Good old days gone for Biotech

achillesheelUID: 2113233

Good old days gone for Biotech

http://www.signonsandiego.com/news/business/biotech/20061126-9999-1n26biotech.html

The business of biotechnology is undergoing a seismic shift, and for some
companies there's no surviving the jolt. Take Discovery Partners
International. The San Diego company ceased to exist in September, a victim
of trends that are reshaping the biotech industry and, at least in the short
term, threatening innovation and job creation in the nation's third-largest
biotech cluster.

Increasingly, the venture capitalists who fund new life-science companies
are shopping for existing drugs to refine instead of backing scientists to
make discoveries. When startups are created, they're often minimally staffed
. More drug companies are farming out research work to scientists in China,
India and Eastern Europe, where tasks are done more cheaply.

For California, the birthplace of biotechnology, the stakes are high. Of the
estimated 260,000 Californians who work in the life-science industry, about
70 percent are employed in high-paying jobs in drug, medical-device or
diagnostic-tool companies. In San Diego, an estimated 36,600 employees work
at about 500 companies, according to BIOCOM, the local biotech trade
association.

"Offshoring is what destroyed our business, literally,” said Michael Venuti
, former chief executive officer of Discovery Partners. “We had one of the
premier chemistry services businesses in 2000, when the company went public,
and through 2004 this company was profitable.” A year ago, Discovery
failed to win a competitive bid that would have renewed its contract with
drug giant Pfizer, which provided half the company's annual revenue. Two
other U.S. biotechs that provided drug research services to Pfizer – Boston
's ArQule and St. Louis-based Tripos – also lost out on bids to renew
multimillion-dollar contracts with the company.

Venuti said Pfizer had the three U.S. biotechs bid against offshore
providers in India, China and Eastern Europe. “Price was the driver,”
Venuti said. “To my chagrin, Discovery bid at zero margin the second time
around just to try to keep the contract. One cent less and we'd have been
doing charity work for Pfizer.” Ultimately, Discovery sold a portion of its
business and this year folded the rest into Cambridge, Mass.-based Infinity
Pharmaceuticals. Tripos has announced it will sell its discovery
informatics and research divisions as part of the liquidation of the company
, while ArQule also said it will exit its chemistry research services
business.

“Five years ago, life-science companies would have been incredibly
reluctant to entrust a key part of their research program to scientists 12
time zones away,” Venuti said. “But not today.” Today, the biotech scene
is more frugal, leaner and, for some scientists losing high-paying research
jobs or looking for them, meaner.

Unlike 2000, when biotechs blossomed on the initial-public-offering market
and venture capitalists poured money into startups with big ideas but few
products, cash is tight for most drug developers that don't have a product
in late-stage testing or close to market.

Ivor Royston, arguably the father of San Diego's biotech cluster with two of
its biggest success stories, Hybritech and Idec Pharmaceuticals, said the
local biotech community has shifted painfully from true drug discovery. “
Today there are more virtual companies, more outsourcing, not a lot of big
labs, and fewer lab scientists being hired as we focus on developing
clinical products,” said Royston, a partner in the venture-capital firm
Forward Ventures. “There is also a growing gap between innovation and
product development, between a great idea and being able to develop
something for the clinic. And that hurts.”

The pain began in earnest a few years ago when investors, burned by biotech
hype and failed experimental drugs, began to shun biotech IPOs. In an effort
to revive Wall Street interest, venture capitalists shifted to creating
companies that develop late-stage products or existing drugs that can be
revamped to treat other diseases.

Such companies don't require the big staffs or laboratories lavished on San
Diego's pioneer biotechs, which often took a decade or more and spent
hundreds of millions of dollars to get a novel drug to market. Instead, drug
companies are stretching dollars by farming out tasks to U.S. contract
research organizations or cheaper offshore companies.

Accurate statistics about offshoring are hard to find, but recent drug
industry studies and corporate news releases attest to its growing
popularity. A survey of 186 top global companies with a combined research
and development budget of $76 billion found that three-quarters of R&D sites
planned through 2007 will go to India and China.

