Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Functional Overview of the Biotechnology Industry

Comprehensive introductory presentation on the business of biotechnology describing legal, commercial, scientific, and regulatory foundations; used in biotech MBA programs.

  • Login to see the comments

Functional Overview of the Biotechnology Industry

  1. 1. Functional Overview of the Biotechnology Industry <ul><li>To accompany </li></ul><ul><li>Building Biotechnology </li></ul><ul><li>ISBN 9780973467666 </li></ul><ul><li>Relevant pages are cited within presentation </li></ul><ul><li>Type CTRL-L to toggle </li></ul><ul><li>fullscreen view </li></ul>Presentation starts on next page For more information: Yali Friedman, Ph.D. [email_address]
  2. 2. Functional Overview of the Biotechnology Industry Presentation to accompany BUILDING BIOTECHNOLOGY
  3. 3. Objectives <ul><li>Appreciate the diversity of biotechnology applications and the fundamentals of biotechnology </li></ul><ul><li>Distinguish biotechnology from ‘traditional’ pharmaceuticals </li></ul><ul><li>Understand the value proposition of biotechnology companies </li></ul><ul><li>Appreciate why drugs are the most common application of biotechnology </li></ul><ul><li>Appreciate the interplay of legal, regulatory, and commercial factors </li></ul>
  4. 4. The Pillars of Biotechnology
  5. 5. What do Biotechnology Companies do? <ul><li>Use molecular biology to develop useful products and services </li></ul><ul><li>RED </li></ul><ul><li>Drugs, diagnostic tests </li></ul><ul><ul><li>Large profit margins </li></ul></ul><ul><ul><li>FDA mandates that all drugs must be proven safe and effective prior to marketing </li></ul></ul><ul><ul><li>History of successful regulation </li></ul></ul><ul><li>GREEN </li></ul><ul><li>Enhanced crops, molecular farming (non-drug) </li></ul><ul><ul><li>No regulatory legacy </li></ul></ul><ul><ul><li>Development costs similar to drugs, profits are not </li></ul></ul><ul><li>WHITE </li></ul><ul><li>Industrial processes </li></ul><ul><ul><li>Energy production, waste degradation, environmental remediation </li></ul></ul><ul><ul><li>Unresolved safety concerns, and issues in scalability </li></ul></ul>BUILDING BIOTECHNOLOGY Chp 6
  6. 6. Ecology  Physiology  Molecular Biology Source: EPA
  7. 7. Ecology  Physiology  Molecular Biology NIST
  8. 8. Ecology  Physiology  Molecular Biology
  9. 9. Ecology  Physiology  Molecular Biology
  10. 10. What is Molecular Biology? <ul><li>Molecular biology is the study of biological processes at their most fundamental level </li></ul><ul><li>Ecology </li></ul><ul><li>Species and groups of animals, plants, and microbes </li></ul><ul><li>Physiology, botany, microbiology (virology) </li></ul><ul><li>The structures that compose animals, plants, and microbes </li></ul><ul><li>How these structures interact with each other and the environment </li></ul><ul><ul><li>Eg. Pharmacology, neurology, immunology </li></ul></ul><ul><li>Molecular biology </li></ul><ul><li>The chemical and physical interactions within individual cells </li></ul><ul><li>The processes that underlie physiology, botany, etc. </li></ul><ul><li>Eg. What distinguishes heart from hair cells? </li></ul><ul><li>How is food processed into energy and physiological structures? </li></ul><ul><li>How do signals from the environment cause biological responses? </li></ul><ul><li>Chemistry & Physics </li></ul><ul><li>The processes that form the basis for molecular biology </li></ul>BUILDING BIOTECHNOLOGY Chp 3 <ul><li>Groups of bodies </li></ul><ul><li>Parts of bodies </li></ul><ul><li>Tissues </li></ul><ul><li>Organs </li></ul><ul><li>Individual cells </li></ul><ul><li>Parts of cells </li></ul><ul><li>Large and </li></ul><ul><li>small molecules </li></ul><ul><li>Parts of molecules </li></ul><ul><li>Parts of atoms </li></ul>
