The US Biotechnology Industry
A Market Report
March 2012
Bureau AWEX – New York
Edith Mayeux, Attaché économique et commercial
Patrizia Venditti, Assistante commerciale
2
Contents
I. INDUSTRY OVERVIEW AND MARKET SEGMENTATION................................................3
II. THE US BIOTECH LANDSCAPE...............................................................................................5
III. RESEARCH AND DEVELOPMENT........................................................................................6
DRUG DEVELOPMENT AND APPROVAL PROCESS........................................................6
R&D SPENDING.......................................................................................................................7
ACTIVE CLINICAL TRIALS...................................................................................................9
IV. BLOCKBUSTER BIOLOGICS IN 2010 - 2011.........................................................................10
TOP NINE CATEGORIES OF BIOLOGIC DRUGS IN TEMRS OF US SALES IN 2010....12
TOP SELLING BIOLOGICS ...................................................................................................13
TOP COMPANIES COMPRISING THE MAJORITY OF SALES OF BIOLOGIC
DRUGS IN 2010........................................................................................................................14
V. THE US IN-VITRO DIAGNOSTIC TESTS MARKET............................................................16
VI. CURRENT TRENDS...................................................................................................................17
MERGERS & ACQUISITIONS...............................................................................................17
STRATEGIC ALLIANCES......................................................................................................18
VENTURE CAPITAL & FUNDING........................................................................................20
R&D OUTSOURCING............................................................................................................ .23
HEALTHCARE REFORM.......................................................................................................23
PERSONALIZED MEDICINE.................................................................................................23
GENERIC DRUGS...................................................................................................................24
STEM CELL RESEARCH: LIFTING THE BAN..................................................................24
REMS: MONITORING SAFETY.............................................................................................25
IX. FDA REGULATIONS.................................................................................................................28
BIOLOGICAL PRODUCTS.....................................................................................................28
IN-VITRO DIAGNOSTIC PRODUCTS REGULATION.......................................................35
3
I. Industry Overview and Market Segmentation
The biosciences as an “industry” maintain a unique set of characteristics. They represent a varied set of
companies that span manufacturing, services and research activities, a highly skilled workforce, and a
whole range of products and services classified among nearly 30 industry segments. Much more than
other sectors, the biosciences are dynamic and evolve with the latest research and scientific discoveries
with tremendous widespread impact on food, medicine, and alternative fuels. The common link among
this diverse set of companies is an application of knowledge as to how living organisms function. The
biosciences transcend industry classification, making the sector difficult to define. The existing federal
statistical system does not identify one single industry code that encompasses all bioscience activities;
therefore, defining the industry requires a careful examination of all industries engaged in biosciencerelated activity. In assisting numerous states and regions in developing their bioscience industry base,
Battelle has identified four major subsectors that represent the core of current and likely future
bioscience economic activity.1 The four major subsectors of the biosciences include the following:
 Agricultural feedstock and chemicals—Firms engaged in agricultural production and
processing, organic chemical manufacturing, and fertilizer manufacturing. This includes the
emerging industry activity in the production of ethanol.
 Drugs and pharmaceuticals—Firms that develop and produce biological and medicinal
products and manufacture pharmaceuticals and diagnostic substances.
 Medical devices and equipment—Firms that develop and manufacture surgical and medical
instruments and supplies, laboratory equipment, electro medical apparatus including MRI and
ultrasound equipment, dental equipment and supplies, and ophthalmic products.
 Research, testing, and medical laboratories—Companies engaged in research and
development in the biosciences, testing laboratories, and stand-alone medical laboratories and other
diagnostic centers. This includes firms involved in early-stage (often pre-clinical) research and
development activities around new pharmaceuticals and medical devices.
Research and economic activity within a fifth center of bioscience activity might include
academic health centers, research hospitals, and other research-driven institutions. Many U.S.
hospitals partner with universities and other research institutes to further advances in the
biosciences with a particular focus on healthcare applications. Unfortunately, current industrial
classifications and available data do not allow for an isolation of these research-oriented
establishments outside of the larger hospitals sector. Though it cannot be reliably quantified, the
sector should be recognized as an important element of the bioscience industry cluster.
