Biotech Investing Facts: A Case in Point for Biotechnology Investing

From 1990 to 2004, 393 biotechnology companies have gone public

Currently there are approximately 1,500 biotechnology companies in the U.S., about 350 of which are public

Biotech and pharma collaborations have increased from 69 to 502 deals between 1993 and 2003, a 727% increase

Regularly environment (FDA) keeps improving

Stem cell progress continues to receive substantial government support and funding

Years of work in biotechnology labs are producing drugs that are proven to tackle many diseases

Medical biotechnology produces 40% of the drugs that the U.S. FDA approves.
In 2004 the FDA approved 20 biotech drugs

Ten years ago, there were only 22 products from biotech companies on the U.S. market, today there are 330 products

Tufts Center for the Study of Drugs Development estimates that about 50 of 250 biotech drugs currently in late-stage clinical trials should win FDA approval, a success rate almost three times better than the pharma industry standard

Currently there are about 800 biotech drugs in clinical development

Biotech companies are working tirelessly in the development of over 450 new compounds in cancer prevention alone, about 125 compounds in CNS disorders, 88 in heart ailments, and 204 for women's health

Forbes names the biotechnology company, Amgen, Company Of The year, 2004

The biotechnology industry is attracting more talent, and this is reflected in the number of drug approvals. Since 2002, the biotech industry has overtaken pharma in the number of drugs approved in the US

Ernst & Young's 2003 NDA Pipeline reported that cancer makes up 28% of all biotech R&D spending

Total biotechnology patents granted from 1993 (3,013) to 2003 (6,955) has increased by 230%

Total new biotech drugs and vaccines approved from 1993 (7) to 2003 (37) has increased by 528%

In the last ten years, total R&D spending in the US has increased 314%, in 1993 $5.7 billion and 2003 $17.9 billion

Even though the biotech sector is an extremely volatile, it has historically outperformed the overall market. The American Stock Exchange Biotechnology Index (BTK) is an industry recognized indicator that presents the biotech sectors performance over time

Pharmaceutical

Pharma's drug pipelines are dying out and biotech's keep deepening
Pharma's need more drugs to fill their pipelines, and biotechnology companies are their best source
Overall, the biotechnology industry has many more products in development than the pharma industry
Pharma's patent expirations force them to turn to biotech for innovation and new drugs, increasing the value of biotech companies. $82 billion worth of blockbuster drugs will loose US patent protection by 2007
Recent big pharmaceutical mergers and acquisitions have left fewer companies to acquire, exhausting the source of quick revenue growth and forcing attention to biotech companies
Increase in strategic partnering continues to create more value and provides favorable economics for biotech's
Pharmas are turning into product management and marketing companies, where as biotechs continue to create and develop new drugs and treatments
As cures and treatments get more complex and regulatory reviews grow longer, drug development costs have soared. On average, it takes approximately $600 million and ten years in development before a drug reaches the approval stage. Pharmaceuticals, under pressure from Wall Street to show advancements, are more wary about investing in new drugs. That's another reason to reduce risk by partnering with biotech start-ups, e.g.: Bristol-Myers has signed more then 190 such deals, and in 2004 there were a total of 502 deals

Economics

Impressive and consistent revenue growth for biotech companies, see chart. [Link to the chart. Open in new browser window.]
18% of all industry venture capital investments come from biotech
Private investment in the biotechnology sector has increased nearly six fold over the last ten years to $18.4 billion in 2004
Total biotech financing since 1998 (5.4 billion) to 2004 (18.4 billion) has increased 340%
Historically the biotechnology sector has outperformed the overall market, see chart. [Link to the chart. Open in new browser window.]
Biotech IPOs in 2004 had an average 17% increase in share price
The total biotech market capitalization since 1994 (45 billion) to 2004 (est. 399 billion) has increased 886%

Health Care

Increase in healthcare spending
Increased use of drugs vs. expensive hospital care
Personalized medicines are more in demand, as one size does not fit all anymore
Constant demand and need will be a big market for obesity, memory/Alzheimer, chronic diseases (preventative/predictive cure), anti invectives (antibiotic resistance), cancers and other age related diseases
125 million Americans have one or more chronic disease
75% of all healthcare costs are due to chronic diseases

Aging Population

The aging baby boomer generation is the world's richest, and is undoubtedly the most influential generation, and they are in need of new medicines
Three quarters of the nation's wealth is in the baby boomer generation
When baby boomers turn 65 in 2010, there will be 39 million Americans, a 17% increase of senior citizens. This generation accounts for 28% of the total U.S. population
Baby boomers buy almost 75% of all pharmaceuticals. By an approximate 5:1 ratio, senior citizens use more drugs than the middle-aged
By 2020, over 1 billion people worldwide will be over the age of 60. Average life expectancy of an American: 76.5 years

For more information about biotechnology investing, please contact DPEC Partners.

* InvestBio does not offer any securities. InvestBio's biotechnology investment products and services can only be obtained through DPEC Capital, Inc.

Sources:
bio.org, Burrill & Company, Ernst and Young LLP, BioWorld, Yahoo Finance, Viagra.com, US Department of Commerce, FDA, Office of Technology Competitiveness, Individual Investor, Bureau of Census, US Patent and Trademark Office, IndustryWeek, USA Today, BusnessWeek