‘Drug discovery depends on long-term finance with high risk of failure – and lots of it,’ he pointed out. ‘Financing of biotechnology companies hit $50bn in 2007. And overall, these biotechs only made profits for the very first time last year, amounting to $1bn on revenues of $59bn.’
The financial crisis has affected venture capital firms who are less eager to back risky early research in return for company shares. Last year bio-tech firms received £32 billion in funding, but a tough period lies ahead, the professor warned the 200 participants in the international event. Also taking part in the session were eminent economics experts Professor Gary Pisano of Harvard University and Professor William Lazonick of the University of Massachusetts Lowell. ‘Like many other sectors,’ Prof Wield continued, ‘the pharmaceutical industry has had tough times recently – there is seemingly no way to speed up and improve the drug discovery pipeline, and heavily increased R&D has not increased the number of new drugs. As a result, big companies have been laying-off staff and closing down research units, instead looking to biotechnology start-ups for new ideas.’
In recognition of the significant long term and immediate challenges faced by the pharmaceutical sector the UK Research Councils are working to help underpin future development of the sector, for example to find new ways of enabling effective drug trials that enjoy public confidence; and building new research partnership with the sector.
Medical research charities also hit Cancer Research UK, for example, has reported that its £420m annual income is likely to drop by 5%. This organisation alone supports over 500 research group leaders throughout the UK, through a variety of funding mechanisms including research institutes, clinical centres, programme and project grants.
Spending on private health is down
Not since the milder recession in the early to mid-90s has the fall in patients’ spending on private medical procedures been as significant as it is today, according to analyst company Laing and Buisson, which estimates that in 2007 the spend on non-cosmetic surgery, such as knee and hips, had already fallen by almost £30 million to £345 million.
One reason could be the greatly reduced waiting times demanded by the UK government for such procedures within the National Health Service (NHS). To meet those demands many NHS Trusts have paid for patients for treatments by private healthcare companies. As a result, from 2006-2007 the drop in self-paying private patients had not damaged the profits of private health groups – indeed they experienced raised demands for their services. Figures based on information provided by leading private health groups suggest that over £600m is spent annually by the NHS in this way.
Philip Blackburn, senior economist at Laing and Buisson, said he thinks the NHS market will grow and the drop in self-paying private patients continue due to the economic squeeze and also, with NHS waiting times falling there are less reasons to go private.