__________________
1
Battelle 2008 State Bioscience Initiatives Report
4
Table 1. The Bioscience Subsector Industries
NAICS Code NAICS Description
NAICS Code
NAICS Description
AGRICULTURAL FEEDSTOCK & CHEMICALS
311221
Wet corn milling
311222
Soybean processing
311223
Other oilseed processing
325193
Ethyl alcohol manufacturing
325199
All other basic organic chemical manufacturing
325221
Cellulosic organic fiber manufacturing
325311
Nitrogenous fertilizer manufacturing
325312
Phosphatic fertilizer manufacturing
325314
Fertilizer (mixing only) manufacturing
325320
Pesticide and other agricultural chemical manufacturing
DRUGS & PHARMACEUTICALS
325411
Medicinal and botanical manufacturing
325412
Pharmaceutical preparation manufacturing
325413
In-vitro diagnostic substance manufacturing
325414
Other biological product manufacturing
MEDICAL DEVICES & EQUIPMENT
334510
Electro medical apparatus manufacturing
334516
Analytical laboratory instrument manufacturing
334517
Irradiation apparatus manufacturing
339111
Laboratory apparatus and furniture manufacturing
339112
Surgical and medical instrument manufacturing
339113
Surgical appliance and supplies manufacturing
339114
Dental equipment and supplies manufacturing
339115
Ophthalmic goods manufacturing
339116
Dental laboratories
RESEARCH, TESTING, & MEDICAL LABORATORIES
541380*
Testing laboratories
541710*
R&D in the physical, engineering, and life sciences
621511
Medical laboratories
621512
Diagnostic imaging centers
*Includes only the portion of these industries engaged in biological or other life sciences activities.
Source: Battelle 2008 State Bioscience Initiatives Report
The bioscience subsectors each operate in distinct markets, with their own sets of product and
service offerings, suppliers, and regulatory environments. To varying degrees, the subsectors do
intersect in beneficial ways. For example, bioscience research directly impacts the development of new
drugs and devices and leads to new uses for agricultural feedstocks; testing laboratories enable
breakthroughs in medical devices; and agricultural research contributes to further innovation in drugs
and pharmaceuticals as well as research and testing. This report will focus on the drugs &
pharmaceuticals subsector.
5
II. The US Biotech Landscape
The US biotech industry remains the benchmark in international terms. It is considered to be the most
successful in the world and it is likely to maintain this leading position for the foreseeable future. The
vibrant R&D environment and access to venture capital from investors have been the key to its success over
the years. Growing at an annual rate of 14%, the industry in 2010 included about 1,726 companies of all
sizes with combined annual revenues over $61 billion and total market capitalization of about $292 billion.
Forecasts predict the worth of the industry revenues to touch US $95 billion by 2013.2
Top US Biotech Companies Ranked by 2011 Revenue
Company
Sales 2011
$15.6 billion
Amgen
$8.39 billion
Gilead Sciences
$5.05 billion
Biogen Idec Inc.
$4.84 billion
Celgene Corp
$4.05 billion*
Genzyme/Sanofi-Aventis
$3.78 billion
Life Technologies Corp
$2.81 billion*
Cephalon, Inc./Teva Pharmaceuticals
$783.43 mil
Alexion Pharmactuticals, Inc.
$753.97 mil
Cubist Pharmaceuticals, Inc.
$743.18 mil
United Therapeutics Corp
*Sales 2010
Sources: http://www.americanregistry.com and http://www.hoovers.com
US biotechnology at a glance, 2009 - 2010 (US $b)
2010
Public company data
Product Sales
$52.6
Revenues
61.6
R&D expense
17.6
Net Income
4.9
Market capitalization
$292.0
Number of employees
112,200
Financing
Capital raised by public companies
16.3
Number of IPOs
15
Capital raised by private companies
4.4
Number of companies
Public companies
315
Private companies
1,411
Public and private companies
1,726
2009
% change
$48.1
56.2
17.1
3.7
$271.6
106,600
9%
10%
3%
33%
8%
5%
13.5
3
4.6
21%
400%
-3.2%
314
1,389
1,703
0.3%
2%
1%
Source: Ernst & Young
Data were generally derived from year-end information (31 December). 2010 data are estimates based on JanuarySeptember quarterly filings and preliminary annual financial performance data for some companies. The 2009
estimates have been revised for compatibility with 2010 data. Numbers may appear inconsistent because of rounding.