  11. 11. Why is Biotechnology Usually Associated with Drugs? <ul><li>Emphasis is on drugs, because: </li></ul><ul><ul><li>Drugs are less expensive than hospital treatments </li></ul></ul><ul><ul><ul><li>Save healthcare payers time and money </li></ul></ul></ul><ul><ul><li>Drugs are the only effective treatment for some conditions </li></ul></ul><ul><ul><ul><li>Fill unmet market needs </li></ul></ul></ul><ul><ul><li>Post R&D, drug production costs can be very low </li></ul></ul><ul><ul><ul><li>High markup </li></ul></ul></ul><ul><ul><ul><li>Years of patent-protected sales </li></ul></ul></ul><ul><ul><li>Interrupting biological processes is easier than modifying or creating them </li></ul></ul><ul><ul><li>Cost to develop non-drugs may be similar to drugs, but profits are smaller </li></ul></ul>
  12. 12. Pharmaceutical vs. Biotech Drugs <ul><li>Synthetic (Pharmaceutical) Drugs </li></ul><ul><ul><li>Chemically synthesized </li></ul></ul><ul><ul><li>Typically small and water soluble </li></ul></ul><ul><ul><li>Can withstand stomach acids and enter bloodstream </li></ul></ul><ul><li>Biologic (Biotechnology) Drugs </li></ul><ul><ul><li>Biologically synthesized </li></ul></ul><ul><ul><li>Typically large proteins, not necessarily water soluble </li></ul></ul><ul><ul><li>Cannot withstand stomach acids </li></ul></ul><ul><ul><li>Cannot cross into bloodstream </li></ul></ul>Aspirin – 21 atoms Epogen – 1297 atoms BUILDING BIOTECHNOLOGY pp. 36-37
  13. 13. Drug Delivery Implant Liposome Patch Dosed Alza BUILDING BIOTECHNOLOGY pp. 64-65
  14. 14. Delivering Biologics <ul><li>Challenge </li></ul><ul><li>Must invest in developing effective delivery methods </li></ul><ul><li>Patient compliance </li></ul><ul><li>Opportunity </li></ul><ul><li>Possible to increase efficacy, safety </li></ul><ul><li>Patches and favorable dosage regimens can improve compliance </li></ul><ul><li>Selling twice as much drug by doubling adoption and compliance </li></ul><ul><li>is similar to selling two drugs, without the cost of </li></ul><ul><li>developing two drugs </li></ul>BUILDING BIOTECHNOLOGY pp. 64-65
  15. 15. Taxol: A Traditional Pharmaceutical <ul><li>Anti-cancer drug </li></ul><ul><ul><li>In 1980 it was discovered that taxol interferes with structural proteins </li></ul></ul><ul><ul><li>to prevent cell division </li></ul></ul><ul><li>Production issues </li></ul><ul><ul><li>Only natural source was slow-growing, endangered Pacific Yew </li></ul></ul><ul><ul><li>Six 100-year old trees required to treat just one patient </li></ul></ul><ul><li>Synthetic synthesis </li></ul><ul><ul><li>Three methods have been developed, none are economically efficient </li></ul></ul><ul><li>Semi-synthetic synthesis </li></ul><ul><ul><li>Taxol precursors are extracted from yew needles and converted to taxol </li></ul></ul>
  16. 16. Biotechnology has Revolutionized Drug Development <ul><li>Injected insulin directly supplements an insufficiency in diabetics </li></ul><ul><li>Prior to 1982, insulin was primarily extracted from pig pancreas </li></ul><ul><li>50 pigs sacrificed to produce sufficient insulin for one person for one year </li></ul><ul><li>Risk of disease transmission, shortages, immune system rejection </li></ul><ul><li>Use gene splicing to insert human insulin gene into bacteria </li></ul><ul><li>Plentiful supply </li></ul><ul><li>No risk of animal disease transmission </li></ul><ul><li>Reduced risk of immune system rejection </li></ul><ul><li>Traditional pharmaceutical methods involve chemical synthesis and </li></ul><ul><li>biological extracts and pharmaceuticals are often indirect effectors </li></ul><ul><li>Biotechnology uses biological synthesis and biologics are often direct effectors </li></ul>BUILDING BIOTECHNOLOGY pp. 10-11, 36
  17. 17. The Pillars of Biotechnology
  18. 18. The Path From Science to Drugs BUILDING BIOTECHNOLOGY Chp 4
  19. 19. Genentech is a Prototype for Biotechnology Business Development <ul><li>Initially focused on applications of one innovative technology </li></ul><ul><li>The only biotech company that has never traded below its IPO price </li></ul><ul><li>Profitable for all but two of its years as a public corporation </li></ul><ul><li>Successfully diversified beyond its original commercial focus </li></ul>BUILDING BIOTECHNOLOGY pp. 13, 184
