targeting $1 billion for its eighth fund, which is expected to close by the end of the second quarter. The fund is likely to invest in biologics, Young says.
Major biopharmaceutical companies, such as Biogen Idec and Genzyme, have pioneered the development of biologics, but a handful of venture-backed companies and other startups are also developing ways to produce them at lower costs. And some investors believe the sector is poised for growth.
CoGenesys Inc. also has the ability to develop biologics. The Rockville, Md.-based pharmaceutical research company raised $55 million from New Enterprise Associates, OrbiMed Advisors and others before it was bought in January by Teva Pharmaceutical Industries Ltd. of Israel for $400 million.
One company that is developing biologics is Glen Allen, Va.-based
President and CEO Geoffrey Allan noted that the investors backed the company when it was producing pharmaceutical products unrelated to follow-on biologics. Insmed shifted its focus to manufacturing biologics about 18 months ago.
Allan says that he recently met with two private equity investors who are considering investing $50 million each into his company to help fund clinical trials. He declined to name the potential investors.
Investor interest in biologics is no doubt rising because it is considered one of the fasting-growing sectors in the medicines market, with consumers spending more than $30 billion on them each year, according to Bryan Liang, executive director of the Institute of Health Law Studies in San Diego. By 2010, worldwide spending on biologics is estimated to grow to $105 billion as biologics will make up nearly half of all newly approved medicines.
Stephen Reeders, founder and managing partner of Boston-based
“The most valuable aspects of technology are about making things more available to a wider group of people,” he says. “To make a change on biologics will not only need some influence from the U.S. Legislature, but also some sway from the Executive Branch,” Reeders says.
Pundits say that any of the main candidates for president—Sens. Hillary Clinton, Barack Obama and John McCain—will likely focus on biologics during the 44th U.S. presidency and ultimately support the Biologics Bill.
Obama supports lower costs for drugs and new biomedical initiatives, according to his website. McCain favors faster introduction of generics and biologics, according to the Kaiser Foundation, which monitors major health care issues in the United States. Clinton was one of several co-sponsors of an earlier version of the bill, introduced last year, and worked toward brokering compromise in the months that followed.
The candidates’ positions are important to investors because a new president typically appoints a new FDA commissioner, who oversees the development of regulations and the drug approval process.
Kelly Slone, director of the NVCA’s medical industry group, says that the NVCA had opposed the earlier bill filed by Rep. Henry Waxman (D-CA) in February 2007 that was designed to fast-track the introduction of follow-on biologics to market. The Waxman bill, Slone says, would have been “devastating on investment,” because it didn’t offer original drug developers time to recover financially from their years of research and development.
Still, there’s no guarantee that a new president will move the legislation forward and open the door to biologics.
“It all depends on what direction a new president chooses to take in looking at this issue,” Slone says.