________________
2
RNCOS report "Healthcare Industry: US Biotech Market Analysis", December 2010
6
The landscape for US biotech will continue to be a challenging one. For many smaller companies, raising
capital has become quite difficult, and the results are appearing in restructurings, layoffs, bankruptcies and
delistings on stock exchanges. According to the Biotechnology Industry Organization (BIO), there were
20% fewer active public US biotech companies in 2009 with total of 85 companies no longer listed. While
almost half are accounted for by acquisition, the other half are missing in action either bankrupted, liquidated
or "inactive", meaning they no longer report results to market authorities. At the other end of the spectrum,
several mature, successful biotechs were acquired by big pharma companies during the year, and the merger
& acquisition trend will continue to be the preferred exit strategy in 2010 as well.
Demand for biotechnology research in the fields of medicine, agriculture, food, and science is driven by
insurers' willingness to pay for new medical treatments, the global need to produce more food for a rapidly
expanding population, and scientists' desire to find solutions for complex scientific and medical issues.
Funding for biotech research is often provided by venture capital funds hoping to cash in on new products.
The profitability of individual companies depends on the discovery and effective marketing of new products.
Because the market for potential products is so large, small biotechnology companies can co-exist
successfully with large ones if they have expertise in a particular line of research. The industry is capital
intensive: average annual revenue per worker is more than $350,000. Biotech firms face stiff competition
from pharmaceutical and other companies seeking to be first with a new product or discovery.
III. Research & Development
Drug Development and Approval Process
The biopharmaceutical development process is research-intensive in nature, requires significant investments
of time and money, and has uncertain outcomes. It begins with the identification and investigation of disease
targets and often includes the screening of thousands of compounds. Promising drug candidates then
undergo substantial preclinical and clinical testing prior to regulatory review by the FDA. The chart below
highlights the US drug development and approval process, illustrating the activities that occur during the
estimated 10 to 15 years needed for a new drug to reach the market.
US Drug Development and Approval Process
Once a new compound has been identified in
the laboratory, medicines are developed as
follows:
● Preclinical Testing - A pharmaceutical
company conducts laboratory and animal
studies to show biological activity of the
compound against the targeted disease, and
the compound is evaluated for safety.
● Investigational New Drug Application
(IND) - After completing preclinical testing, a
company files an IND with the U.S. Food and
Drug Administration (FDA) to begin to test
the drug in people. The IND becomes
Source: www.innovation.org
7
effective if FDA does not disapprove it within 30 days.
The IND shows results of previous experiments; how, where and by whom the new studies will be
conducted; the chemical structure of the compound; how it is thought to work in the body; any toxic effects
found in the animal studies; and how the compound is manufactured. All clinical trials must be reviewed
and approved by the Institutional Review Board (IRB) where the trials will be conducted. Progress reports on
clinical trials must be submitted at least annually to FDA and the IRB.

Clinical Trials, Phase I - These tests involve about 20 to 100 normal, healthy volunteers. The tests
study a drug’s safety profile, including the safe dosage range. The studies also determine how a drug is
absorbed, distributed, metabolized, and excreted as well as the duration of its action.

Clinical Trials, Phase II - In this phase, controlled trials of approximately 100 to 500 volunteer patients
(people with the disease) assess a drug’s effectiveness.

Clinical Trials, Phase III - This phase usually involves 1,000 to 5,000 patients in clinics and hospitals.
Physicians monitor patients closely to confirm efficacy and identify adverse events.