  20. 20. Genentech’s Value Proposition <ul><li>Efficiently manufacture large quantities of biological drugs to satisfy unmet needs </li></ul><ul><li>1973: Stanley Cohen and Herbert Boyer demonstrate gene splicing </li></ul><ul><ul><li>Enables production of human proteins in bacteria, yeast, cell cultures </li></ul></ul><ul><li>1976: Boyer and Robert Swanson form Genentech </li></ul><ul><li>Proof-of-principle: somatostatin </li></ul><ul><li>1982: Recombinant human insulin licensed to Eli Lilly </li></ul><ul><li>1985: Genentech becomes first biotech company to market its own drug - hGH </li></ul>
  21. 21. Calgene’s Flavr Savr Tomato <ul><li>Produce a novel tomato product that can be sold at a premium price </li></ul><ul><li>Most tomatoes are gas-ripened </li></ul><ul><li>Picked while green to prevent damage during shipping </li></ul><ul><li>Sprayed with ethylene to ‘ripen’ prior to sale </li></ul><ul><li>Result is bright red but tasteless tomatoes </li></ul><ul><li>Vine-ripened tomatoes sell for a premium </li></ul><ul><li>Tastier than gas-ripened tomatoes </li></ul><ul><li>Cost more to deliver to market, have shorter shelf-lives </li></ul><ul><li>Polygluconase enzyme was associated with ripening in 1984 </li></ul><ul><li>Highly expressed in red tomatoes, absent in green tomatoes </li></ul><ul><li>Calgene set out to reduce expression of polygluconase to delay ripening </li></ul><ul><li>Produce tomatoes that can be transported like gas-ripened tomatoes </li></ul><ul><li>but are worthy of vine-ripened prices </li></ul><ul><li>Can compete with vine-ripened tomatoes because of </li></ul><ul><li>greater durability and longer shelf-life </li></ul>BUILDING BIOTECHNOLOGY p. 326
  22. 22. Path to Development <ul><li>Isolate PG gene and generate antisense tomatoes </li></ul><ul><li>Develop assay for ripening </li></ul><ul><ul><li>Flavr Savr tomatoes spoiled slower than wild tomatoes at room temperature </li></ul></ul><ul><ul><li>1 lb weight and timer to measure firmness </li></ul></ul><ul><li>Field test </li></ul><ul><ul><li>Flavr Savr tomatoes ripened as fast as wild tomatoes, rotted slower </li></ul></ul><ul><li>File Patents </li></ul><ul><li>Solicit FDA Approval </li></ul><ul><ul><li>Demonstrate that Flavr Savr tomatoes do not pose a health risk </li></ul></ul>
  23. 23. Market Launch <ul><li>Taste of Flavr Savr tomatoes not as good as competing premiums </li></ul><ul><ul><li>Flavr Savr gene was not introduced into premium tomato varieties </li></ul></ul><ul><li>Flavr Savr tomatoes could not withstand shipping </li></ul><ul><ul><li>Firmer than vine-ripened, but not as durable as green tomatoes </li></ul></ul><ul><li>General lack of expertise in the fresh-tomato business </li></ul><ul><ul><li>Product pulled from market </li></ul></ul><ul><li>Flavr Savr tomatoes had marginal added value; </li></ul><ul><li>could not be sold at a profit </li></ul>
  24. 24. Epogen – Biotech’s First Blockbuster <ul><li>Erythropoietin (EPO) is a hormone that increases red blood cell proliferation </li></ul><ul><ul><li>Used to treat anemia </li></ul></ul><ul><ul><li>Reduces need for blood transfusions </li></ul></ul><ul><li>Development timeline </li></ul><ul><ul><li>Initially purified from 2,500 quarts of human urine in 1976 </li></ul></ul><ul><ul><li>Patents filed in 1984 </li></ul></ul><ul><ul><li>Efficacy demonstrated in 1986 </li></ul></ul><ul><ul><li>Approved for HIV patients in 1990 – 14 years after first purification! </li></ul></ul><ul><ul><li>Expanded approvals thereafter </li></ul></ul><ul><li>Developed by Amgen </li></ul><ul><ul><li>CEO is a former US Navy nuclear-submarine chief engineer </li></ul></ul><ul><ul><li>Prior science training: High-school biology, college chemistry </li></ul></ul>
  25. 25. Marketing as a Driver for R&D <ul><li>Technology Push vs. Market Pull </li></ul><ul><ul><li>Does the product solve a painful problem? </li></ul></ul><ul><ul><ul><li>Drugs are the only effective treatment for some conditions </li></ul></ul></ul><ul><ul><li>What is the value to the customer? </li></ul></ul><ul><ul><ul><li>Drugs are less expensive than hospital treatments </li></ul></ul></ul><ul><ul><li>Can R&D expenses be recovered? </li></ul></ul><ul><ul><ul><li>Post R&D, drug production costs can be very low </li></ul></ul></ul><ul><ul><ul><ul><li>High markup </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Years of patent-protected sales </li></ul></ul></ul></ul>BUILDING BIOTECHNOLOGY Chp 13
