Biotechnology Research Services
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 3,900 biotechnology research firms in the US study the use of microorganisms and cellular and biomolecular processes to develop or alter living or non-living materials. Firms develop new biotechnology processes or prototypes of new or genetically-altered products that may be reproduced, utilized, or implemented by various industries. A firm may specialize in a particular field, such as oncology, cardiovascular medicine, or agricultural products. Companies may also specialize in a particular stage of drug development (discovery, pre-clinical, clinical) or offer a full-service model that allows a firm to play a part in each step of the drug approval process.
Liability
Because biotechnology research and development involves the testing of new drugs on patients in clinical trials, firms are exposed to the risk of liability for personal injury to or death of patients, particularly those with life‑threatening illnesses.
Failure Is Inherent
The overall probability that a drug in the discovery and preclinical phases of development will reach the final market is extremely low.
Industry size & Structure
The average biotech research and development firm operates out of a single location, employs about 74 workers, and generates about $7-9 million annually.
- The biotech research and development industry consists of about 3,900 firms that employ 287,000 workers and generate $30 billion annually.
- About 5% of firms operate as non-profit organizations that generate just under 15% of industry revenue.
- The average non-profit biotech research firm employs about 64-65 workers and generates about $16 million annually.
- The industry is moderately concentrated at the top and fragmented at the bottom; the top 50 companies account for about 56% of industry revenue.
- Large firms, which include PAREXEL, Covance (LabCorp), and Syneos Health (merger of inVentiv Health and INC Research), may be vertically integrated and operate manufacturing facilities in addition to R&D centers. The largest firms typically have global operations.
- Large non-profit organizations that operate biotechnology R&D facilities include major research universities (SUNY system), IAVI, and Battelle Memorial.
- The major contract research organizations (CRO) typically focus on the development phase and offer limited services related to research/discovery.
- The broader bioscience industry includes five major subsectors: agricultural feedstock and chemicals; bioscience-related distribution; drugs and pharmaceuticals; medical devices and equipment; and research, testing, and medical laboratories.
Industry Forecast
Biotechnology Research Services Industry Growth
Recent Developments
Mar 2, 2023 - Regulatory Pathways Needed To Aid Industry Growth
- Up to 60% of the physical inputs to the global economy could theoretically be produced biologically, according to the McKinsey Global Institute. The Council on Competitiveness and four US National Laboratories are calling for a strategic, aggressive, and coordinated federal effort to capture biomanufacturing’s great potential. Creating clear, transparent regulatory pathways for firms to bring bio-based products to market is essential the group argues. Bio-applications will cut across a range of domains — from food and drugs to materials and chemicals to environmental remediation and consumer products. The regulatory landscape is complex, the group argues, but the processes must be efficient, streamlined, and timely.
- US Senator Elizabeth Warren called on the Federal Trade Commission (FTC) to closely examine two pending "Big Pharma" mergers: Amgen’s buyout of rare disease drugmaker Horizon Therapeutics and Indivior’s acquisition of Opiant and its nasal opioid overdose portfolio. Warren noted that recent decades have seen “extensive consolidation” of the pharmaceutical industry. She points out that some 60 dominant companies have been reduced to 10 between 1995 and 2015. This in turn has spurred higher prices and “decreased innovation,” the senator claims. Federal Trade Commission officials unveiled in 2021 a sweeping review of their approach to biopharma merger and acquisition scrutiny. FTC Commissioner Rebecca Kelly Slaughter cited “skyrocketing” drug costs and allegations of anticompetitive conduct in the industry as a driver of the review and said that the agency planned an "aggressive" review of proposed mergers.
- Biotechnology startups are experiencing what some experts have called economic whiplash as investors leave the space and longtime venture firms turn down the funding tap after two years of record-high investments. Startups are navigating a new world of plummeting valuations, down rounds, and less-than-ideal exit strategies. US biotech startup funding reached a record high of $77 billion in 2021, according to Crunchbase, as investors flocked to a space blooming with innovation in genetics, therapeutics, and diagnostics. Biotech funding decreased 38.6% in 2022. Investors are being more selective about which startups they fund. Just 660 startups received funding between January and August of 2022, down from 1,034 in the same time period the year prior.
- President Biden signed an Executive Order (EO) creating a National Biotechnology and Biomanufacturing Initiative. The EO states that the US Department of Health and Human Services will invest $40 million to expand the role of biomanufacturing for active pharmaceutical ingredients, antibiotics, and the key starting materials needed to produce essential medications and respond to pandemics. The US Department of Defense will invest $1 billion in bioindustrial domestic manufacturing infrastructure over five years to catalyze the establishment of the domestic bioindustrial manufacturing base that is accessible to US innovators. President Biden said that the EO is intended to “... ensure we can make in the United States all that we invent in the United States.”
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