New Drug Application (NDA)/Biologic License Application (BLA) - Following the completion of all
three phases of clinical trials, a company analyzes all of the data and files an NDA or BLA with FDA if
the data successfully demonstrate both safety and effectiveness. The applications contain all of the
scientific information that the company has gathered. Applications typically run 100,000 pages or more.
The average review time for the 26 new therapeutics approved by the FDA in 2007 was 11.1 months.

Approval - Once FDA approves an NDA or BLA, the new medicine becomes available for physicians
to prescribe. A company must continue to submit periodic reports to FDA, including any cases of adverse
reactions and appropriate quality-control records. For some medicines, FDA requires additional trials
(Phase IV) to evaluate long-term effects.
R&D Spending
The biotech industry remains strong despite ongoing market volatility and research and development (R&D)
cutbacks. According to the 2011 BDO Biotech Briefing, which examined the most recent 10-K SEC filings
of the publicly traded companies listed on the NASDAQ Biotechnology Index (NBI), R&D spending at US
biotech firms dropped 7% in 2010 to about
$54 million, making the second
Biotech R&D Spending 2008 - 2010 (mil)
consecutive year biotechs have cut R&D
66
costs. These cuts are in line with the
64
64
global drug industry, which saw
62
expenditures for discovering and
60
developing new drugs decline nearly 3%
58
from the $70 billion spent in both 2008 and
58
2009, according to Thomson Reuters. The
56
54
decline is also expected to continue
54
through 2011 as US biotechs keep
52
sharpening their focus on the most
50
promising products and initiatives and
48
being more strategic with their cash
2008
2009
2010
reserves.
Source: 2011 BDO Biotech Briefing
8
Biotech's Biggest Spenders 2011
 Amgen - $2.8B
 Cubist Pharmaceuticals - $161.4M
 Biogen Idec - $1.25B
 Amylin Pharmaceuticals - $157.3M
 Celgene - $1.13B
 BioMarin Pharmaceutical - $147.3M
 Gilead Sciences - $1.07B
 Seattle Genetics - $146.4M
 Genzyme - $866.6M
 Vertex Pharmaceuticals - *$637.4M
 Actelion - $539M
 Regeneron Pharmaceuticals - $489M
 CSL - $334M
 Exelixis - $210.7M
 United Therapeutics - $171M
Source: www.fiercebiotech.com
A recent FierceBiotech's article " The World's Biggest R&D Spenders" lists the top 10 players in the
biopharma industry who shelled out a record $66.41 billion on drug development with big acquisitions and
bold trial plans. FierceBiotech found that despite considerable cuts in a number of R&D operations, the top
10 players saw a collective jump of more than 10% in R&D spending. And despite plans by Pfizer--number
one in R&D spending in 2010--to force through a major restructuring in R&D, big pharma is also going to be
a big spender in 2011 when it comes to drug research.
Top R&D budgets of Biopharma Companies
Company
R&D Spending R&D Spending
2010 (billion) 2009(billion)
% Change
from 2009
Pfizer
Roche
Merck
$9.4
$9.2
$8.12
$7.8
$9.7
$5.6
20%
-5%
45%
Novartis
Johnson & Johnson
$8.08
$6.84
$7.28
$6.98
11%
-2%
GlaxoSmithKline
Sanofi-Aventis
$6.09
$5.94
$5.61
$6.18
8%
-4%
AstraZeneca
Eli Lilly
$5.3
$4.88
$4.4
$4.32
20%
13%
Bristol-Myers Squibb
Takeda Pharmaceuticals
$3.56
$3.5
$3.64
$4.64
-2%
-32%
Source: fiercebiotech.com
9
Active Clinical Trials
America's biopharmaceutical research companies have 901 biotechnology medicines and vaccines in
development to target more than 100 debilitating and life-threatening diseases, such as cancer, arthritis and
diabetes, according to a new report by the Pharmaceutical research and Manufacturers of America (PhRMA).
The medicines in development, all in either clinical trials or under Food and Drug Administration review,
include 352 for cancer and related conditions, 188 for infectious diseases, 69 for autoimmune diseases and
59 for cardiovascular diseases.
