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Sources of Medical Technology: Universities and Industry
FIGURE 2-6 Total R&D spending, Pharmaceutical Manufacturers Association member companies, 1990–1993. SOURCE: PMA, 1993b.
truly novel drugs. Within this context, the distinction between pharmaceutical companies and biotechnology companies is blurring as pharmaceutical companies are increasingly using biotechnology techniques to develop new drugs. According to the BCG study, 33 percent of research projects in major pharmaceutical companies in 1993 were based on biotechnology, compared with only 2 percent in 1980. In some larger pharmaceutical companies, up to 70 percent of the research projects were based on molecular biology (BCG, 1993).
According to a recent "DataWatch" article in Health Affairs, the biotechnology sector included 1,272 biotechnology companies in 1993, of which 235 are public (Read and Lee, 1994). More than 100 of these companies were started in the last two years. Compared to the larger pharmaceutical sector, biotechnology is relatively small—according to a survey by Ernst and Young (1994), revenues for biotechnology companies were about $7 billion in 1992, compared to revenues of $114 billion for pharmaceutical companies. The biotechnology sector is nonetheless a very large funder of biomedical research. According to the same survey, biotechnology companies spent nearly $5.7 billion on R&D in 1992 (or about half the R&D expenditures for pharmaceuticals), or nearly 80 percent of sales (Read and Lee, 1994). As is obvious from these levels of R&D spending, the overwhelming majority of biotechnology companies are research organizations with essentially no revenues. Moreover, with very few exceptions, development efforts in the majority of these biotechnology companies are several years from approval. Table 2-3 shows the number of drugs currently in development that use biotechnology techniques, including drugs developed by larger pharmaceutical companies. Currently, there are only 19 biotechnology drugs approved for use in the United States (see Table 2-4).