biotechnologies: current achievements and prospects social acceptance of biotechnology-derived ...

157 Pages·2005·0.52 MB·English

BIOTECHNOLOGIES: CURRENT
ACHIEVEMENTS AND PROSPECTS
SOCIAL ACCEPTANCE OF
BIOTECHNOLOGY-DERIVED
PRODUCTS

MEDICAL AND PHARMACEUTICAL
BIOTECHNOLOGY

Prof. Albert Sasson
Paris, France

JULY 2004
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CONTENTS
INTRODUCTION: BIOTECHNOLOGY, BIO-INDUSTRY AND BIO-ECONOMY
US biotechnology and bio-industry
Europe’s biotechnology and bio-industry
Japan’s biotechnology and bio-industry
Australia’s biotechnology and bio-industry

MEDICAL AND PHARMACEUTICAL BIOTECHNOLOGY: CURRENT
ACHIEVEMENTS AND INNOVATION PROSPECTS
Genomics, and drug discovery and improvement
Current achievements and prospects
Hepatitis C
Ebola fever
RNA viruses
Human immunodeficiency virus
SARS virus
Avian flu virus
Chagas’ disease
Type-1 diabetes
Autoimmune diseases
Struggle against cancers
Antibiotics
Diagnostics

REGULATORY ISSUES
Efficient risk management
Drug approval in the European Union

ECONOMICS OF PHARMACEUTICAL BIOTECHNOLOGY AND BIO-
INDUSTRY
Global pharmaceutical market
Consolidation in the pharmaceutical industry
Biomanufacturing capacity
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Strategies of biotechnology companies and pharmaceutical groups
Comparative advantages of biotechnology companies
Funding biotechnology research and development
Pre-seed investment
Venture capital
Incentive and supportive measures in European countries
Patent expiry of biotechnology-derived drugs and its economic impact

PROMISING AREAS AND VENTURES
Medicines from transgenic animals
Plant-derived drugs using molecular biology and biotechnology
Biopharming
Plant-based pharmaceuticals
Plantibodies and vaccines
Preferred crop species
Comparative economic advantages
Pharmaceuticals and nutraceuticals from marine organisms
Cosmeceuticals

MEDICAL AND PHARMACEUTICAL BIOTECHNOLOGY IN SOME
DEVELOPING COUNTRIES
Argentina
Brazil’s genomics programmes
Cuba
Cuban Center of Molecular Immunology (CIM)
China
Chinese scientific research and development
Investments in biotechnology
Genomics work
Medical and pharmaceutical biotechnology
Cooperation
India
Singapore
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SOCIAL ACCEPTANCE OF MEDICAL AND PHARMACEUTICAL
BIOTECHNOLOGY
Social acceptance
Bioethics
Preimplantation genetic diagnosis (PGD)
Stem cells
Use of stem cells for regenerative medicine
Stem cells and cancer
The terms of the debate; positions of European countries
Positions of the USA and other countries
Therapeutic and reproductive cloning
Conclusions
Gene therapy
Testing drugs and ethical issues
Biopharming