Biotechnology has opened the door to the discovery and development of new types of human therapeutics.
Advancements in both cellular and molecular biology have allowed scientists to identify and develop a host
of new products. These cutting-edge medicines provide significant clinical benefits, and in many cases,
address therapeutic categories where no effective treatment previously existed.
10
Approved biotechnology medicines already treat or help prevent heart attacks, stroke, multiple sclerosis,
leukemia, hepatitis, congestive heart failure, lymphoma, kidney cancer, cystic fibrosis, and other diseases.
These medicines use many different approaches to treat disease as do medicines currently in the pipeline.
According to the report, there are 300 monoclonal antibodies, a laboratory-made version of the naturally
occurring immune system protein that binds to and neutralizes foreign invaders; 298 vaccines, a biological
preparation that improves immunity to a particular disease; 23 antisense drugs, medicines that interfere with
the communication process that tells a cell to produce an unwanted protein; and 20 interferons, proteins that
interfere with the ability of a cell to reproduce.
The practice of medicine has changed dramatically over the years through pioneering advances in
biotechnology research and innovation, and patients continue to benefit from the treatments that are being
developed. As medicines that address significant unmet needs are developed, future innovations in
biotechnology research will bring exciting new advances to help more patients.
IV. Blockbuster biologics in 2010 - 2011
In the United States, spending on expensive biologic drugs3 is growing more than ten times faster than
spending on traditionally-developed “small molecule”drugs.4
Global biologic drug sales are expected to reach nearly $200 billion by 2015, up from $138 billion in 2010.5
Currently, just under half of biologic drug spending is concentrated in the United States.6
____________________
3
Biologic drug prices are an average of 22 times higher than traditional drug prices. A.D. So and S.L. Katz, "Biologics
Boondoggle," New York Times, March 7, 2010.
4
IMS Institute for Healthcare Informatics, "The Use of Medicines in the United States: Review of 2010," April 2011.
5
IMS Institute for Healthcare Informatics, "The Global Use of Medicines: Outlook Through 2015," May 2011.
6
IMS Institute for Healthcare Informatics, "The Use of Medicines in the United States: Review of 2010," April 2011.
11
In 2010, biotech sector sales in the US experienced a 6.5% growth rate, reaching 51.3 billion and
outperforming the overall pharmaceutical sector, whose growth lagged at 2.3%.7 Sales in Q1 2011 grew by
2.9% and declined by 0.4% in Q2.
Growth trends in the United States biotech market for biologic drugs (2006–2010)
Monoclonal antibodies (mAbs) remain the best selling class of biologics. In 2010, US sales of mAb products
reached $18.5 billion, 9.7% higher than 2009 sales, keeping companies with mAb products in the lead in
revenues.8 The growth rate of 2010 was similar to that of 2009 (8.3%), although the sales trends exhibited
new dynamics.9 First, a substantial proportion of the growth in this sector was driven by new products.
Second, most of the best-selling products are showing signs of saturation or in some cases even declining
sales. With seven new mAbs reaching the market during 2010 - 2011, there are now 34 US Food and Drug
Administration (FDA) approved mAbs in the market (Xigris was withdrawn in 2011), and sales of mAbs
constitute 36% of the total biologics market. The two best selling indications for mAbs continue to be cancer
and inflammatory disorders, with anti-inflammatory mAbs now constituting almost half (46%) of all sales,
and mAbs focused on oncology, 41%.10
Six blockbuster products comprise 82% of the total sales of this sector. Among them, three of the top
products are showing signs of saturation. The largest selling mAb, Janssen's (Horsham, PA) Remicade
(infliximab) has been experiencing declining sales growth due to crowding in the anti-tumor necrosis factor
market and competition from other novel mechanism-of-action biologics. Similarly, Genentech/Biogen
Idec's (Cambridge, MA) Rituxan (rituximab) and Genentech's (S. San Francisco, CA) Herceptin
(trastuzumab) are showing signs of saturation in their indications with sales growth in the 4-6% range.
