Industry Update: Biopharmaceutical

February 15

According to an August 25, 2009 BusinessWeek report, healthcare companies are leading the way in R&D spending while overall U.S. research spending was down 4% from Q4 2007 through Q2 2009. Biotechnology and pharmaceutical companies comprised 13 of the 25 companies that have increased R&D spending despite the economic downturn. By comparison, only eight high-tech companies made the list.

One of the main reasons for the boost in biopharm industry R&D budgets is the pressure on big pharma companies to get new products into their pipeline due to the patent cliff (drugs going off-patent within the next few years that can then be reproduced as generic drugs). Additionally, R&D budgets are being used to search for licensing deals as companies seek to offer a wider range of products. Some biotech and pharma companies are gaining an increase in their research budgets as they buy out other companies.

It may take time to see significant results of the increased research budgets — so far the industry has seen little increase in the ratio of R&D spending to sales.

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