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Keep the Success Coming

Big biotech companies are increasingly acting like big pharmaceutical companies, writes Meghana Keshavan at Stat News. A new report from EY indicates that large biotechs are focusing on gaining new products through mergers and acquisitions instead of developing them themselves, she says.

The EY report found that the 17 big biotechs — biotechs with more than $500 million a year in revenue — all together raised $32 billion in debt financing last year that Keshavan notes is available for mergers and acquisitions. At the same time, she says the big biotechs only increased their research and development spending by 10 percent, as compared to the 28 percent increase by the broader biotech industry.

Celgene, for instance, raised $8 billion to help pay for its acquisition of the startup Receptos for $7.2 billion, she says, and Receptos has a drug to treat the autoimmune disorder ulcerative colitis that complements Celgene's focus on inflammatory disease drugs.

Keshavan adds that big biotechs are beginning to face the same problems that plague big pharma: staying current, having a full pipeline, dealing with drug pricing, and managing shareholders.

"We're starting to see more pronounced pressures on some of the bigger biotechs that we haven't seen in the past," Ellen Licking, an EY senior analyst, tells her. "They're victims of their own success: Big biotech has seen enormous growth in recent years, but those growth rates are hard to sustain."