______________________
7
IMS Institute for Healthcare Informatics, "The Use of Medicines in the United States: Review of 2010," April 2011.
8
Nature Biotechnology, "What's fueling the biotech engine - 2010 to 2011," Volume 29, Number 12, December 2011.
9
Nature Biotechnology, "What's fueling the biotech engine - 2010 to 2011," Volume 29, Number 12, December 2011.
10
Nature Biotechnology, "What's fueling the biotech engine - 2010 to 2011," Volume 29, Number 12, December 2011.
12
A substantial decline in sales growth was also observed for mega blockbuster Roche/Genentech's (Basel,
Switzerland) Avastin (bevacizumab), whose sales growth declined from a high of 30% to 15% in 2007 2009 to 2% in 2010. During Q1 and Q2 of 2011, its sales further fell by ~5.3% and ~1.5%, respectively.
This decline is due to FDA's withdrawal of its metastatic breast cancer indication.
Top nine categories of biologic drugs in terms of US sales in 2010
The pie chart shows US sales of these drug categories. The table shows the growth rates of the categories between 2009 and 2010.
The red boxes indicate the major categories showing the fastest growth rate during that period. For therapeutic enzymes, their
manufacturers do not break out the US sales, so their sales were estimated assuming 20–30% of worldwide sales were generated
in the United States.
Source: Nature Biotechnology, "What's fueling the biotech engine - 2010 to 2011," Volume 29, Number 12, December 2011.
13
One mega blockbuster mAb that
has sustained its double-digit
growth in sales is Abbott's
(Deerfield, IL) Humira
(adalimumab). In 2010,
Humira's sales grew by ~15%,
twice the growth rate of the antiTNF market (~7%). At the
current growth rate, Humira will
likely be the top-selling biologic
in the United States in 2011 and
2012. One potential catalyst for
Humira is indication expansion
to include ulcerative colitis,
spinal arthritis, uveitis and
hidradenitis suppurativa.
Another blockbuster,
Genentech's Lucentis
(ranibizumab, a humanized
antibody FabV2 fragment that
targets vascular endothelial
growth factor; VEGF), grew by a
double-digit rate, with ~28%
growth, reaching sales of ~$1.8
billion in 2010. This robust
growth could be due to less offlabel use of Avastin for wet agerelated macular degeneration
(AMD).
* Based on La Merie, “Top 30 Biologics 2010 (global sales),” March 2011.
Note: Numbers reflect annual sales in the United States; total (global) annual sales are
considerably higher. U.S. sales for Avastin, Rituxan, Herceptin, and Lucentis have been converted
from Swiss francs (CHF).
Source: AARP Public Policy Institute, "Biologics in Perspective: The New Biosimilar Approval Pathway," October 2011.
14
Top companies comprising the majority of sales of biologic drugs in 2010
The pie chart shows the fraction of total biotech sales of the top 13 companies. The table shows the annual growth rates of the top
ten companies. Red boxes indicate companies that had biologics sales growth of >10%. For the purpose of this analysis, Rituxan
US sales have been split equally between Genentech and Biogen Idec; Erbitux US sales were split 40/60 between Lilly and BristolMyers Squibb. J&J, Johnson & Johnson; BMS, Bristol-Myers Squibb.
Source: Nature Biotechnology, "What's fueling the biotech engine - 2010 to 2011," Volume 29, Number 12, December 2011.
15
One factor driving biologic spending is that the U.S. Food and Drug Administration (FDA) only recently
acquired the authority to approve less-expensive generic versions of biologic drugs, known as biosimilars.
Conventional drug products fall under the purview of the Federal Food, Drug, and Cosmetic Act, which has
a streamlined process to approve generic drug products. However, the majority of biologics fall under the
Public Health Service Act, which did not have an equivalent approval pathway until the passage of the
Affordable Care Act in 2010. The new biosimilar approval pathway is expected to result in biosimilars
entering the market by 2014.11
While the need for a biosimilar approval pathway was widely accepted, the newly created pathway is a
source of considerable debate. One of the most prominent issues is the 12-year market exclusivity period, or
the amount of time that brand name biologic manufacturers are protected from generic competition.