The study also found that China and India will account for 31 percent of
global R&D staff, up from 19 percent in 2004. Meanwhile, the number of R&D
sites and staff in Western Europe and the United States are expected to
remain static.

Charley Beever, a vice president with Booz Allen Hamilton, the consulting
firm that conducted the study, said pharmaceutical and biotech companies are
beginning to contract out more complex research, animal studies and human
clinical trials, and doing “toe in the water” drug discovery
collaborations.
Last year, Carlsbad's Invitrogen Corp. opened a small research unit in
Bangalore, and the company has shifted its Asia-Pacific executive team from
New Zealand to Shanghai. Those divisions in India and China collectively
employ about 245 people, and additional staffing is planned.

Invitrogen, which employs 1,100 in San Diego County, said the India unit
supplements rather than supplants the science done here.

“For many companies that are looking at China and India, it's really not
about cheap labor,” said Ben Bulkley, senior vice president of Invitrogen's
Asia-Pacific region. “In some instances that is a factor, but more often
there is a research collaborator you want to work with because they bring a
unique skill or perspective.”

Contract research companies with small staffs in San Diego and bigger units
abroad abound. ChemDiv employs 50 people at its local headquarters, but most
services performed for clients go to a Russian subsidiary that employs 450.
There is BioDuro, a contract research organization with operations in
Beijing, and Sundia, a company with offices in San Diego and Boston that
operates a Shanghai drug discovery and development service.

Abgent, which develops antibodies used as research tools, employs 15 in its
San Diego headquarters, most of them marketing and customer support staff.
The biotech's China research and production facility employs 50.

“Using the labor market in China, you can multiply by 10 the number of
products you can put on the market,” said Herve Le Calvez, director of
business development for Abgent.

Traditional San Diego biotechs that pursue their own drug and technology
research are also looking abroad. Arena Pharmaceuticals and Kalypsys have
hired Chinese companies to do select chemistry work, while Ambit Biosciences
uses companies in both China and India.

Ascenta, a San Diego biotech founded in 2003, has offices in San Diego and a
preclinical research facility in Shanghai. TargeGen, another local biotech,
contracts much of its medicinal chemistry work to Shanghai's WuXi
Pharmatech. And last month, San Diego's Immusol began offshoring some of its
chemistry work to two companies in Shanghai and Beijing.

Earlier this year, Immusol laid off about a dozen of its 50 employees –
most of them scientists working in drug discovery. Zhu Shen, senior director
of business development at Immusol, said offshoring provides greater
flexibility as research projects are taken up or discarded.

Shen said some of her scientist friends who have lost their jobs in San
Diego are going back to academia or taking courses to get into another
aspect of the drug business – such as guiding a drug through the regulatory
process.

“It's not a good environment now for certain types of scientists hoping to
land a good opportunity in San Diego,” Shen said. “It is very much on
people's minds these days, because there are only so many research jobs,
given these changing trends.”

One such trend is the rise of “virtual” companies. Many startups are
managed with fewer dollars and a skeleton crew, at least compared with the
companies that launched San Diego's biotech boom more than 25 years ago.

The now-defunct Agouron Pharmaceuticals, one of San Diego's earliest biotech
companies, spent $450 million and 13 years getting its first drug, Viracept
, from discovery to regulatory approval. By 1995, when Viracept was in mid-
stage Phase 2 clinical trials, Agouron employed more than 250 people.

In contrast, the region's focus on clinical development of existing drugs
requires fewer resources. Cabrellis Pharmaceuticals, founded in May and sold
in November to a Colorado company, advanced its chemotherapy drug into
Phase 2 studies with only an eight-person staff and about $10 million.

La Jolla drug developer Anaborex, formed last year to develop drugs for
treatment of the cancer-related wasting syndrome, employs one person and
farms out most of its work to contractors. Tracon Pharmaceuticals, also
formed last year, employs four people to manage development of a pipeline of
three early-stage cancer drugs.