GLOBALIZATION OF REGULATORY STANDARDS AND ETHICAL NORMS;
SOLIDARITY WITH DEVELOPING NATIONS
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INTRODUCTION: BIOTECHNOLOGY, BIO-INDUSTRY AND BIO-ECONOMY
The word 'biotechnology' was coined by Karl Ereky, a Hungarian engineer, in 1919 to
refer to methods and techniques that allow the production of substances from raw
materials with the aid of living organisms. A standard definition of biotechnology has
been reached in the Convention on Biological Diversity (1992): 'any technological
application that uses biological systems, living organisms or derivatives thereof, to
make or modify products and processes for specific use'. This definition was agreed by
168 member nations, and also accepted by the Food and Agricultural Organization of
the United Nations (FAO) and the World Health Organization (WHO).
Biotechnologies are therefore a collection of techniques or processes using living
organisms or their units to develop added-value products and services. When applied at
industrial and commercial scale, biotechnologies give rise to bio-industries.
Conventional biotechnologies include plant and animal breeding, the use of micro-
organisms and enzymes in fermentations, preparation and preservation of products, as
well in the control pests (e.g. integrated pest control). More advanced biotechnologies
mainly refer to the use of recombinant deoxyribonucleic acid (DNA) techniques (i.e. the
identification, splicing and transfer of genes from one organism to another), which are
now supported by the research on genetic information (genomics). This distinction is
just a convenient one, as modern techniques are used to empower conventional
methods, e.g. recombinant enzymes and genetic markers have been employed to
improve fermentations, plant and animal breeding. It is, however, true that the wide
range of biotechnologies, from the most simple to the very sophisticated ones, allows
each country to select those biotechnologies which suit its needs, development
priorities, and by doing so could even reach a level of excellence (e.g. the case of
developing countries who have used in vitro micropropagation and plant-tissue cultures
to become world leading exporters of flowers and commodities).
The potential of biotechnology to contribute to increasing agricultural, food and feed
production, improving human and animal health, and abating pollution and protecting
the environment, has been acknowledged in Agenda 21 – the work programme adopted
by the 1992 United Nations Conference on Environment and Development in Rio de
Janeiro. In 2001, the Human Development Report considered biotechnology as the
means to tackle major health challenges in the poor countries, such as infectious
diseases (tuberculosis), malaria and HIV/AIDS, and as an adequate tool to deal with the
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development of the regions left behind by the 'green revolution', but home to more than
half of the world's poorest populations, depending on agriculture, agroforestry and
livestock husbandry. New and more effective vaccines, drugs and diagnostic tools, as
well as more food and feed of high nutritional value will be needed to meet the
expanding needs of the world's populations.
Biotechnology and bio-industry are becoming an integral part of the knowledge-based
economy, because they are closely associated with the progress in life sciences, and the
applied sciences and technologies linked to them. A new model of economic activity is
being ushered – bio-economy – whereby new types of enterprises are created and old
industries are revitalized. Bio-economy is defined as including all industries, economic
activities and interests organized around living systems. Bio-economy can be divided
into two primary industry segments: the bioresource industries that can directly exploit
biotic resources – crop production, horticulture, forestry, livestock and poultry,
aquaculture and fisheries –, and the related industries that have large stakes as either
suppliers or customers to the bioresource sector – agrochemicals and seeds,
biotechnologies and bio-industry, energy, food and fiber processing and retailing,
pharmaceuticals and health care, banking and insurance. All these industries are closely
associated with the economic impact of human-induced change to biological systems
(Graff and Newcomb, 2003).
The potential of this bio-economy to spur economic growth and create wealth, through
enhancing industrial productivity, is unprecedented. It is therefore no surprise that high-
income and technologically-advanced countries have made huge investments in
research and development (R&D) in the life sciences, biotechnology and bio-industry.
In 2001, bio-industry was estimated to have generated $34.8 billion in revenues and
employed about 190,000 persons in publicly-traded firms, worldwide. These are
impressive results given that, in 1992, bio-industry was estimated to have generated
$8.1 billion and employed less than 100,000 persons.
The main beneficiaries of the current 'biotechnology revolution' and derived bio-
industries are largely the industrialized and technologically-advanced countries, i.e.
those which enjoy a large investment of their domestic product in R&D and
technological innovation. Thus, the USA, Canada and Europe account for about 97% of
the global biotechnology revenues, 96% of persons employed in biotechnology ventures
and 88% of the total biotechnology firms. Ensuring that those who need biotechnology
have access to it remains therefore a major challenge. Similarly, creating a conducive
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environment for the acquisition, adaptation and diffusion of biotechnology in
developing countries is another great challenge. However, a number of developing
countries are increasingly using biotechnology and have created a successful bio-
industry, at the same time as they are raising their investments in R&D in the life
sciences.

