Live from BIO 2011: Biotechs might have to do more with less

A panel of biotech leaders, including Sanofi CEO Chris Viehbacher (photo), spoke at a panel Tuesday at the BIO International Convention to discuss the Ernst & Young 25th Annual Biotechnology Industry Report.

The industry is facing a number issues, including scarce funding and cuts in R&D. As the report points out, companies and their investors have had to realign strategies through restructuring or partnering with larger companies earlier. And we can expect this state of affairs to continue, according to the report.

The global economic crisis has made funders hesitant to finance innovation at emerging companies. So now, these companies must do more with less and prove it or lose it. "[I]n today's new normal, as raising capital has become more challenging, companies will also need to pay close attention to preserving and optimizing their more limited resources," the report states.

Funding increasingly be tranched, as E&Y's Gautam Jaggi pointed out. This might help achieve milestones, but it increases pressure on companies. However, Paul Hastings, president and CEO of OncoMed, said doing more for less and tranched funding are good things, and he doesn't see the industry as all that different that it was in 1986. He added that anyone who isn't doing more with less shouldn't be in the biotech industry.

In R&D terms, 2009 saw a dramatic drop in spending. There was a 2 percent increase last year--perhaps a sign of a turnaround. But companies should become more targeted in their approach. Drugs for rare diseases is gaining interest, the report points out, and this might give us a glimpse of the future of medicine. "The future is one where more and more drug development will involve targeted approaches for smaller populations. It is one where diseases will be understood and classified based on their mechanisms of action rather than the symptoms they manifest," the report states.

Viehbacher, who came in as a last minute guest on the panel, said that even though there will probably be a decline in R&D spending over the next five years, it might benefit the industry in the long run.