The Bioscience Industry and Technological Convergence

By Jim Austin,
     Director of Life Sciences, DSI
& Michael Mavaddat,
     Managing Director, Consulting Services, DSI

Between 1980 and 2000, the convergence of computers, information technology, and the telecom industry drove enormous global change. A similar convergence is taking place in biosciences, nanotechnology, bioinformatics, and other disciplines. This bioscience industry and technological convergence promises to play an increasingly critical role in the development of human healthcare over the next two decades. Dr. Bill Haseltine, director of the Human Genome Project, argues, "The merger of biology and information is creating new innovations such as tiny computers built into everything-eyes, ears, delivery devices, and micro-feedback devices."

As part of an on-going discussion centered on the publication of The Future of BioSciences: Four Scenarios for 2020 and Their Implications for Human Healthcare, the following highlights the ways in which bioscience industry and technology might spur future developments.¹ We have already seen some of the ways in which this convergence will play out. For example:

• With the convergence of biology, chemistry, and semi-conductors, researchers have begun to develop biochips that can diagnose blood samples.
• With connections between cardiac monitoring devices (such as pacemakers) and wireless networks, some at-risk patients now have more freedom to work and travel.
• With the development of new types of plastics provided by the chemical industry, and the use of "biomimicry" to emulate the properties of human tissue in the knee or other joints, synthetic materials may one day resurface bone joints.

Indeed, as the following diagram of just a few major industries suggests, examples of bio-driven convergence abound:

In many areas-including nanobiotechnology-universities have only just begun to develop interdisciplinary programs in biology, engineering, and supercomputing to train scientists in the principles of nanoscience and bioscience. Princeton University, for example, created the Lewis-Sigler Institute for Integrative Genomics, to encourage research and teaching at the interface of modern biology and quantitative science (particularly in physics, chemistry, and computer science). In addition, during 2000, Leroy Hood, co-founder of Applied Biosystems and Amgen, launched the Institute for Systems Biology, where he hopes to produce revolutionary biomedical tools by combining expertise in engineering, the physical sciences, and biology.² As a result of these and other institutions, some of the most promising innovations in the coming decade may spring from a breath-taking convergence across industries, academic disciplines, and markets.

Emerging technologies, such as proteomics, biochips, signal transduction, and toxicogenomics also promise to change the drug discovery landscape and to create new opportunities for pharmaceutical, biotechnology, and other health-related companies. Funded during the 1980s and 1990s by an aggressive venture capital community, biotechnology ventures exceeded 1,300. Although developers only managed to introduce 13 commercially successful products from that venture base, the example of computing, information technology, and telecommunications suggests that increasing convergence will create the context for rapid product development in the not-so-distant future. In addition, although no commercial therapies have yet resulted from the more than $1 billion investment in gene therapy, bioscience industry and technological convergence promises to spur further development. And while the "biotech bubble" burst in 1999-2000 dampened investment for several years (and led to shorter-term technological development in areas such as research tools and diagnostic tests that could generate revenues more quickly), several trends have emerged as large drug companies continue to evolve, new technologies surface, and previously separate disciplines converge. These trends include gains in systems biology, biotech partnerships, industry consolidation, new partnerships, and new entrants into the market.

Gains in systems biology (the combination of state-of-the-art technologies such as molecular diagnostics, advanced computers, and genetic databases) may eventually lead to faster, more efficient, and lower-cost drug development. Advances will flow, in large measure, from more efficient use of technologies to target the genetic causes of, and to develop novel cures for, niche diseases of interest to governments. For example, during May of 2001, the FDA approved Novartis's new drug Gleevec (a revolutionary and highly effective treatment for patients suffering from chronic myeloid leukemia). Normally, the FDA approval process would take more than six years; in the Novartis case, it took an astonishing 2 ½ months. Three factors led to this fast-track approval: 1) Mounting an aggressive and targeted "new product identification" approach to the disease, Novartis not only quickly determined that a specific genetic malfunction had caused the disease, but also developed a drug specifically designed to block the protein that causes the genetic malfunction; 2) Employing advanced genetic research techniques, Novartis scientists saw quick and effective results, which led to higher investment in speedy development; and 3), the FDA, perceiving the drug's usefulness, sped up the review and approval process. This one example illustrates where convergence might lead.

Biotech partnerships, between small- and medium-sized firms and more mature, global pharmaceutical companies, provide further instruction in convergence Although small- to mid-sized biotech firms continue to look to mature, global pharmaceutical companies for cash, marketing muscle, distribution channels, and regulatory expertise, global leaders-facing diminished new product pipelines-increasingly seek breakthroughs from smaller, more focused biotech firms. As a result, despite some setbacks, firms of all sizes have begun to sign major partnerships and acquisitions at a rapid clip. Examples include the agreement between Millennium Pharmaceuticals and Abbott Laboratories to develop new diagnostics for obesity and diabetes, and Isis Pharmaceuticals arrangements with Eli Lilly to study metabolic and inflammatory disease. Additionally, during June 2005, Novartis signed a deal with a biotech firm in San Diego, Anadys Pharmaceutical, to develop drugs aimed at hepatitis B and C. Moreover, Pfizer and Sanofi-Aventis invested in Coley Pharmaceutical Group, a biotech firm focused on developing new drugs to stimulate the immune system's response to cancer, hepatitis, and other diseases. More recently, Pfizer's global research president announced that the company has a "$17 billion budget" to acquire or license next-generation blockbuster drugs from biotechs or other drugmakers. ³

Recent consolidations signal further industry convergence. For example, during July 2002, in a $16 billion deal representing big biotech's coming of age, Amgen's acquired Immunex in the largest biotech/biotech deal to date. During 2003, IDEC Pharmaceuticals purchased Biogen for $6.7 billion, and Novartis recently acquired Chiron (still struggling after its own acquisition of PowderJect Pharmaceuticals, complete with regulatory challenges to the manufacture of its vaccine).

New partnerships have also emerged, including those between large pharmaceutical firms and university research hospitals. Breaking with the past, large pharmaceutical have significantly increased their upstream investment to research hospitals and academic programs, through multi-year, multimillion dollar grants.

New entrants also promise to alter the playing field in the biosciences. Over the past few years, several large, traditional companies from outside biosciences have established life science business units to invest in and to develop new life science technologies. These global firms include 3M, Reliance Group (India), and Hitachi Chemical Research Center Inc. (Japan/California). Moreover, in Britain, Toumaz Technology and Oracle (the world's second largest software firm) have entered into a joint venture with the Institute of Biomedical Engineering at Imperial College, London to develop and market a "pervasive monitoring system" combining cell phone, EKG data monitoring, and medical assessment capabilities to track at-risk heart patients.⁴

Although we do not know where all this activity will lead, convergence promises to provide a fascinating landscape over the coming decade. Of course, some technological and business failure will occur, just as it has in times past. After all, the first fax machine was invented 100 years before it became a commercial success. More recently, the Internet flowered slowly, taking decades to move from military and academic communities into private homes. Just as in the early days of cardiac and transplant surgery, when most patients died from complications, there may be many false starts and detours. But the general trend is unmistakable: profound convergence is happening in the biosciences, which in turn will fundamentally change the production and delivery of healthcare around the world.