US biotechnology and bio-industry
According to Frost & Sullivan Chemicals Group, Oxford, United Kingdom, nearly
4,400 biotechnology companies were active globally in 2003: 1,850 (43%) in North
America; 1,875 (43%) in Europe; 380 (9%) in Asia; and 200 (5%) in Australia. These
companies cover the gamut from pure R&D participants to integrated manufacturers to
contract manufacturing organizations (CMOs) The USA leads with the largest number
of registered biotechnology companies in the world (318) , followed by Europe (102).
Annual turnover (2002) of these companies has been $33 billion in the USA and only
$12.8 billion in Europe. Some $20.5 billion had been allocated to research in the USA,
compared with $7.6 billion in Europe (Adhikari, 2004).
Ernst & Young – a consultancy firm – makes a difference between US companies
which have medicines and the others. The former include pioneers such as Amgen, Inc.,
Genentech, Inc., Genzyme Corporation, Chiron Corp., Biogen, Inc. These five
companies have an annual turnover representing one-third of the sector’s total, i.e. $11.6
billion out of $33 billion; in addition, their product portfolio enables them, with respect
to their turnover and stock value, to compete with the big pharmaceutical groups. For
instance, Amgen, Inc., with a $75-billion market capitalization, is more important than
Eli Lilly & Co., while Genentech, Inc.’s market capitalization is twice as big as that of
Bayer AG (Mamou, 2004e).
In 2002, Amgen, Inc., had six products on the market with global revenues amounting
to $4,991 million. With 11 products on the market and revenues worth $2,164 million,
Genentech, Inc., followed in second place. The remaining places in the top five were
filled out by Serono SA (six products, $1,423 million), Biogen, Inc. (two products,
$1,034 million) and Genzyme Corporation (five products, $858 million) [Adhikari,
2004].
Over the last decade, a clutch of companies has amassed significant profits from a
relatively limited portfolio of drugs. There is, today, heightened recognition that
lucrative opportunities await companies that can develop even a single live-saving
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biotechnology drug. For instance, Amgen, Inc.’s revenues increased by over 40% from
2001 to 2002 on the $2 billion Amgen made in 2002 from sales of Epogen and the $1.5
billion earned from the sales of Neupogen. Over $1 billion in sales of Rituxan –
monoclonal antibody against cancer – in 2002 helped Genentech, Inc., record a 25%
growth over its 2001 performance (Adhikari, 2004).
In California, there are two biotechnology 'clusters' of global importance: one at San
Diego-La Jolla, south of Los Angeles, and the other at Bay Area, near San Francisco. A
cluster is defined as an interconnection of enterprises and institutions in a precise sector
of knowledge, geographically close to each other and networked through all kinds of
links, starting with those concerning clients and suppliers. In both biotechnology
clusters, it does not take more than 10 minutes to move from one company to the other.
Biocom – a powerful ensemble of 450 enterprises, including about 400 in
biotechnology, in the region of San Diego – is helping the San Diego cluster in all
aspects of its functioning, which also includes lobbying the politicians and the various
actors of the bio-economy. The cluster relies on the intensity of exchanges between
industry managers and university research centres; for instance, one of the objectives is
to shorten the average time needed to set up a licensing contract between a university
and a biotechnology company: it generally takes 10 months to establish such a contract,
which is considered too long, and the cluster association gathers all the stakeholders to
discuss the relevant matters and conclude rapidly (Mamou, 2004e).
The clusters have developed the proof of concept, i.e. to try to show that behind an idea,
a theory or a concept, there could be a business model and eventually a blockbuster
drug. Such an endeavour made by the researchers toward the industry would lead to
licensing agreements which would reward the discovery work. The strategic alliance
between politics, basic research and pharmaceutical industry (including biotechnology
or not) within the cluster would be meaningless without capital. In fact, the success of
bio-industry is above all associated with an efficient capital market, according to David
Pyott, chief executive officer of Allergan, the world leader of ophtalmic products and
unique owner of Botox – a product used in esthetic surgery and the main source of the
company’s wealth. There cannot be any cluster without a dense network of investors,
business angels, venture capitalists and bankers, ready to take part in companies being
constituted (Mamou, 2004e).
Besides the two Californian clusters which represented 25.6% of US companies in
2001, the following percentages correspond to the other States: 8.6% – Massachusetts;
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7.7% – Maryland; 5.9% – New Jersey; 5.8% – North Carolina; 4.6% – Pennsylvania;
3.4% – Texas; 3.1% – Washington; 3.1% – New York; 2.5% – Wisconsin; and 29.7%
for the rest of the country (data from the US Department of Commerce Technology
Administration and Bureau of Industry and Security).

