Final Paper (PDF)
The biotechnology industry is expanding worldwide, with significant research
investment in the United States, Asia, and Europe. For example,
the governments of South
Korea, India, Taiwan, and Singapore have all begun to invest in biotechnology.
U.S. accounted for more than 70% of revenues and research and development
public biotechnology companies globally in 2002.
With increased global interest in biotechnology, increased competition
and off-shoring could
become an issue in the future, but U.S. job losses have not yet become
a major concern.
The Research Triangle area of North Carolina has attracted a large cluster
firms, including foreign investors, such as Bayer, BASF, Syngenta, Esai,
and Novo Nordisk.
Many of these firms are based in the Research Triangle Park.
North Carolina creates about $3 billion dollars in annual biotechnology
revenue. Revenues in the
industry overall are expected to grow as research continues to advance
and new applications
State leadership has assisted in the growth of North Carolina’s
industry, most recently in the form
of training initiatives:
• The North Carolina Biotechnology Center, in partnership with the
Golden Leaf Foundation, is
developing a massive training initiative for
the biotechnology industry, BioWork.
• The state has set up two new incubators near universities to provide
hands-on training experience.
Market Trends and Industrial Outlook
• Investment in agricultural biotechnology
is expected to increase — Global population growth,
declines in land productivity, declines in land area available for food
production, and the potential
for profit have caused the rapid adoption of biotechnology around the
• Bio-pharmaceutical industry is also expected to grow — The
ageing population has increased
demand for healthcare and, thus, expanded market opportunities for drugs
developed through biotechnology.
Sources: Ernst & Young LLP, annual biotechnology industry reports,
The Value Chain
New research often begins in the university and
is later developed by private industry. North
Carolina is well positioned to continue research through the presence
• Duke Medical Center and Duke’s Institute for Genome Science
• UNC Hospitals, UNC Comprehensive Cancer Center, and the Department
of Cell and
• NC State’s Department of Agricultural and Life Sciences
and Centennial Campus, a leader in
public/private research partnerships.
• Each major Triangle university has an Office of Technology Transfer
responsible for assisting
university researchers in applying for patents and
finding commercial partners. These offices
negotiate protection of intellectual property, act
as liaisons with the private sector, and assist
in the marketing of new products/technology.
All pharmaceutical drugs approved for sale by the
FDA need to undergo extensive safety tests.
This testing process includes:
• “Proof of Principle” — Demonstrate that, in
a limited test, the desired biological effect was achieved.
• Preclinical trials — Results are submitted when applying
for an Investigational New Drug Application
(INDA), which is a formal request to begin human
• Clinical trials — Three phases of FDA approval include administration
to healthy individuals,
individuals with the infliction intended for
treatment, and a wide group of individuals in a
randomized, double blind study. Only 5-10% of
drugs complete clinical trial testing.
Bio-agricultural products are approved by the USDA and undergo a separate
• Complexity — Bio-manufacturing is
a very process specific, capital intensive procedure which
does not allow for quick recalibration or a wide variety
of generic product to be produced.
Production runs are carefully orchestrated and require
special technical equipment which
may or may not be applicable for other procedures.
• Regulatory concerns — The FDA applies rigorous testing procedure
before any facility can be
approved for manufacturing. Should one prospective
treatment fail to achieve commercial
approval, there are many more in the pipeline which are awaiting
Due to the time and capital intensive nature of beginning a bio-manufacturing
process, there is
generally a backlog of production. Many more products are
manufactured than those that
make it through all the hurdles of production.
• Importance of Lead Firms—Lead Firms dominate bio-manufacturing
because they possess
the best equipment and funding, although some contract manufacturers
appearing more recently.
• Demand assessment — Once a product
is approved for commercial use, there must be demand
for it in order for it to sell. Often, demand for products
is frequently assumed when, in fact,
there is none.
• Marketing capability — Large, well-endowed, and branded
firms have marketing advantages.
Established lead firms often have extensive marketing
networks with established contacts in
the medical community which can obtain commercial success
for a product fairly quickly.
Startup companies often choose to partner with a larger company in order
to perform well in sales.
Firms that tend to be larger in size and product array have more success
and presence throughout
the biotechnology value chain. Lead firms also serve as partners to smaller
firms because the larger
firms can bring a new product to market more easily.
Increasing the number of lead firms in the state (currently 7) would enhance
the likelihood of job
creation in North Carolina. North Carolina has the highest
concentration of Contract Research
Organizations (CROs) in the country. CROs may be contracted
to perform any number of tasks,
including lab testing, trial design, and data analysis.