Lessons for the Nascent Regenerative Medicine Industry from the Biotech Sector

Abstract

Recently, Gary Pisano, a respected Harvard Business School professor, who has long followed the biotech industry, published a new book, Science Business: The Promise, the Reality, and the Future of Biotech [1]. It contains evidence for some striking conclusions, most stark of which is that the industry in aggregate has never made a profit. This tends to be overlooked because a handful of companies, most notably Amgen, have been so brilliantly successful (Figure 1). A second conclusion is that biotech ventures in general have been consistently no better or worse than pharmaceutical companies over a 25-year period in terms of cumulative R&D costs incurred per new drug launched. Pisano examines why the performance of the biotech sector as a whole evidently has not been better and concludes that the industry is quite different to the silicon-based information technology sector. There, too, the pattern of university spinouts, venture funding and investment by major companies is found. However, in information technology, the intellectual property situation is more straightforward and the activities can be separated into modular parts that are distinct and relatively easy to interface and trade between stakeholders. In biotech, the elements of drug R&D are not modular, but are heavily interdependent. There is also, in spite of the great advances in biosciences, still a considerable degree of art to the discovery process and the judgements that follow. The intellectual property situation is also complex, with greater uncertainty of outcome on poorly defined and overlapping patents versus the more concrete intellectual property of software code [MacKay G, Pers. Comm.]. Again, in contrast to semiconductors, the new biopharmaceutical proteins of the biotech sector