Skip to main content
Premium Trial:

Request an Annual Quote

Biopharmas Rejigger in the Capital Crunch

Premium

Biotech tool companies whose technologies are used in early-stage drug discovery are in for a long, cold winter.

R&D spending among some big biopharmas will grow at a slower clip as they struggle to rein in spending, according to a report by investment bank Stephens. And in what may portend a bleaker future for genomic-tool companies, what little cash is allotted for new drug-discovery technology will likely go to later-stage tools.

According to study author John Sullivan, some big pharma shops covered by Stephens — Bristol-Myers Squibb, Merck, Pfizer, Pharmacia, Schering-Plough, and Wyeth — spent an average of 6.8 percent more on R&D spending in the third quarter 2002 than during the same period last year. This may not be too bad compared with the 7.4 percent increase reported for the same three-month period in 2001 and 2000, but it is a far cry from the 10 percent pace favored by investors. The trend has already started to encroach into the fourth quarter and beyond.

The problem is that most drug companies, faced with anemic revenue growth and cagey capital markets, spend their cash on “later-stage programs and candidates where the payoff is more imminent,” Sullivan says.

Some shops may be shielded from the cutbacks — especially those that make tools “used at relatively late stages of drug discovery,” he adds. Affy’s gene chips, for example, “are so additive that drug-company researchers can’t afford not to spend on [them].” And mass spectrometers have become very popular now that proteomic-tool companies bundle them with liquid chromatography, says Sullivan.

On the flip side are developers of new gene-sequencing technologies. “The marginal benefit of new gene-sequence information is relatively low, so researchers are not acting as quickly to buy the products,” Sullivan says.

As it stands now, the R&D trend looks long-term. Spending on new technologies will track revenue growth, according to Sullivan, “and until revenue accelerates again” — which he doesn’t expect to see for two more years — “you’re not going to see R&D spending accelerate again.”

 

The Scan

Gone, But Now Reconstructed SARS-CoV-2 Genomes

In a preprint, a researcher describes his recovery of viral sequences that had been removed from a common database.

Rare Heart Inflammation Warning

The Food and Drug Administration is adding a warning about links between a rare inflammatory heart condition and two SARS-CoV-2 vaccines, Reuters reports.

Sandwich Sampling

The New York Times sent tuna sandwiches for PCR analysis.

Nature Papers Describe Gut Viruses, New Format for Storing Quantitative Genomic Data, More

In Nature this week: catalog of DNA viruses of the human gut microbiome, new dense depth data dump format to store quantitative genomic data, and more.