VIEWPOINT: International competition locks on U.S. biotech Industry

Michael Fleming | PHOTO COURTESY OF DELAWARE BIO

The headline “Saudi Arabia launches plan to become biotech hub by 2040,” recently caught my eye – a report that might once have been derided, the oil rich desert kingdom’s life science ambitions are no joke. 

According to the article, “the National Biotechnology Strategy will advance Saudi Arabia’s capabilities across four main areas: vaccines, bio-manufacturing and localization, genomics and plant optimization.”

Building a thriving biotechnology industry from the ground up (or top down) ain’t the same as launching a new golf tour, but Crown Prince Mohammed bin Salman’s advisors must believe they can deploy the same LIV playbook: use piles of cash to lure All Star researchers to Riyadh and create “an international biotech hub in 16 years.”

“By improving its biotech capabilities,” the article blandly, but accurately explains, “the country hopes to boost domestic production, spur job creation and drive economic growth and diversification.” 

Money alone cannot an industry make, but it certainly doesn’t hurt, particularly at a time when the smaller companies that drive much of our biomedical innovation and new medicine pipelines are desperate for investor cash.

Last year was a historically difficult one for biotech fundraising, with biotech bankruptcies hitting a 10-year high. “More biotech companies filed for bankruptcy in 2023 than any year since 2010,” Fierce Biotech reported last week, “underscoring a brutal year defined by layoffs, company closures and pipeline reprioritizations, according to data from S&P Global Market Intelligence.”

 The biopharmaceutical industry requires Job-like patience from investors – it can take a dozen years or more before backers see a return. So with a risk averse capital market and a health care system demanding ever-higher bars of innovation – read: extremely costly years of clinical trials demonstrating step-change improvements in efficacy – biotech companies face immense, growing challenges.

Yet that dynamic has not deterred American and Delaware life science researchers from passionately advancing their mission of bringing new therapies and technologies to millions of patients and creating enormous economic value, something that clearly has caught the eye of shrewd central planners overseas.

We are the undisputed global life science leader thanks to the ingenuity and productivity of these entrepreneurial scientists who either started a business or came here because of our rare assets: a fair, predictable intellectual property (IP) framework; effective collaboration between academic and industry researchers; and a marketplace that incentivizes and rewards long-term investment.

Yet these very pillars of our success are under threat from misguided policies.

One dangerous example is the proposal for the federal government to use “march-in rights” to control the price of drugs under the Bayh-Dole Act.

Few pieces of legislation have had the transformational impact on our economy or public health as Bayh-Dole, passed in 1980. The measure is responsible for the flourishing of university technology transfer, which has sparked thousands of innovative discoveries and the boom of research parks and innovation districts across the country. Indeed, since Bayh-Dole was enacted, over 200 new medications and vaccines have been developed through public-private partnerships.

The deeply-flawed “march-in-rights” concept – where government would effectively seize the patents of products developed by small businesses or universities who received any federal support (such as very early-stage research grants) – is roundly opposed by the research community as threatening the very future of places like the University of Delaware’s humming STAR Campus.

The Association of University Research Parks (AURP) says, “this rules change is much broader (than drug prices) and will impact the university startup community, angel and VC investors plus the developers of research parks and tech hubs seeking these tenants.”

The founder of a promising Delaware “tech-bio” startup has written the proposal “would have a chilling effect on academic research and its translation to medicine, and the US pharmaceutical and biotech industries across the board – drug developers, drug manufacturers, life science tools companies, and many others.”

Another concerning policy – one that is now law – is the “pill penalty” included in the Inflation Reduction Act. This measure mistakenly penalizes small molecule drugs (usually in pill form) by unfairly, arbitrarily limiting their protection from government price controls to nine years, versus the 13 years provided biologics or “large molecule” medicines (often delivered intravenously).

The pill penalty was born of fundamental misunderstanding of the development of medicines of all categories as well as the financial imperatives of investors and companies who may not see sufficient revenue to justify R&D expenses until a drug has been on the market a decade or more.

Fortunately, there is rare bipartisan consensus in Congress to oppose one of these (march-in-rights) and fix another (pill penalty). We support these efforts and will continue to work with our congressional delegation to ensure that Delaware’s thriving life science ecosystem – a mosaic of companies of every shape and size and university and academic researchers and all the businesses that support them – continues to grow right here, not in some wealthy foreign land.

Michael Fleming is the President of the Delaware BioScience Association