PRINT THIS PAGE Life sciences industry reaches crossroad
26/03/2008. Source:Pillsbury Winthrop Shaw Pittman.
Even as investors maintain their strong interest in the life sciences sector, industry stakeholders are facing tough decisions, according to law firm Pillsbury Winthrop Shaw Pittman.
“Despite the current credit crunch in the U.S., life science organizations spanning biotechnology, pharmaceuticals and medical devices continue to enjoy relatively easy access to capital and growing markets compared to other areas of the economy,” said San Diego partner John Wetherell, co-leader of Pillsbury’s National Life Sciences industry team. “But concerns over where to hedge R&D bets, globalization’s advantages and pitfalls, pivotal intellectual property concerns and shifting oversight and regulations in Washington raise some tough questions about where the industry is going.”
Wetherell says one of the biggest questions revolves around upcoming patent procedure changes and reform laws likely to affect how inventors are recognized and the awarding of damages in infringement claims. While Congress and the Patent and Trademark Office (PTO) weigh patent revisions, the first series of patents on more than 70 common pharmaceuticals will expire, which begs the question about generics and how much patent holders stand to lose after investing so much money in research for these products. This is of particular concern given a changing regulatory environment in Washington, where authorities and legislators seek to revamp competing policy objectives and incentives intended to empower the industry and consumers, as well as protect patient safety.
“Given Presidential campaign polls showing that many voters favor some form of universal healthcare and the scope of such plans touted in Congress and on campaign trails, including debates over how best to negotiate lower costs for prescriptions drugs, pharmaceutical companies, universities and other life science leaders face significant risks and opportunities,” said David C. Main, head of Pillsbury’s Health Care practice and founder of the Healthcare Technology Network of Greater Washington. Main advocates healthcare clients' interests on Capitol Hill and before regulatory bodies, including the Centers for Medicare and Medicaid Services (CMS) and state health and insurance departments.
Main and Wetherell agree that among the most crucial factors affecting life sciences are:
- Growth in the pharmaceutical market is expected to be between five and six percent this year, reaching record sales of $740 billion, according to the IMS Health’s 2008 Global Pharmaceutical Market and Therapy Forecast.
- While Big Pharma is reaping huge rewards distributing blockbuster pills, most new drugs are developed at small, innovative start-ups, while R&D costs are rising—to the tune of $55 billion in 2006 alone. Accordingly, the number of strategic alliances, licensing deals, and mergers has increased as companies seek new products on shorter timetables.
- Developing the right products is critical for firms requiring approval from the U.S. Patent and Trademark Office and Food and Drug Administration. Backlogs in applications make it hard for companies to recoup investments at a time when novel drugs, diagnostic equipment, implantable devices and other goods generally must yield sales in the hundreds of millions to cover research costs. A lengthened approval process is especially difficult for small companies with limited funding, who often cannot sustain years of procedural delays.
- Regulators, including the Federal Trade Commission and the Department of Justice, are shining light on the industry. Among other investigations, the FTC is exploring the competitive implications of deals in which brand-name pharmaceutical companies allegedly collaborated with their generic drug rivals to delay the introduction of discount alternative products after hard-won patents expire.
- Proposed legislation strengthening the federal government’s hand in negotiating bulk prescription drug purchases for Medicare recipients is provoking intense lobbying and alliance-building efforts in Washington.
- Despite regulatory uncertainty and free-market risks, 2007 was a record year for venture capital investments in the life sciences, with an estimated $12 billion focused on medical devices, biotechnology and pharmaceuticals.
“2008 is a year of opportunity and major decisions for both the industry’s titans and newly-minted players,” Wetherell said. “With venture-backed and acquisitive entities seeking the lead in a finite number of promising areas, researchers are weighing the best business plans and merits of partners and alliances.”
Regulators and legislators likewise offer choices while seeking to address the industry’s growth and national importance.
“Crafting life science policy is challenging for lawmakers because competing motives are often attributed to ‘Big Pharma,’ universities, federal agencies or specific constituencies in established biotech regions,” Main added. “The community’s growing and varied ranks, coupled with many Americans pushing for universal healthcare are requiring life science companies to carefully examine policy aims and outcomes while crafting the right engagements and alliances.
Pillsbury’s National Life Sciences industry team is comprised of lawyers and senior advisors with years of experience and industry-specific credentials in pharmaceutical, biotechnology healthcare, and agriculture. Members include lawyers with Ph.D.s and other advanced degrees in such fields as microbiology, chemistry, cellular biology, biochemistry, molecular biology, and physics, and include former judicial law clerks from the Court of Appeals for the Federal Circuit and examiners from the U.S. Patent and Trademark Office.
Pillsbury Winthrop Shaw Pittman is a dynamic full-service law firm with market-leading strengths in the life science, energy, financial services, real estate and technology sectors. Our lawyers serve clients throughout the U.S. and internationally from key global financial centers including New York, London, Tokyo and Shanghai. Industry-driven client teams and a multidisciplinary approach to crucial business issues of the day ensure that clients receive insightful counsel which spans the full breadth of a matter. For more information go to www.pillsburylaw.com.
The 2008 Corporate Counsel survey of in-house counsel at Fortune 500 companies named Pillsbury a "Go-To Firm" in six practice areas—corporate transactions, international, Intellectual Property, litigation, labor and employment and securities.
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