A favorable regulatory environment and rising environmental concerns will drive growth
Los Angeles, CA (PRWEB) March 27, 2012
Biotechnology is a relatively young industry with numerous opportunities for new applications. While recent developments have helped drive growth since 2007, they have failed to defend against the economic downturn. Revenue declined in 2008 and 2009, but growth returned in 2010. Over the five years to 2012, revenue is expected to increase 4.4% per year to $87.0 billion. According to IBISWorld industry analyst Sophia Snyder, new product development, a favorable regulatory environment, an aging population and access to capital have largely driven growth in industry revenue.
The Biotechnology industry had relatively easy access to capital prior to the recession, but it forced biotechnology companies to deal with low investor confidence and a cash-strapped government. While investor confidence declined in 2008 and 2009, the industry still received financing from venture capital due to promising technologies in the field. In anticipation of a less favorable capital market, biotechnology companies took considerable steps to reduce costs in 2009, including reduced research and development (R&D) expenditures.
Mergers and acquisitions (M&A) have been increasing during the five years to 2012, with the number of companies rising at an average annual rate of 2.1% to 1,843. As small companies integrate with larger operators, overall access to resources for R&D and marketing has grown. Biotechnology companies also benefit from continued federal funding for biological defense, so pharmaceutical manufacturers have acquired biotechnology companies in order to diversify product lines. Says Snyder, “This trend is effectively slowing growth in the number of industry operators, which is projected to remain flat during the next five years.” Major companies include Amgen Inc., Roche and Monsanto Company.
Among other government programs, healthcare reform legislation will benefit the industry through 2017. The reform paves a clear path for generic biological drugs (which provides operators with foresight to plan) and provides tax breaks for smaller biotechnology operators. A favorable regulatory environment combined with an aging population and mounting environmental concerns will drive revenue. For more information, visit IBISWorld’s Biotechnology report in the US industry page.
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IBISWorld industry Report Key Topics
Firms in this industry primarily use living organisms or molecular and cellular techniques to provide chemicals, food and services that meet human needs. The industry excludes companies primarily involved in developing small-molecule pharmaceuticals, performing contract research or manufacturing biological equipment.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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