Brand name biologic manufacturers maintain that a 12-year exclusivity period is needed to recover the costs
associated with biologic drug development and support continued innovation. However, the U.S. Federal
Trade Commission (FTC) concluded that 12 years of exclusivity was unnecessary and could negatively
impact innovation.12
Based on drug manufacturers’ U.S. sales data alone, most top-selling biologic drugs are able to recoup their
manufacturer’s development costs13 within a single year (see the chart of US Sales for Top-Selling Biologic
Drugs in 2010, page 13 of this report).
The FTC also concluded that the costs associated with biosimilar development, manufacturing, and marketing
will likely limit biosimilar entry to biologic drug markets with more than $250 million in annual sales. Thus, only
biologic drugs that can quickly recoup their development costs are likely to face competition.
In addition, unlike traditional generic drugs, a variety of factors are expected to prevent biosimilars from
rapidly gaining market share. Consequently, brand name biologic manufacturers will likely continue to earn
substantial profits even after biosimilar versions of their products enter the market.14
Between the rapid rise in the number of biologic drugs15 and regularly expanding indications for the products
that are already on the market,16 biologics are becoming an increasingly common treatment option for
conditions that primarily affect older populations, such as cancer, rheumatoid arthritis, and multiple lessexpensive biosimilars should help patients facing the substantial out-of-pocket costs that can be associated
with biologic drugs.
However, an unnecessarily lengthy market exclusivity period will impede access to biosimilars and
increase costs for consumers, employers, and publicly-funded programs like Medicare and Medicaid.
______________________
11
IMS Institute for Healthcare Informatics, "The Global Use of Medicines: Outlook Through 2015," May 2011.
12
US Federal Trade Commission, "Emerging Health Care Issues: Follow-on Biologic Drug Competition," June 2009.
13
The average cost to develop a new biologic drug is $1.2 billion. This figure includes the costs associated with compounds that
fail to reach the market. J.A. DiMasi and H.G. Grabowski, "The Cost of Biopharmaceutical R&D: Is Biotech Different?",
Managerial and Decision Economics, 28, no. 4-5: 469-479.
14
US Federal Trade Commission, "Emerging Health Care Issues: Follow-on Biologic Drug Competition," June 2009.
15
W.H. Schacht and J.R. Thomas, "P.L. 111-148: Intellectual Property Provisions for Follow-On Biologics," Congressional
Research Service Report, April 26, 2010.
16
For example, Avastin, which was approved in 2004, is currently involved in more than 1,000 clinical trials investigating its use in
over 50 tumor types and different settings. "Roche 2010 Annual Report", 2011.
16
V. The US In-vitro Diagnostic (IVD) Tests Market
According to RNCOS's new report "US Diagnostic Market Outlook 2014," the US represents world's largest
and one of the most developed diagnostic markets accounting for 47% of the total global IVD market in
2011. The European region accounted for 31% of the global IVD market with Germany accounting for the
largest share of 23.24% followed by France (16.89%) and Italy (16.41%). Huge investment in research and
developments and commercially successful innovations in diagnostic industry has helped the US to
outperform other prominent diagnostic markets including EU, Japan etc. Looking ahead, the US is expected
to maintain its position of the world's largest IVD market, growing at a moderate CAGR of around 9.3%
during 2010-2014. Favorable reimbursement policies for clinical lab testing, increasing awareness about
early disease detection, and aging population that demands increased diagnostic testing will be the main
growth drivers.