  26. 26. The Pillars of Biotechnology
  27. 27. Regulation <ul><li>FDA </li></ul><ul><ul><li>Safety and efficacy of drugs must be demonstrated prior to marketing </li></ul></ul><ul><ul><li>Food, feed additives, medical devices </li></ul></ul><ul><ul><li>Orphan Drug Act and Hatch-Waxman Act provide incentives </li></ul></ul><ul><li>USDA </li></ul><ul><ul><li>Plant pests, plants, veterinary biologics </li></ul></ul><ul><li>EPA </li></ul><ul><ul><li>Pesticides of chemical and biological origin </li></ul></ul><ul><ul><li>Novel organisms that may have industrial uses </li></ul></ul>BUILDING BIOTECHNOLOGY Chp 8
  28. 28. Clinical Trials <ul><li>Demonstration that drugs are safe and effective </li></ul>BUILDING BIOTECHNOLOGY p. 141
  29. 29. Clinical Trials Provide Value Milestones Identify a useful target Find and refine a drug Pre-clinical trials Clinical trials Market and sell drug Basic research Proof of principle Refine properties Prototype and scale Market and sell product Drug development: Non-drug biotechnology: value value Milestones facilitate funding, provide exits BUILDING BIOTECHNOLOGY pp. 242-243
  30. 30. Timeline for Product Development <ul><li>Apply R&D to reduce risk and increase the value of products </li></ul><ul><li>Concept  Patent  Pre-clinical  Phase I-III  Approval </li></ul>BUILDING BIOTECHNOLOGY pp. 362-264
  31. 31. The Pillars of Biotechnology
  32. 32. Intellectual Property Protection <ul><li>Cost of innovation is high, cost of imitation is low </li></ul><ul><li>R&D involves high up-front costs and years of research </li></ul><ul><li>Sophistication of tools and techniques makes copying products relatively easy </li></ul><ul><li>Pioneers require a mechanism to recoup R&D expenses </li></ul><ul><li>Patents grant a temporary monopoly, preventing competitors </li></ul><ul><li>from undercutting innovators </li></ul><ul><li>Lack of IP protection would motivate a commodity-based market </li></ul>BUILDING BIOTECHNOLOGY Chp 7
  33. 33. Intellectual Property <ul><li>Patents </li></ul><ul><ul><li>Prevent others from practicing an invention </li></ul></ul><ul><li>Trade Secrets </li></ul><ul><ul><li>Protect information and know-how </li></ul></ul><ul><li>Trademarks </li></ul><ul><ul><li>Protect company and product name, look and feel </li></ul></ul><ul><li>Copyright </li></ul><ul><ul><li>Protect the products of ideas – not generally applicable to </li></ul></ul><ul><ul><li>biotechnology </li></ul></ul>
  34. 34. Patents and Trade Secrets <ul><li>Patents grant the right to exclude others from making, using, or selling an invention </li></ul><ul><ul><li>Term is 20 years from date of filing </li></ul></ul><ul><ul><li>Must demonstrate: </li></ul></ul><ul><ul><ul><ul><li>Non-obviousness </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Novelty </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Substantial utility </li></ul></ul></ul></ul><ul><ul><li>Require publication of best mode to practice an invention </li></ul></ul><ul><li>Trade secrets protect know-how and information </li></ul><ul><ul><li>Do not require publication </li></ul></ul><ul><ul><li>Can potentially last indefinitely </li></ul></ul><ul><ul><li>Competitors may reverse-engineer or independently derive an invention </li></ul></ul>
  35. 35. If You Only Read One Slide … <ul><li>Biotechnology’s value proposition: </li></ul><ul><li>Apply R&D to develop novel products worthy of a multiple on investment </li></ul><ul><li>Concept  Patent  Pre-clinical  Phase I-III  Approval </li></ul>
  36. 36. Building Biotechnology on Facebook <ul><li>Join the Building Biotechnology group on Facebook to ask questions and network with biotechnology </li></ul><ul><li>students from other schools </li></ul><ul><li> </li></ul><ul><li>or </li></ul><ul><li> </li></ul>