Biotech (2023)

1. Biotech’s growing share of the pie

   Biotech has long been a critical source of innovation for drugmakers — and this role has grown over the past two decades. In 2003, the top 10 pharma companies still accounted for 53% of clinical trial enrollment. By 2021, the top 10 firms enrolled only 18% of clinical trial participants, according to McKinsey. Last year, emerging biotech companies were responsible for a record 65% of the molecules in the R&D pipeline without a larger company involved, up from less than 50% in 2016 and 34% in 2001, according to the IQVIA Institute.

2. GenAI x biotech: a hot niche

   Not all investors who joined the 2021 biotech gold rush had the expertise to evaluate scientific soundness. Generalist investors may feel more at home in the “techbio” world, betting on companies that are building computing platforms or infrastructure. As biology moves from bench science to data science, the ability to handle vast amounts of sequence data and run bioinformatics workflows has become a key part of the job (and indeed, biotechs are in growing need of space for their data centres).

   A new flock of startups have collectively raised billions of dollars to apply AI to drug development. Biotechs that have announced drugs discovered or developed using AI tools include London-based Exscientia, and US-based Verge Genomics and Recursion Pharmaceuticals.

3. Slashing through the regulatory thicket

   It’s really hard to get a biotech product on the European market, with startups required to get the green light from three different regulatory bodies — the European Medicines Agency (EMA), the Medicines and Healthcare products Regulatory Agency (MHRA) in the UK, and Swissmedic in Switzerland. In most cases, biotechs must do all this while simultaneously pursuing commercialisation with the Food and Drug Administration (FDA) in the US.

   It’s a gauntlet, but biotechs are doing well on red tape: the number of products approved annually by the FDA and EMA is growing: FDA approvals have doubled — from 29 in 2011 to 60 in 2021 — and EMA approvals have ticked up from 80% between 2011 and 2015 to 89% from 2016 to 2020.

4. Prepare for more Alzheimer’s drugs, after Swedish breakthrough

   Who’s had a more successful year than Gunilla Osswald, CEO of BioArctic? In July, the FDA approved the Swedish company’s first commercially available drug candidate, lecanemab, created with the Japanese drugmaker Eisai and US company Biogen. It is the first time people with Alzheimer’s will be able to take something to slow the progression of their disease.

   This milestone should see more companies piling into neuroscience. Clinical trials for Alzheimer’s drugs are at a record level, with drugmakers increasing the number they sponsor by almost 8% in the past year, according to research from the University of Nevada.

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