Excerpt from American Political Network
American Health Line
Volume 10 No. 9
Copyright (c) 2004 by American Political Network, Inc.
January 27, 2004
INSIDE THE INDUSTRY BIOTECH INDUSTRY: AMERICAN HEALTH LINE FEATURES RECENT NEWS
USA Today and the San Francisco Chronicle this week published reports on recent news in the biotechnology industry. Summaries of the reports appear below. - USA Today: Venture capital firms invested $3.4 billion in biotech start-up companies in 2003 -- a 6.4% increase from 2002 -- as their overall investments decreased by about 20%, research company VentureOne reported last week, USA Today reports. Biotech companies received about 20% of VC firm investments in 2003, compared with 15% in 2002. In addition, biotech and health care start-up companies received half of the 10 largest VC firm investments in 2003, John Gabbert, headof research at VentureOne, said. According to USA Today, the recent "surge]" in VC firm investments in biotech companies has resulted in part because of efforts by FDA Commissioner Mark McClellan to reduce approval times for new prescription drugs, which he has said could save companies an average of $12 million per medication (Hopkins, USA Today, 1/26). - San Francisco Chronicle: Biotech companies faced 17% of shareholder lawsuits filed in the United States in 2003, although the industry accounts for only 2% of the estimated 17,000 companies publicly traded in the nation, according to the 2003 Securities Litigation Study conducted by PricewaterhouseCoopers, the Chronicle reports. The allegations in the lawsuits range from"concealing pivotal FDA] communications to misforecasting the performance of core company products," the Chronicle reports. According to Carl Feldbaum, president of the Biotechnology Industry Organization, the "surge of litigation" is part of the business strategy of "well-heeled class-action law firms looking for new targets," the Chronicle reports. Feldbaum also attributed the focus on biotech companies in part to the "front-page spotlight on the legal woes" of ImClone Systems, the Chronicle reports. He called ImClone "atypical of the industry" and "a rogue case." Reed Kathrein, an attorney in San Francisco who represents shareholders in lawsuits filed against biotech companies, said that the companies have taken advantage of their ability to control the release of information about progress of their medications at the FDA. He said, "Sometimes there's a fine line between optimism and fraud" (Tansey, San Francisco Chronicle, 1/26).