BIO 2008

I spent last week in San Diego at the annual Biotechnology Industry Organization (BIO) international meeting, and wanted to share a few of my impressions.

Biotech Profitability

At a well-attended panel presentation by Ernst & Young summarizing and commenting upon the results of their 2008 Global Biotechnology Report, day reported that publicly traded US biotechnology companies came very close in 2007 to realizing a net profit (a net loss of $0.3b, compared to a $5.6b net loss in 2006). If the trend toward profitability continues, 2008 might be the first year in which US biotechnology is able to report a profit, which I think would be a huge psychological breakthrough if nothing else.

Major Themes

For those who have not attended a BIO conference, it is a huge event with many parallel presentation tracks, so it is very difficult to take in and make sense of more than a small fraction of the information presented. However, from my perspective some of the important topics which received a great deal of attention included biomarkers, genomics, personalized medicine, and the integration of diagnostics and drug products; reimbursement issues; globalization, particularly the rising importance of Asia as a producer and consumer of biotechnology products; the use of biotechnology to address environmental and energy concerns; and of course, recent developments in patent law, particularly in US courts and Congress. There was also a great deal of emphasis on finding and implementing incentives and market-based approaches for the development of products to address orphan diseases, diseases primarily affecting the developing world, and other under-addressed conditions.

For example, BIO has spun out BIO Ventures for Global Health (BVGH), a small nonprofit charged with the mission of harnessing the biopharmaceutical skills and resources that have transformed medicine in the industrialized world to accelerate the development of innovative vaccines, drugs and diagnostics targeting the most pernicious diseases of the developing world. BVGH is funded by BIO, the Rockefeller Foundation, the Bill and Melinda Gates Foundation, and members of industry. These diseases have received relatively little attention due to a lack of a market able to pay for any resulting product, and BVGH is attempting to facilitate and encourage market-based solutions to encourage greater industry investment, and public-and private partnerships, to create a pipeline of innovative solutions for the developing world.

In a similar fashion, groups like FasterCures seek to develop mechanisms to encourage biotechnology investment in developing drugs for orphan diseases and other conditions which have so far failed to garner sufficient industry interest. In one session, representatives of FasterCures held a discussion forum seeking input on ways to encourage the sort of innovation. Some of the ideas discussed involved better funding for FDA, a reduction of regulatory hurdles to reduce the cost of developing drugs and speeding their entry to market, and the use of prizes to incentivize innovation. In particular, there was discussion of expanding the use of market exclusivity rewards, such as those currently available for the developers of certain orphan drugs, or for companies performing pediatric studies. Another sort of prize discussed is a transferable "priority review the voucher.” The Food and Drug Administration Amendments Act (HR 3580), signed into law Sept 27, 2007, authorizes FDO to award a priority review voucher to the sponsor of a newly approved drug or biologic the targets and neglected tropical disease. The voucher, which is transferable and can be sold, entitles the bearer to a priority review for another product. It is estimated that such a voucher could shave months off approval times, resulting in valuations potentially in the tens of millions of dollars.

Intellectual Property Hot Topics

Hot topics in intellectual property at Bio 2008 included obviousness, especially the impact of KSR on the patentability of pharmaceutical and biotechnological inventions in the United States; patent reform legislation; USPTO rule changes; and the potential impact of World Health Organization (WHO) proposals to modify intellectual property practices and policies on member states. Many speakers expressed the view that proposed patent reforms being considered by Congress would substantially weaken patent laws and have an inordinately deleterious impact on biotechnology, characterizing the debate as pitting biotechnology and pharma versus the computer and information sectors. While I support strong patent rights, and agree they are of critical importance to biotechnology, sometimes I think the rhetoric goes a little overboard. While some speakers made it sound like many of the proposed patent reforms would severely harm biotechnology, a number of the reforms that have been called for in recent years have essentially been put in place in the courts, particularly in recent Supreme Court decisions. Other aspects of patent reform, like the availability of opposition proceedings, are available in other parts of the world like Europe, and do not seem to have impeded the progress of biotechnology. I think that there is a danger that if representatives of biotechnology keep promoting the idea that patent reforms will substantially undermine the future of biotechnology, and these reforms ultimately to come to pass, investors will heed the warnings and interpret the changes as more detrimental to biotechnology than is actually the case. If this occurs, it might be that investor perception of harm ends up hurting biotechnology more than the changes to patent law themselves. Whether it is KSR, Quanta, or eBay, or proposed reforms aimed at damages, venue and post-grant opposition, I predict that biotechnology will be able to cope with the changes and the industry will continue moving forward and accomplish great things.

All in all, I left the conference feeling very optimistic about the future of biotechnology. The motto of the conference was “Feed. Fuel. Heal the World,” a lofty mission, but one that I think will ultimately be successful, thanks in no small part to the important incentives provided by a robust patent system.

For more commentary on BIO 2008, you might want to check out the Biolaw blog for postings by my colleague at the University of Kansas School of Law, Andrew Torrance.