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Biotech Now
It's not just for the drugstore anymore. Agriculture and the petrochemical industry are key focuses, too.


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Some day, parents may be able to buy pasta that helps reduce or eliminate childhood asthma, thanks to today's biotech research efforts.

Begging and bribing children to eat vegetables could fade away into nostalgic folklore as a new crop of nutritionally augmented food products enters the mainstream. The new field of nutraceuticals -- also known as nutritional pharmaceuticals -- is developing foodstuffs that contain more than just the naturally occurring vitamins in vegetables and other foods.

Indeed, while most of the media attention is focused on new miracle drugs coming from the definition of the human genome and other recent advances in biotechnology, a host of nonpharmaceutical advances is the result of the confluence of biology, chemistry and information technology. New substitutes for the raw material of plastics, enzymes that help dissolve pollution and other industrial products, are coming out of the labs and into the mainstream of business life, courtesy of biotechnology.

How distant are these scenarios? The technology and science for much of this exists today. It's just a matter of bringing the cost down, figuring out who pays for it, building in privacy safeguards and educating the various professional communities about the vast potential biotechnology will bring to everyday practices in the next decade.

With hundreds of applications for agriculture and other industries pending as well as more than 300 medical products in the final stages of the drug development pipeline -- Phase III clinical trials, or the final step before companies apply for approval from the Food and Drug Administration -- the $25-billion biotechnology industry is poised to affect every aspect of people's lives within the next decade, from the foods consumed to the vaccines received to the diagnostic tests taken.

The reason is simple: People want to live longer without getting sick. And biotechnology, which pinpoints medical treatments to the individual actions and messages hidden within genes, cells and proteins, offers that hope.

"There is a great demand for new therapies and cures for currently unmet medical needs," says Carl B. Feldbaum, president of the trade group Biotechnology Industry Organization. "The markets for new products in these areas are wide and deep and getting wider and deeper as the Baby Boomers age."

Consider: While development of small molecule drugs by traditional pharmaceutical companies is growing at a rate of seven percent a year, biotechnology-based small-protein drugs are growing at a rate of 15 to 20 percent a year.

"Biotechnology is another industrial revolution," says Matt Kremer, senior director of corporate communication at Neose Technologies, a leading developer of proprietary technologies for the synthesis and manufacture of complex carbohydrates. "We can't estimate how dramatically it will change our lives."

New Approaches
One good sign is the variety of new approaches that not only treats patients better, but provides good financial potential for healthcare companies.

Invest for the Ages
R&D dollars are showing respect for elders. Nearly 30 percent of the more than 300 biotech products in Phase III clinical trials are for cancer; 11 percent on the nervous system, including Alzheimer's and Parkinson's disease.
Consider cancer research. Historically, those efforts have been focused on finding a cure, a treatment that would eliminate all cancer cells from the patient and potentially prevent the disease from returning. Today's cancer efforts, though, are focused more on allowing the patient to live a normal lifespan with the cancer present, but rendered harmless. That would mean an almost endless need for the prescribed drugs and other treatments.

"Clinical research results up until now tend to indicate that the solution to treating some forms of cancer resides in controlling the disease instead of a complete cure. In other words, antiangiogenic products could make it possible to control cancer just as we have been able to do with diabetes," says Claude Hariton, vice president for clinical and regulatory affairs at Aeterna Laboratories. "A patient could therefore live with a tumor, which could be maintained in a latent stage."

And there is other good news for investors. Unlike the dot-com businesses, biotech companies are led by mature executives with real business plans and enough capital to see them through the next five to 10 years. As a result, outside investment -- fueled by the hundreds of products in the pipeline, the significant monies biotech companies have earmarked for research and development, and the unique advantages biotech products have over pharmaceutical drugs -- is expected to continue throughout the decade.

Among its advantages, biotech products are not pressured by the patent expiration and generic equivalents hitting the pharmaceutical industry, says Scott W. Morrison, a partner in the consulting firm Ernst & Young, who coauthored the firm's October 2001 in-depth analysis of this industry.

Over the next several years, for instance, pharmaceutical companies will face patent expirations on drugs that produce about $100 billion in annual sales. Most biotech drugs, however, are patent protected until the beginning of the next decade, while development of generic biologics -- the biotech equivalent of the generic and so-much-cheaper prescription drugs -- hasn't even started.

Another plus is that biotech drugs tend to have applications for multiple diseases. The rheumatoid arthritis drug Enbrel (marketed and manufactured through a joint agreement between Wyeth-Ayerst Pharmaceuticals and Immunex), for instance, blocks a protein called tumor necrosis factor (TNF), which is involved in numerous inflammatory diseases. Thus, TNF is expected to have uses in conditions such as juvenile arthritis and psoriatic arthritis.

