BioInvestor

What's Happening in Research and Development?

BigPharma, the bulk of R&D spending is "organic." You can compare the R&D spend, quarter to quarter, to get a sense of the impact of a merger on the R&D spend. When you dig through the financials, you'll often find write downs associated with R&D expenditures from the target company in a merger.

I think a good measure of the effectiveness of R&D is simply to look at approvals for new molecular or biological entities for a given company and the revenue generation that such approvals garner.

Big Pharma Pipelines Failing to Meet Expectations

I’ll add a comment here. It’s an area that would be very, very easy for analysts to investigate: contact manufacturers, specifically companies that produce material for clinical trials, phases I and II. It takes very little investigation to discover that pilot plants—the plants that produce such material—are full. In fact, pilot plants in contract manufacturers haven’t been as full for over ten years. More significantly, perhaps, is that following a surge of investment in the late 90s, there is much more capacity in the industry today than there was ten or more years ago—by a factor of three or more. While a lot of this capacity in the outsourcing industry appears to be dedicated to emerging pharma, it’s significant in that many of these drugs find there way into the pipelines of major pharmaceutical companies. While the short term pipeline of major pharma looks bad, in the longer term, five plus years, I’d be a lot more sanguine about the recovery of the industry.

Isis Pharmaceuticals Panic Overdone

Isis certainly has a formidable patent position. The company has a large effort into securing intellectual property in this area. The big issue is in ensuring an effective delivery system--something which, at one point, monoclonal antibody products had to face. Now, monoclonal antibody products are moving rapidly through the development/approval process. It's frankly only a matter of time until antisense products reach the market. Isis is in a very strong position in this technology and should be a long-term winner.