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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: arun gera who wrote (66530)	7/23/2005 11:55:52 AM
From: energyplay	Respond to of 74559

I got a bit of a peak at the development cost and TIMELINE for a new, well accepted drug block buster drug from a major biotech company, which I can't name. Activity started about 1994 - of course spending was lower then. Peak R&D spending was >70 million, and this several years before product launch, still in the risk phase. I have tweaked the above numbers so it won't be obvious which firm I am talking about. I could not see me making this investment with these risks. If you have N number of failures, you company is essentially gone, even with ongoing revenue, and N is probably under 7. There needs to be a economic payoff large enough to cover not just the average success/failure rate, but to allow for enough subsequent tries to get back in the game AND to reward the shareholders and management CRAZY enough to run these risks in the first place. There's a much larger benefit to society than many of these biotech companies will ever recover, especially on any kind of risk adjusted basis. If there isn't a way of getting a higher success rate, I expect much of the biotech industry for human drugs will be gone in 15-20 years.