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Time to save for survival

The future is bright for the biotech industry. However, the companies need to cut costs immediately if they want to survive the rough economic times.
The topic of the day when the industry organization Dansk Biotech gathered its members, was how to sustain success of the Danish biotech industry. Søren Carlsen, Chairman of Dansk Biotek opened the session by talking about trends in the international biotech industry. In his speech, he tried to

answer some questions raised due to the global financial

crisis. According to Søren Carlsen, the crisis has not stuck the biotech industry harder than any other sector, but has not left it unaffected, either.

Søren Carlsen argued that there are two strategies biotech companies can use when there is a

shortage of money. The first is to make earlier partnering deals or to sell assets to bring more money into the company. The other way to make it through the rough times is what the chairman of Dansk Biotek calls ‘survival of the quickest,’ meaning that the sooner you start cutting down

on your costs, the better chance you have of staying in business. His advice to the companies in the audience was clear.

“We have to start saving money now. It´s time to get real or go home,” Søren Carlsen said.

One of the new trends Søren Carlsen mentioned in his speech is that during last year, it was mainly pharmaceutical companies that bought biotech firms. Before 2007 the common scenario was that biotech companies bought each other. The means of payment also differs. While the biotech com-panies tend to buy shares, pharmaceutical companies

pay cash. Another trend seen during 2008 is that projects were sold in later clinical phases compared to the previous years.

Søren Carlsen pointed to many factors that contribute to a positive future for biotech companies. One of those is that in the US, being the largest drug market, the growing and aging population spurs market growth. While we are getting older

and wealthier, a number of diseases are also becoming

more common. For example, in 2030, 370 million people are expected to suffer from diabetes.

“We consume more medicines today than ever, and people can afford and are willing to pay for new products. Above all, this affects the market for lifestyle drugs like Viagra or products that reduce hair loss, fight obesity or counteracts insomnia,” said Søren Carlsen.

Another factor that makes the future bright for biotech companies is that a lot of important patents expire in the period between 2007 and 2011. Many big pharma companies companies like Eli Lilly, Pfizer, Wyeth and Glaxosmithkline will loose their key patents during this time.

“Simultaneously, these companies have to grow, and that’s where biotech companies come into the picture,” said Søren Carlsen.
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