There is no doubt that the United States is the absolute leader in the biopharmaceutical industry. The United States accounts for more than 60% of the world's annual sales of biotech drugs and has the most successful biopharmaceutical companies and the most advanced technologies in the world. The number of biopharmaceutical companies in the United States also ranks first in the world. The emergence of a large number of small wholly-owned biotechnology R&D companies has become an American phenomenon, while in Europe and Japan, this feature is not so obvious. Studying the relationship between the external living environment and industrial competitiveness of the U.S. biopharmaceutical industry is obviously very helpful in analyzing the current situation and development direction of China's biopharmaceutical industry.
1. Technological breakthroughs drive enthusiastic market pursuit
Every time Wall Street pursues biotechnology stocks, it is closely related to major breakthroughs in the field of biotechnology.
From the 1950s to the 1970s, basic molecular biology research made significant progress. The discovery of the reverse transcription process, restriction enzymes, terminal transferases, ligases, etc. made gene recombination possible, and many Hard-to-obtain proteins are expressed. These proteins, known as "magic bullets," mostly target some difficult-to-treat diseases. Interferon, EPO, and insulin are all products of this period. Major breakthroughs in technology made it possible to industrialize biotechnology products, and many biotechnology companies came into being. This gave rise to the first extremely high enthusiasm in the capital market in the 1980s and early 1990s.
In the mid-1990s, the U.S. stock market was generally depressed, and the first bioindustry investment frenzy gradually subsided. Biotechnology companies responded mediocrely in the capital market, with fewer IPOs and slow growth in the total market value of biotechnology stocks. . Just a few years later, in 2000, the implementation of the Human Genome Project (HGP) kicked off the second biotechnology revolution. HGP will enable the causes of many diseases to be uncovered and drug design to shift from initial random discovery to targeted research. The epoch-making breakthrough revolution in biotechnology has reignited investors' enthusiasm. In 2000, the total market value of Wall Street biotechnology stocks reached US$360 billion, almost three times that of 1999! Total venture capital investment also peaked.
Take Amgen as an example. After the stock was listed on Nasdaq, the stock price continued to rise. From the available data, it was only $0.104167 at the end of 1984. By 1989, the company's first product, Epogen, was approved by the FDA, and the stock price had risen to $1.020833! In 1991, the company's second product, Neupogen, was approved, and the stock price rose from US$2.59375 at the end of 1990 to US$9.46875 at the end of 1991!
The next major rise in Amgen's stock price began in 1998. During the same period, the Nasdaq Biotechnology Index also rose sharply. This time the capital market's enthusiastic pursuit of biotechnology stocks was mainly due to the human genome we mentioned above. The plan gradually emerged.
Genentech is another example. The stock price trend is closely related to the launch of its therapeutic monoclonal antibody. As shown in the table above, Genentech launched two monoclonal antibody products in 1997 and 1998 respectively, which was the origin of the first wave of growth. In 2003 and 2004, the company launched three more monoclonal antibody products. Correspondingly, the stock price also rose from US$16.58 at the end of 2002.
Millennium's stock price trend may be the most representative of biotech stocks. The stock price went higher and higher with the advancement of the Human Genome Project. When Nasdaq went crazy for technology stocks represented by Internet stocks and biotechnology stocks, the stock price rose from $6.47 at the end of 1998 to 61.88 at the end of 2000. The U.S. dollar has almost doubled! By 2001, as the technology stock bubble burst, stock prices continued to decline and have remained stable in recent years. The ups and downs during this period may reflect the charm of biotechnology stocks.
2. Institutional environment - a booster for industrialization
The "Bachel-Dole Act" and "Stevenson Act" passed by the U.S. Congress in the early 1980s -The Weidler Act allows the results of financially funded research to be patented and allows the patent to be licensed to a pharmaceutical company for exclusive use. Prior to this, microorganisms, cells, proteins, etc. known in nature could not apply for patents because they were considered natural substances. The introduction of these two bills accelerated the conversion of academic results to commercialization, and a large number of R&D biopharmaceutical companies were established. Universities and other scientific research institutions became the birthplace of early American biopharmaceutical companies, including Amgen and Genentech.
Most small biopharmaceutical companies in the United States have close ties with scientific research institutions when they start up, and their strong academic capabilities play an obvious role in promoting them. The high mobility of the U.S. science and technology labor market and the commercialization tendency of academic research results encourage outstanding scientists to participate in enterprises for research and development. Based on the application of scientists, the U.S. government can invest up to US$1 million to help scholars with innovative biotechnology register and establish new biotechnology companies to promote the industrialization of the technology. In other words, government investment improves the ability of scientists to transform into entrepreneurs. success rate.
Source: China Biotechnology Industry Development Report
3. Financing Channels - Injecting Life Blood
The vigorous development of the biotechnology industry has also driven capital The enthusiasm of the market, the 1980s and early 1990s was a period of frenzy for biopharmaceutical capital in the United States. The U.S. venture capital (VC) industry experienced a decline in the 1970s and began to revive in the 1980s. The rapid development of biotechnology attracted a large influx of VCs. Taking Genentech as an example, the company initially used US$100,000 from a VC company as start-up funding for scientific research. In return, the company held 25% of its shares. Nine months later, another VC company invested US$850,000 and held 25% of the shares. Compared with the last capital injection, the price per share increased from 12.5 cents to 78 cents. At this time, Genentech's products - somatostatin, recombinant human insulin, recombinant human growth hormone, etc. are still in experiments. In 1977, Genentech synthesized somatostatin. This breakthrough once again attracted the attention of VCs. The company received a third VC investment of US$950,000, but the VC company only received 8.6% of the shares.
VC plays a very important role in supporting the growth of new biotechnology companies. Like other pharmaceutical sub-industries, biotechnology companies require a large amount of capital investment before products are launched on the market. The table lists the proportion of capital investment at each stage of drug research and development for PhRMA members, which of course also includes biopharmaceutical companies. The data in the table shows that more than 40% of the capital investment is concentrated in the pre-market clinical trial stage. Since many early biotechnology companies were born out of scientific research institutions such as universities, and most of their pre-clinical R&D funds came from government grants, VCs (and some large chemical pharmaceutical companies) mainly intervened in investment from the clinical trial stage.
The Nasdaq market has played an important role in the development of biotechnology companies. Nasdaq relaxed its requirements for newly listed companies, attracting a large number of companies that began to grow rapidly in the 1980s. After initial investment, stock listing is the best way for VCs to exit. Nasdaq has relatively low requirements for companies to go public. As long as they meet the following three conditions and one principle, you can apply for listing.
In the 1980s, biotechnology companies were actively traded on their IPOs, and investors were crazy about them. In October 1980, Genentech was listed on NASDAQ as the first biological company. At this time, Genentech only had 4 years of development time, its main products were still in the pipeline, its total revenue was only US$9 million, and its pre-tax profit was only US$300,000. Total assets are US$5 million. However, within one hour of the company's listing, the stock price rose from US$35 per share to US$88 per share, successfully raising US$35 million. VC, high-tech companies, and the Nasdaq market have formed a situation of mutual prosperity.
To this day, VC and IPO are still the main channels for US biotechnology companies to raise funds, accounting for about 50% of the funds raised by the entire industry.