Tuesday, May 27 2014
I have never been more bullish on the future of biotechnology because of the rapid pace of scientific discovery, strong investor interest and the entrepreneurial drive I see every day at emerging companies across the globe.
But the reality is that for our industry to realize its full promise, we need the right public policy environment. Key issues like reimbursement, FDA funding and flexibility, and strong IP protections will continue to play a critical role in the long-term success of healthcare biotechnology companies and their ability to bring new drugs to patients. Stable, forward-thinking policy is also necessary to support the emergence and growth of agriculture and industrial biotech companies.
These are the issues we work on every day at BIO. In recent years, the environment in Washington has been challenging. We have seen gridlock, partisanship, a government shutdown and sequestration. This meant playing strong defense and protecting our industry and the millions who depend on it for employment from harmful, shortsighted cuts to key programs. And we did that well.
But we also managed to put some good wins on the board, including efforts that have helped to reform the FDA, a major victory in the Affordable Care Act with regard to 12 years of data exclusivity for innovative biologics; long-term reauthorization of the SBIR program; reauthorization of a five-year Farm Bill, with mandatory funding for energy programs and recognition of renewable chemicals and energy crops; and passage and implementation of the JOBS Act.
These policies have helped to boost investor confidence in the regulatory environment. This was evident in a survey of more than 200 leading buy-side investors we conducted earlier this year. Complete results can be found on the BIO.org website, but below are some of the highlights we discussed at the conference:
For starters, investors see ample room for growth in the biotech sector in 2014. More than 56 percent of respondents see double digit returns once again for major biotech indices in 2014. Nearly half of respondents said an increase in positive clinical trials and scientific breakthroughs will be the most important catalysts for that growth.
Approximately 75 percent of respondents said FDA decision making has become more balanced with respect to risk/benefit analysis in recent years, with over 13 percent saying there has been a major shift. This was a major concern for our member companies just a few years ago—and it has been a BIO priority. In addition, more than 75 percent of respondents said that regulatory change contributed to increased investment in recent years, with over 12 percent saying that it has had a significant impact.
Today, there are more than 900 new biologics in development for conditions that target more than 100 diseases. These innovations are built on a foundation of brilliant scientific discoveries, fueled by driven entrepreneurs and allowed to flourish because of the risk taking of private investment and venture capitalists. The goal now is to build on this momentum. And that is our focus every day at
Reauthorization of the Farm Bill’s energy programs and long-term maintenance of the Renewable Fuels Standard also send clear market signals to investors in renewable energy. Mandatory funding for the Farm Bill energy programs will support economic growth and create employment opportunities in rural communities across the country.
Farm Bill energy programs are now open to renewable chemical technologies that create new manufacturing opportunities and jobs, while improving U.S. economic competitiveness. The Biorefinery Assistance Program has already helped secure millions in private capital for advanced biofuel projects and will now provide certainty for investors in the renewable chemicals and biobased manufacturing sector.
The RFS is a unique federal policy that has, just as its bipartisan supporters intended, spurred major domestic and international investment in US biofuels production. The policy is essential to maintaining a growing market for second generation biofuels, which is necessary to attract investment to advanced biofuel companies.
Unfortunately, the Environmental Protection Agency’s (EPA) recent proposal to reduce the RFS could signal instability to investors, which will make it difficult for advanced and cellulosic producers to continue making progress in expanding their infrastructure, scaling up their production line, and improving their technology foundation.
Several companies are nearing completion of pioneer commercial production facilities —including Abengoa in Hugoton, Kansas; POET-DSM in Emmettsburg, Iowa; and DuPont in Nevada, Iowa. These companies need market predictability, which comes from stable policy.
According to Abengoa, the RFS is “the single most important investment and market driver in the biofuels industry…and is the primary reason the company has invested more than $1 billion in the U.S. over the past several years.” Additionally, POET-DSM has argued that with the RFS, Congress intended to ensure a market for advanced biofuel producers but “if the government cannot be counted on to fulfill its side of the bargain, how can anyone expect the private sector to invest in these sorts of endeavors?”
Ramping the advanced biofuel technology from the lab, to pilot and demonstration scale, then to commercial status represents an enormous investment of time and capital. The advanced biofuels industry already has invested nearly $6 billion to develop new technologies, build pilot production facilities, and bring the first commercial biorefineries online, with an average private investment of $159 million per facility. And the development of homegrown technology here in the United States has generated more than 8,000 jobs in biotechnology, engineering and agriculture, along with thousands more in construction.
This is just a fraction of the total investment necessary over the next decade to meet the goals of the RFS. In fact, scaling up commercial advanced biofuel production would require a total cumulative private investment of $95 billion or more. Ongoing investment and construction depends on growth in the market for these fuels.
The RFS has brought America to the cusp of an energy revolution in advanced and cellulosic biofuels. This will mean American jobs, American energy, and American security. That revolution, though, will happen somewhere else if the changes to the RFS shrink the U.S. market for this new technology.
James Collins of DuPont has indicated that if the EPA’s proposal is enacted, “we could find ourselves shipping these technologies, jobs, and environmental benefits overseas to countries with more stable policy environments.”
So BIO will work hard in the coming year to ensure that the final rule for the 2014 RFS standards maintains the stability necessary for advanced biofuel producers.
One of the favorite parts of my job at BIO is visiting the innovative companies that are tackling the big issues we face as a society: Pollution, Disease, Hunger. I enjoy walking the shop floor and meeting the incredible men and women who are making these breakthroughs possible. After you spend time with them, after you tour their facilities, it is hard not to be bullish about America’s future - and the role that a thriving biotechnology sector will play in growing our economy and making America more globally competitive.
There has never been a better time to be in the biotechnology industry. Scientific advances and unique market opportunities are fueling innovation, job creation and economic growth. From groundbreaking new medicines that are helping to cure and treat previously untreatable diseases to renewable chemicals and biofuels that are helping to loosen America’s reliance on foreign fuels to biotech crops that are allowing farmers to feed a growing, global population, biotechnology innovations are creating enormous economic opportunities for businesses and communities around the world. Our goal at the Biotechnology Industry Organization (BIO) is to make sure that we build on this momentum and realize the full economic and societal benefits of biotechnology innovation.