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biotechnology may have a larger impact on the world than health care and agricultural
biotechnology. It offers businesses a way to reduce costs and create new markets while
protecting the environment. Also, since many of its products do not require the lengthy
review times that drug products must undergo, it's a quicker, easier pathway to the
market. Today, new industrial processes can be taken from lab study to commercial
how we manufacture products but is also providing us with new products that could not
even be imagined a few years ago. Because industrial biotechnology is so new, its
benefits are still not well known or understood by industry, policymakers, or consumers.
From the beginning, industrial biotechnology has integrated product improvements with
pollution prevention. Nothing illustrates this better than the way industrial biotechnology
solved the phosphate water pollution problems in the 1970s caused by the use of
removed stains from clothing better than phosphates, thus enabling replacement of a
to get their clothes cleaner with lower wash water temperatures and concomitant energy
savings.
when Neolithic cultures fermented grapes to make wine, and Babylonians used microbial
enabling the production of cheese, yogurt, vinegar, and other food products. In the 1800s,
Louis Pasteur proved that fermentation was the result of microbial activity. Then in 1928,
Sir Alexander Fleming extracted penicillin from mold. In the 1940s, large-scale
drug. Not until after World War II, however, did the biotechnology revolution begin,
Since that time, industrial biotechnology has produced enzymes for use in our
daily lives and for the manufacturing sector. For instance, meat tenderizer is an enzyme
and some contact lens cleaning fluids contain enzymes to remove sticky protein deposits.
which are specialized proteins. These enzymes have evolved in nature to be super-
These amazing enzyme catalysts are what make industrial biotechnology such a powerful
new technology.
of detailed information derived from the cell: genomics, proteomics, and bioinformatics.
ranging from bacteria, yeasts, and fungi to marine diatoms and protozoa.
environment and then use DNA probes to search at the molecular level for genes that
produce enzymes with specific biocatalytic capabilities. Once isolated, such enzymes can
be identified and characterized for their ability to function in specific industrial processes.
Many biocatalytic tools are rapidly becoming available for industrial applications
because of the recent and dramatic advances in biotechnology techniques. In many cases,
the biocatalysts or whole-cell processes are so new that many chemical engineers and
product development specialists in the private sector are not yet aware that they are
available for deployment. This is a good example of a "technology gap" where there is a
lag between availability and widespread use of a new technology. This gap must be
for a Cleaner Environment" provides dramatic illustrations of what these powerful new
tools can do. The report aims to spark more interest in this powerful technology, to help
close this technology gap, and facilitate progress toward a more sustainable future.
On the medical front, the endeavor to improve people's health is fulfilled through
DNA sequences that do not naturally intermingle. With these DNA alterations, biotech
companies have discovered treatments and therapies for a range of diseases, such as
and diabetes.
Established companies typically fund their growth ventures with cash flow, but
debt and equity markets are sometimes tapped. Since many biotech companies are small,
and cash is often scarce, external funding can be important. Patrons are typically big
from taking a stake in a drug that is commercialized. During difficult economic times,
outside funding often dries up, as lenders become budget-constrained and more cautious
about investments.
Growth Contingencies
New discoveries for the treatment of diseases provide opportunities for growth
and gains in stockholder value. Investors must, however, be willing to tolerate volatile or
weak results in the short term. In many instances, a biotech firm may have to endure a
lengthy period of sometimes-heavy losses before a drug comes on the market and yields
operating benefits. The sales and earnings potential of a newly introduced commercial
drug or treatment can be immense and remain positive for years. Indeed, patented biotech
drugs enjoy a 12-year period of protection from generic competition, allowing a sustained
material, negative impact on long-term sales and profitability. So far, the companies have
held on to the prohibition period by successfully arguing that biotech drugs are
scientifically complex, not easy to duplicate, and costly to develop. In fact, most
prospective drugs never complete clinical trials and reach commercialization, since
Regulatory Considerations
The U.S. Food and Drug Administration (FDA) is the primary regulator of the
Biotech Industry. Before a drug makes it to market, it must traverse a strict clearance
process set forth by the FDA. Statistically, there are significant odds against a drug
progressing through all the required clinical trial stages. For every 5,000 compounds
discovered in pre-clinical studies, only about five make it to FDA approved status. There
are four stages in the FDA trial process; in the final step, drugs are placed on the market.
Even after approved for use, drugs are subject to ongoing studies, in which patients are
monitored for negative side effects. Recalls due to injuries and/or fatalities are not
uncommon. Patents are nullified in the event of a recall. Companies invest considerable
time and resources to ensure a product's success. Recalls not only hurt sales and net
regarding the marketing of biotech offerings that might have a big effect on the areas
Uses of Cash
Like the majority of companies under our review, biotech firms must determine
the best use of cash sourced from operations, as well as from equity and debt issues. First
and foremost, the goal is to achieve out-sized growth, and managements work to ensure
fully funded research and development budgets. Substantial capital is also spent on
gaining approval of new drugs and bringing them to full production. Marketing and
distribution require sizablel funds, as well. Acquisitions are more common among large
industry players, which, at times, seek to bolster their lineups. In descending order, debt
retirements, stock repurchases, and dividends are the least desirable uses of cash.
The nature of the operations of firms in the Biotech Industry makes these equities
more suited to aggressive, risk-tolerant investors. Stock prices here can fluctuate
relationship. Often, investors must be patient and willing to endure years of losses before
the benefits of a drug pipeline, in the form of long-term share-price appreciation, are
realized.
the scientifically intensive operations of companies that reside here. Markets served
include medical, agricultural, environmental, and industrial. This industry emerged in the
1970s, with the main goal of enhancing the quality of human life. Biotech firms differ
from conventional drug makers in that they utilize natural ingredients, as opposed to
synthetic ones. Drugs are manufactured in a living system, i.e., a microorganism, plant or
cell.
References:
Website
23 Oct. 2017].
http://www.valueline.com/Stocks/Industry_Report.aspx?id=10573#.We6hHP-nFkg