"The total potential for a product like this is in the multibillion dollar range," says L. Patrick Gage, Ph.D., senior vice president for science and technology at American Home Products and president of Wyeth-Ayerst Research.

Rhetoric and Reality
The biotech industry received a burst of atomic power in 2000 with the identification of the 30,000 to 40,000 genes that make up the human genome. While this opens up thousands of new avenues of discovery, it's been a bit like uncovering a new world.

"Now you're here, what do you do with it?" asks Lauren Linton, Ph.D., vice president of applications, marketing and R&D at Applied Biosystems, who worked on the Human Genome project while at the Massachusetts Institute of Technology's Whitehead Institute.

With about 40,000 genes to work with, "there is an unbelievable target overload," says Ernst & Young's Morrison. "The bottleneck is in deciding which ones we can or can't develop drugs for. Functional genomics is just the starting line; the finish line is being able to understand the function of genes and the interactions of proteins in the disease process."

This ongoing effort will change the way medicine is practiced, experts predict. Using biochips -- glass or silicon wafers that function as a kind of search function to quickly accelerate the sequencing of DNA -- for example, doctors will be able to analyze thousands of genes and proteins at once, notes Morrison in his report. They then will be able to use that information to develop personalized medicine, including treatments and disease prevention strategies based on each patient's specific genetic profile. Thus, medicine will shift from an acute clinical practice to one of prevention.

Even as the biotech industry grapples with the human genome, researchers already are delving into the next step: proteomics, the understanding of hundreds of thousands of proteins -- most of which play a role in health and disease -- that genes encode for. If genes tell people what they may be, then proteins tell people what they are.

Genes code for proteins, much like a blueprint for a house. The individual elements that go into building a house -- the wood, the glass, the wiring -- are the proteins. Figure out how to make the house warmer, more secure and fireproof, and you have an overall "healthier" house. Figure out the role individual proteins play in health -- and disease -- and target drugs to either block or promote their actions, and you have an overall healthier person.

Dozens of small companies are springing up around single proteins, notes the Biotechnology Industry Organization's Felbaum. With thousands of proteins -- and perhaps more -- in existence, "the economic opportunity to access these proteins is pretty remarkable," he says.

Breaking the Logjam
The focus on functional genomics and proteomics has spurred demand for an immediate payoff in new products, notes Ernst & Young's Morrison. "But the facts are, what you put in the pipeline takes an enormous amount of time to come to market."

Good Biotech Patent News
Pharmaceuticals soon face patent expirations on many key drugs. Most biotech drugs, however, are patent protected until the beginning of the next decade, while development of generic biologics hasn't even started.
An average of 10 to 15 years, in fact, is required. This timetable poses one of the greatest challenges to the medical biotech industry. "For the industry to be as productive as it needs to be to justify today's market valuations, there has to be a very significant increase in productivity," says Stephen Hill, president of ArQule, which collaborates with pharmaceutical and biotechnology companies in the area of drug discovery.

Over the next three to five years, he notes, the industry needs to halve both the six years it currently requires between target identification and investigational new drug (IND) filings and the $50 million it costs to bring a drug to clinical trials. It also needs to bring 30 percent of those compounds successfully through clinical trials to approval, rather than the 10 percent that make it today.

Analysts expect such productivity gains will come as increasingly powerful technology is designed to enhance what used to be a painstakingly slow discovery process. Today, for instance, instead of 20 experiments a week, companies run 20,000 a day.

Expect Explosive Growth
With the largest demographic in the country's history soon eligible for Social Security, it's no wonder the majority of products in the medical biotech pipeline target diseases of aging. Nearly 30 percent of the biotech products in Phase III clinical trials are for cancer. Another 11 percent target the nervous system, including Alzheimer's and Parkinson's disease.

By 2007, as many as 240 new medicines should reach the consumer market, including expected blockbusters in the areas of cancer and heart disease.

But scientists know that biotech's magic extends far beyond the doctor's office. The lab technician's test-tube tricks will be improving the grocery store, the hardware store and, ultimately, the boardroom.

Overall, says Ernst & Young's Morrison, "we think we're at the very beginning of the technology curve. We see really explosive growth in this industry until the latter part of this decade."


This biotech special advertising section was prepared for BusinessWeek by Triangle Publishing Services Co. Inc.


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Triangle is a leading content provider of business and technology editorial for publishers and vendors. Triangle delivers print, Patent-Pending online and multimedia products, as well as a wide variety of publishing services.

Biotech Section writer:
Debra Gordon




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