A Policy Agenda to Fit All Sizes

A Policy Agenda to Fit All Sizes

03.22.11 | By Kate Connors

On Friday, The Hill's Congress Blog ran a column by PhRMA's President and CEO, John Castellani, in which he argues about America's global leadership in medical innovation that "the time for a national policy of support is now."

America's life sciences sector, including biopharmaceuticals, doesn't just provide hope for cures; it also provides jobs. As President Obama said in his State of the Union address this year, "In America, innovation doesn't just change our lives. It is how we make our living."

It reminds me of the report, recently released by Boston Consulting Group (BCG) with support from PhRMA, about emerging biopharmaceutical companies. The report found that 40 percent of these companies, which are defined by their annual revenues of between $100 million and $3 billion, are headquartered in the U.S. They are, most certainly, sources of job creation. According to BCG, "The number of jobs in emerging biopharmaceutical companies grew at an annual rate of 7 percent from 2000 to 2008, significantly more than the 1 percent growth rate of U.S. jobs in general over the same period."

What's more, "some companies in this group have experienced even faster growth as they have introduced new medicines; in these cases, the increase in number of jobs has increased by as much as ten to twelve fold within the period."

However, the report also makes clear that these companies are "like the canary in the coal mine." As they can be hit harder, earlier, they can be a sign of things to come.

The fact is, they can be particularly vulnerable to market pressures, regulatory challenges, and changing policy environments. A setback with a new medicine in development can be burdensome to any biopharmaceutical pipeline, but could potentially turn an emerging company's business model on end.

They are often heavily reliant on venture and other sources of private capital, and often do not achieve profitability for 15, 20, or more years. And because many may focus on medicines in a particular or limited therapeutic range, policy changes with a direct impact on their specific therapeutic class or disease state can dramatically affect the sustainability of their business.

This is just another reason why it's important for lawmakers to create a policy environment that supports innovation throughout the life sciences. From novel new medicines to job creation, America would reap the benefits of retaining our competitive edge.

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