GEN What is the perspective of a major biopharmaceutical equipment and services supplier like Sartorius Stedim Biotech regarding this serious global economic downturn?
Reinhard Vogt: The biopharmaceutical market in the past has not been considerably impacted by economic upturns or downturns. If you look at the biotech industry’s development over the past year, there were already signs of a downswing in the last quarter of 2007, way before the financial crisis hit. The five largest biopharmaceutical companies forecasted only 5% growth in 2008 compared with two-digit growth in 2007.
Various factors were responsible for this relatively low growth as higher failure rates concerning new drug approvals, less commercial success for some biotech drugs than anticipated, and also, the warning letters issued by FDA that led to fewer prescriptions and less consumption of the drugs concerned. So there were other effects on the bioindustry than just the financial crisis.
Of course, with the financial crisis, there will be less money in the market, and financing of drug developments and clinical studies will become more difficult. Many biotech start-ups and even medium-sized companies will find it difficult to secure the needed financing because of the lack of venture and risk capital. Also, this is not the time to pursue IPOs. This situation may propel consolidation of the industry at an even faster pace as has already been observed in the recent years. The proposed acquisition of Wyeth by Pfizer is a good example of this. Leading biotech firms like Genentech and Amgen with a strong drug development pipeline will recover in the next few years, and we, as a supplier, can expect our business to increase as a result.
Generally, we can expect that the trend of restrictive and cautious investments in new manufacturing capacities and plants as experienced during the past two years will continue or even become more pronounced due to the financial crisis. However, this development also has positive effects for us as it is one of the key drivers for disposable technologies where we have positioned Sartorius Stedim Biotech as a key supplier to the biopharmaceutical industry.