FOR IMMEDIATE RELEASE

November 20, 2003

Biopharmaceuticals Industry Analysis

Funding Shortfalls and Capacity Gap Threaten to Hamper Biopharmaceutical Industry's Progress

London, UK - 20th November, 2003

Accounting for over 70 percent of total revenues and R&D spend, the U.S. currently dominates the $41.30 billion global biopharmaceuticals market. Europe is well entrenched in second place with nearly 20 percent share of global revenues and 22 percent share of R&D outlays. Sustained expansion in the region will require industry participants to effectively address funding deficits and concerns related to manufacturing capacity.

According to latest research from Frost & Sullivan, Biopharmaceuticals Industry Analysis - Quantification of Supply and Demand of Manufacturing Capacities, Europe generated an estimated $8.30 billion in global biotech revenues with R&D spends totalling almost $5.00 billion in 2002. Building on a tradition of strong R&D and advanced technological skills, the region hosted the largest number of biotech companies in the world. However, serious funding shortages are threatening to erode Europe's global market share.

"In order for the ‚'cash-poor' companies to survive, they would have to look at means to reduce cost and be performance-oriented.This is to say, they should carry out effective research which will bring more products to launch and reduce the number of failures in clinical stages," says Frost & Sullivan Research Analyst, Dr. Raju Adhikari.

Another critical challenge for the industry as a whole has been the gap between demand and supply of manufacturing capacities.

"In the short term, projected shortfall of supply in manufacturing capacities means companies are currently able to charge premium prices for providing this service. This could, however, change entirely in the long run as new facilities and expansions could mean that manufacturers will face more difficult market conditions," notes Dr. Adhikari.

Underpinned by hectic expansion activity, a projected two million litres manufacturing capacity for 2003 is set to increase to over three million litres in 2006. In particular, the 350-plus biopharmaceutical drugs undergoing clinical trials are expected to generate a sizeable demand for capacity, while motivating more expansions.

Ongoing trials of key drugs for cancer, AIDS, diabetes and cardiac disease are likely to place additional pressures on supply levels. The rapid growth of reported diseases coupled with an increase in the elderly population is anticipated to further contribute to rising capacity demand.

At the same time, process yield improvements and pioneering expression systems for large-scale manufacturing of biotech drugs could dramatically alter the capacity gap. For instance, transgenic technology has the potential to deliver large manufacturing capacities at much lower production costs than current expression systems.

"On the other hand, if capacity supply exceeds demand, this would have important implications for the entire industry diluting the importance of the manufacturing function. A reduction in contract manufacturing organisations (CMO) charges can be expected, which would affect their profit margins. However, the excess capacity would be beneficial in terms of higher product availability and easier access to capacity by R&D firms," adds Dr. Adhikari.

Biopharmaceuticals Industry Analysis - Quantification of Supply and Demand of Manufacturing Capacities
Code: B181

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CONTACTS:

The following is a list of key industry participants: Abbott Diagnostics, Acon Labs, Beckman Coulter, Bio-Rad Laboratories, Biosite, Cozart Biosciences, Dade Behring, MAHSAN Diagnostika, Microgenics, OraSure Technologies, Princeton BioMeditech Corporation, Roche Diagnostics, Securetec Detektions-Systeme, Surescreen, von minden.