Europe’s biotechnology and bio-industry
The European bio-industry is less mature than its 25-year-old US counterpart. Actelion
of Switzerland qualified as the world's fastest-growing drugs group in sales terms
following the launch of its first drug, Tracleer, but it had just only achieved profitability
in 2003. Similarly, barely a few European biotechnology companies earn money.
Only Serono SA – the Swiss powerhouse of European biotechnology that grew out of a
hormone extraction business with a 50-year record of profitability – has a market
capitalization to rival US leaders (Firn, 2003). Serono SA, which is the world leader in
the treatment of infertility and also well known in endocrinology and the treatment of
multiple sclerosis, had made in 2002 a $333 million net profit from $1,546 million of
sales, and devoted 23% of these sales to its research-and-development division where
1,200 people were working. The Spanish subsidiary of Serono SA in Madrid is now
producing recombinant human growth hormone for the whole world, while the factories
in the USA and Switzerland ceased to produce it. The Spanish subsidiary had to invest
€36 million in order to raise its production, as well as another 5 million to upgrade its
installations to the production of other recombinant pharmaceuticals to be exported
worldwide.
In spite of a wealth of world-class science, the picture in much of Europe is of an
industry that lacks the scale to compete and faces financial crunch, which may force
many too seek mergers with stronger rivals (Firn, 2003).
Germany has overtaken the United Kingdom and France, and is currently home to
more biotechnology companies than any country except the USA. But far from pushing
the boundaries of biomedical sciences, many companies are putting cutting-edge
research on hold and selling valuable technology just to stay solvent. Until the mid-
1990s, legislation on genetic engineering in effect ruled out the building of a German
bio-industry. Since then, the more than 400 companies set up in Germany needed to
raise at least $496 million from venture capitalists over 2004 to refinance their hunt for
new medicines, according to Ernst & Young. Most were far from having profitable
products and, with stock markets in effect closed to biotechnology companies following
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the bursting of the bubble in 2000, they were left to seek fourth or even fifth rounds of
private financing (Firn, 2003).
The biggest German biotechnology companies, such as GPC Biotech and Medigene,
were able to raise significant sums in initial public offerings at the peak of Neuer Markt,
Germany’s market for growth stocks. But when the technology bubble burst in 2000, it
became clear to GPC Biotech that investors put very little value on ‘blue-sky’ research.
‘They wanted to see proven drug candidates in clinical trials’, states Mirko Scherer,
chief financial officer. The only option for companies such as GPC Biotech and
Medigene was to buy drugs that could be brought to market more quickly. GPC Biotech
has used the cash it earned from setting up a research centre for Altana, the German
chemicals and pharmaceutical group, to acquire the rights to Satraplatin, a cancer
treatment that was in the late stages of development. In October 2003, regulators gave
the authorization to initiate the last round of clinical trials (Firn, 2003).
After a series of clinical setbacks, Medigene has moth-balled its early-stage research to
cut costs and licensed-in late-stage products to make up for two of its own drugs that
failed. The strategy will help the company eke out its cash; but cutting back on research
will leave its pipeline looking thin (Firn, 2003).
Many of Germany’s biotechnology companies have abandoned ambitious plans to
develop their own products and chosen instead to license their drug leads to big
pharmaceutical companies in exchange for funding that will allow them to continue
their research. This approach is supported by the acute shortage of potential new
medicines in development by the world’s biggest pharmaceutical companies. But
Germany’s bio-industry has few experimental drugs to sell – about 15 compared with
the more than 150 in the United Kingdom’s more established industry. Moreover, most
of Germany’s experimental drugs are in the early stages of development, when the
probability of failure is as high as 90%. That reduces the price that pharmaceutical
companies are willing to pay for them (Firn, 2003).
Companies also have to struggle with less flexible corporate rules than their rivals in the
United Kingdom and the USA. Listed companies complain that the Frankfurt stock
exchange does not allow injections of private equity, common in US biotechnology. As
a result, few of Germany’s private companies state they expect to float in Frankfurt.
Most are looking to the USA, the United Kingdom or Switzerland, where investors are
more comfortable with high-risk stocks. But many German companies may not survive
long enough to make the choice (Firn, 2003).