"The key challenge facing healthcare today stems from its high rate of achievement in recent years. The quality of treatment has greatly improved in almost every conceivable disease. This means that in the coming years, we'll be paying more for smaller improvements." This was the equally encouraging and worrying prediction from Mary Tanner, one the world's senior life sciences analysts. Tanner is founder and managing director of Life Sciences Partners, a healthcare investment and advisory firm. From 2001 to 2004, she was senior managing director at Bear, Stearns & Co., Inc. Before that, she was a healthcare consultant and held various positions at Lehman Brothers.
Tanner is due in Israel this week to attend the ILSI 2007 Biomed Conference opening today in Tel Aviv. In her lecture, she will highlight the factors that have built up the life sciences industry's value in recent years, as well as some of the factors that she believes will build value for companies in years to come.
"The FDA is the industry's bottleneck," she continues. "Science is making rapid progress, but safety and efficacy testing still require a lot money and time. Targeted medicine will probably be the factor that will probably release this bottleneck. It will change the field, not because the laws will change, but because it will be possible to plan trials more successfully, and more information will be available on what works, thereby enabling quicker progress under existing legislation as well."
Globes: Are you, in effect, predicting the return of diagnostics?
Tanner: "I would not use the word 'return' since history never repeats itself. The new diagnostics industry will have to build its own models. The big question is not how to make an exceptionally specific diagnosis of disease, but how to do this in a manner that will have the most beneficial effect on the ability to take important medical decisions that will save money in the healthcare system."
One of the biggest value builders in life sciences in recent years has been biotechnology - protein-based drugs. Yet this industry still isn't profitable.
"The big biotech companies are extremely profitable, some of the medium-sized companies are profitable, and the small ones are making losses. Some of them are waiting for that one drug that will take them from losses to profitability. It's a very promising industry.
"Antibody-based drugs are now very hot merchandise. Anything that is successful draws attention. These drugs are extremely difficult to produce, but because of their specificity, (antibodies are built on the basis of the same receptor that they are supposed to attack, thus they are extremely effective, G.W), they are quite safe to use and can focus on targets that were previously out of reach.
"But it is a tough business. One failure can kill a stock's value even if there's a good product pipeline, and then you have to regain the confidence of investors in order to raise money again."
The Israeli biomed industry dreams of another mega company alongside Teva. How important do you feel it is to maintain companies' independence in the face of takeover bids?
"Recent years have seen an increase in the number of mergers and acquisitions in the biomed sector at the expense of the quantity and size of offerings. So perhaps, for the time being, it's worth taking into account that sometimes you have to sell."
What would you advise young companies to pay attention to in their business development?
"The thing that every company in the world needs is market intelligence. You have to realize which other products are on the verge of being launched, but not just that. You also have to understand which of the larger trends could harm the product, including trends in regulation, insurance and so on."
Published by Globes [online], Israel business news - www.globes.co.il - on June 5, 2007
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