Biotech industry has "implementation gap" around demonstrating the value of products under development

Ernst & Young’s annual biotech report shows strong performance by major players but a challenging environment for the rest of the industry and an urgent need to focus on demonstrating value, comments trade group EuropaBio.

The global biotechnology industry continued on a path of recovery in 2012 as public companies in the sector achieved top- and bottom-line growth for the third straight year even while R&D spending remained under pressure at many companies. However, new survey research in Ernst & Young’s 27th annual biotechnology industry report Beyond borders: matters of evidence indicates an “implementation gap” at most small- to mid-size companies when it comes to gathering evidence to demonstrate the value of products under development. This gap has implications on the future ability of these companies to raise capital, obtain attractive deal valuations and be successfully reimbursed for their drugs upon approval.

“In today’s increasingly outcomes-focused, evidence-driven health care systems, biotech companies cannot afford to pursue an R&D strategy that only focuses on whether or not their drug works. They need to also understand whether it will be valued and reimbursed by payers,” said Glen Giovannetti, Ernst & Young’s global life sciences leader, adding: “If you wait to address questions of value only as a product launch approaches, you do so at your own peril because pharma alliance partners - still the most viable exit option for most biotechs - now consider such data to be key drivers of their product and company valuations.”