While San Diego's veteran biotechs continue to be a robust force in the life
-science job market, the advent of the “virtual” model raises concerns
about whether job creation can keep up with job loss.

Among old-guard companies, Invitrogen plans to add 400 to 600 new employees
at its Carlsbad headquarters, while diabetes drug developer Amylin
Pharmaceuticals plans to add 350 employees to its San Diego work force in
the coming year.

But layoffs and downsizings, usually spurred by a failed drug or loss of a
collaboration, have taken their toll. For every Invitrogen there is a Pfizer
, which laid off 250 San Diego employees this year, or an Elan
Pharmaceuticals, which cut 107 San Diego jobs.

Neurocrine Biosciences cut about 100 local employees this year after it
failed to win approval for its experimental sleeping pill; Diversa cut 85
jobs; and Carlsbad's CancerVax, which merged this year with a German company
after its cancer vaccine failed in human studies, cost the Southern
California region about 180 jobs.

While no one knows whether virtual companies and offshoring will hurt San
Diego's future job base, at least one sector – commercial real estate – is
feeling the impact.

Jerry Keeney, a real state broker with CB Richard Ellis who specializes in
the biotech market, said that almost 7 percent of San Diego's laboratory
space – or 861,291 square feet – was vacant or available for sublease at
the end of September.

“It's been stagnant for a while; there isn't a lot of organic growth in the
market,” Keeney said.

During the height of the biotech boom in 2000, about 1.7 million square feet
of laboratory space was leased, the biggest year ever for San Diego. In the
first nine months of this year, 375,000 square feet of lab space was leased
.
Keeney anticipates that a total of 450,000 to 500,000 square feet of lab
space will be leased by the end of year, roughly on par with the 521,000
square feet leased in 2005.

“Typically, you see a biotech startup raise a certain amount of money, and
the next event would be that they lease some laboratory space,” Keeney said
. “But this is not now the case.”

In the short term, the trends reshaping the biotech sector may result in job
losses, some biotech observers say. But a stronger and more stable industry
also could emerge.

Kevin Kinsella, a partner with the San Diego venture-capital firm Avalon
Ventures, said offshoring and virtual companies allow venture capitalists to
“make more bets with fewer dollars.”

And successful bets will pay off in the form of stable companies that will
grow and expand here, he said.

“The days when discovery-stage companies spring fully formed from the head
of Zeus are gone,” Kinsella said. “But once you can get a startup over the
first hurdles, you almost have to create a bigger company that will require
more space and more people.”

“I don't think the whole world is going to end up in China and India, but
10 years from now it won't be as it is today, with most of the biotech work
in the U.S.,” Beever said. “It will be more balanced.

The United States' position at the “high end of the teeter-totter” is
unsustainable, Beever said.

A canvass of San Diego life-science companies turns up several that have set
up offshore units or are contracting work that would have been performed by
local scientists a few years ago.

This year, San Diego-based Accelrys, a company that develops drug discovery
software, cut 50 employees and closed a portion of a facility in Cambridge,
England. That was on top of another 50 employees who lost their jobs in 2004
, as Accelrys shifted more of its work to a facility it opened in Bangalore,
India, where it employs 74.

[ 本帖最后由 achillesheel 于 2006-12-20 04:00 编辑 ]

achillesheelUID: 2113233

赶紧转有机&药化吧，兄弟们

achillesheelUID: 2113233

San Diego-based Abgent, which has a unit in Shanghai, is among the local biotechs that have turned to China.
http://www.bio168.com/yp/readcmp.asp?cmpid=50060528135010

[ 本帖最后由 achillesheel 于 2006-12-20 04:00 编辑 ]

chris songUID: 129131

what a pity!


中国的生物春天太短暂,个人感觉在2000年后1-2年.可惜~

zehuaUID: 199246

哎，biotech, bioinfo都萧条了，biostat还能繁荣多久呢？:(
凡是跟bio挂钩的产业都好景不长。:rolleyes: