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Last Updated

23 Jun 2003

Source: Washington Post, June 23, 2003


The State of Biotechnology

By Kyle Balluck, Staff Writer

Researchers, government officials and industry executives are gathering in Washington for the Biotechnology Industry Organization's annual convention. Topics to be addressed at BIO 2003 range from science and regulatory affairs to bioethics and homeland security.

BIO's president and the leaders of Maryland and Virginia's biotechnology associations shared their views on the state of the industry and the challenges it faces.

Carl Feldbaum: President, Biotechnology Industry Organization


The freedom to practice responsible science is certainly one challenge that touches every participant at the basic level. A little more tangibly, the FDA is an institution which has enormous influence over the pace of biotechnology. Accordingly, a great deal of the programming [at BIO 2003] will deal with FDA and regulatory issues in general. FDA Commissioner Mark McClellan will be an active participant and speaker.

Because it's here in Washington, we will have a much greater participation from, in many cases, high-level government officials. We have a whole component of the meeting that involves [the National Institutes of Health]. We have issued an invitation to the president. We are still hopeful that he will be at BIO 2003 to deliver a major health policy address.


There is very good news about biotech in terms of the capital markets recovering. I can actually say that biotech stocks are rather hot. The Nasdaq biotech index is up nearly 50 percent this year. And that's been a six-month, steady phenomenon. That's been accentuated by surges attributed to announcements of scientific advances and FDA announcements of new approved drugs. Also, in the first quarter of 2003, biotech financing rose 16 percent. Just this past May, companies raised a billion dollars in a month, which is extraordinarily positive. On the venture capital side, the National Venture Capital Association recently said life sciences show extraordinary resilience.


I think it's significant to point out that very few companies get money directly from the government for research. That's increased a bit with the concerns about bioterrorism. There are now more companies doing business with DoD than before. But this is still a very small portion of the biotech community. One thing the U.S. has going for it over every other nation is the commitment to basic biomedical research and the substantial funding of the NIH.


Just as you've seen an enormous convergence of biotechnology and information technology, you're beginning to see convergence of biotechnology with other technologies, engineering disciplines and nanotechnology, in the building of new, highly computerized dry laboratories that are, if not nanotechnology, very miniaturized. It gives you the ability to do thousands of times more experiments than you could in the past.


The bright spots are a continuation of what's happened during the last year in biomedical advances. I don't know if it's attributable to Mark McClellan and FDA, but product approvals seem to be rolling again. And they are for really breakthrough medicines. The fact that the biotech industry has performed the last six months has been driving a lot of things, including the markets.

Robert Eaton: President, MdBio, Inc.


The number one issue right now is the ability to attract early stage financing. That's been a challenge for a couple of years. I'm certainly hopeful. There will be a time lag. How sustained this stock market rally is will go toward determining the availability of early term financing.

I think the Medicare prescription drug benefits are going to be a very important factor in the ability of companies to sell their products and in obtaining investments. As long as there's any specter of government regulation of prices, it's going to be that much more difficult for companies to raise money.


I think tech transfer important, not only from federal lab and universities, but also from companies. I look at those as fountains of entrepreneurship. It's a major factor in development of companies. In terms of tech transfer, I think the federal labs can't afford to be preferential to any geographic area.


I think we have a next generation of companies. The next time the window opens for public financing, several Maryland companies are ready to take that next step. By and large, their products are fairly far down the development pipeline. I think service companies that we have will continue to do well as other firms continue to outsource functions within the R&D process.

Mark Herzog: Executive Director, Virginia Biotechnology Association


I think in terms of challenges, it's exactly the same as other states. The funding. The venture capital support that has been out there in the past is not there now. Clearly, companies are struggling. The capital markets have dried up in terms of funding for biotech companies. It's that way throughout the country.


One of the things that was an interesting development after 9/11 was the impact of the federal funding on biodefense and homeland security. A lot of companies prior to 9/11 that had not been involved in homeland security were able to reconfigure their research and continue on doing biodefense research.


Tech transfer is not sometimes a major priority for universities. Universities are funded based on how many undergrads they educate. There is not the same incentive to invest resources in a tech transfer office. As a result, staff is overworked, with 400 to 500 applications that they have to review. There is no way under existing resources they can completely meet the demand.


I think the economy is turning around. We've had a lot of approvals from the FDA in the past couple months.

The current administration in Richmond has launched a biotech commission made up of approximately 40 leaders from across the Commonwealth looking for ways to leverage state resources to promote biotechnology in the Commonwealth. An executive order was just signed to extend the commission. Over the next six months, they'll get a detailed proposal to take to General Assembly. Due to economic climate, we don't expect huge, groundbreaking initiatives, but we're very optimistic that we have an administration that's supportive.

Clearly, success with the FDA is a key benchmark, getting approvals. That's really what drives the investors and confidence in companies. On a larger scale, Virginia's larger success in recruiting pharmaceutical companies and drug manufacturers is also important.