Investors Backing Preclinical Biotech Firms

Assessing the lifecycle development of the biotechnology industry in theUSA is a complicated task, according to a recent report published by Russell Reynolds Associates. One of the principal difficulties that arises is the near-irrelevance of applying the traditional corporate benchmarks of sales and revenues to an industry where only a fraction of firms have even a single product on the market.

The task is further complicated by what the report refers to as the separation of the biotechnology industry into two distinct "generations." It notes that the largest members of the first group, namely Amgen, Genentech, Chiron and Biogen, have developed similarly to the major pharmaceutical companies, as they are oriented toward drug discovery and marketing products either directly or through licensing agreements.

By adopting the traditional fully-integrated company model, the report argues, such firms stand essentially as the R&D arm of the pharmaceutical companies with which they are allied. The second-generation of firms, however, typified by Human Genome Sciences and Pharmacopeia, has begun to achieve critical mass in areas such as genomics, combinatorial chemistry and high-throughput screening.