Another report “The World Market for Molecular Diagnostics” released by Kalorama Information predicts
the world market for molecular diagnostic tests will grow 11% annually, reaching $8.085 billion U.S.
dollars in 2015. Back in 1995, the market for these nascent tests was estimated to comprise just 2% of the
total in vitro diagnostic (IVD) market or $360 million. Today that number stands at $4.765 billion. The
report highlights the primary growth drivers for molecular diagnostics, and describes challenges facing the
IVD industry in the future. It attributes the continued growth in the market to the introduction of numerous
assays over the past 5 years, as well as publication of the Human Genome Project and advances in
functional genomics, bioinformatics, miniaturization, and microelectronics. At the same time, demand for
testing has been fueled by an increase in cancer patients, proliferation of infectious diseases and growing
interest in parental gene carrier analysis. Especially notable is the fact that many of these complex tests
have been commercialized as proprietary lab-developed tests offered by reference labs and companysponsored lab services.
But major challenges obstruct use of molecular diagnostic assays, including getting stakeholders, payers,
physicians, researchers, and regulators to work together to close the gap between research and clinical
applicability. Physician education is also lacking, and reimbursement problems threaten further
implementation of these tests.
More than 75% of the molecular diagnostics market is controlled by nine companies: Roche Diagnostics,
Qiagen, Gen-Probe, Abbott Diagnostics, Siemens, Becton Dickinson, Cepheid, bioMérieux, and Beckman
Coulter.17 Roche is the undisputed market leader with almost 30% share and an unparalleled product
portfolio, which includes molecular diagnostic tests for oncology, virology, microbiology, and blood
screening.
Sales of molecular diagnostic tests for infectious diseases generate approximately 60% of overall molecular
diagnostics market revenues.18 Market participants largely focus on developing and marketing infectious
disease molecular diagnostics, which primarily include tests for human immunodeficiency virus (HIV),
HPV, hepatitis B and C (HBV/HCV), and CT/NG. With the exception of the HPV molecular diagnostics
___________________
17
Genetic Engineering & Biotechnology News, "Infectious Disease Molecular Diagnostics: Market Review and Opportunities,"
(Vol. 31, No. 20), November 15, 2011.
18
Genetic Engineering & Biotechnology News, "Infectious Disease Molecular Diagnostics: Market Review and Opportunities,"
(Vol. 31, No. 20), November 15, 2011.
17
market, most of these testing areas are very mature with growth rates settling around 5%.19 HPV testing,
however, remains an enormous market opportunity with growth rates expected to remain as high as 20%
through 2014.20
VI. Current Trends
Mergers & Acquisitions
So far 2012 has provided plenty of action on the M&A front, from Roche's hostile $5.7bn bid for Illumina to
Amgen's $1.1bn takeover of Micromet. These are encouraging signs of life compared to 2011, when global
mergers and acquisitions between pharma and biotech companies slowed dramatically on the previous four
years. Data from EvaluatePharma show that only 136 M&A deals were struck in 2011, down from 171 and
170 seen in the previous years. Most markedly, big pharma was almost moribund in 2011, the analysis
shows, spending only $23.4bn in 13 deals. Outside of Johnson & Johnson's $21.3bn acquisition of Synthes,
a medtech deal, the biggest purchase of a drug developer by big pharma last year was Bristol-Myers Squibb's
$475m takeover of Amira.
Big Pharma M&A analysis
2011
Pharma deals
Total deals
Pharma deals
Count
1
Value
($m)
0.6
Count
3
Value
($bn)
0.4
Count
0.5
1
0.5
1
-
-
0.5
Merck & Co
0.4
1
Pfizer
0.05
GlaxoSmithKline
Five Year Total
(2007 - 2011)
Value
Count
($bn)
53.1
17
Count
1
Value
($bn)
0.7
0.7
1
0.7
1
4.2
5
1
38.0
4
38.0
4
52.3
13
0.4
1
0.5
2
0.5
2
42.5
7
2
0.05
2
3.8
3
3.8
4
72.9
15
0.04
1
0.04
1
0.9
8
0.9
8
8.1
22
Sanofi
-
-
-
-
20.8
6
21.4
7
32.3
19
Johnson & Johnson
-
1
21.3
2
2.2
2
2.7
3
30.1
17
AstraZeneca
-
1
-
1
-
-
-
-
16.3
3
Eli Lilly
-
-
-
1
1.2
2
1.2
2
8.1
6
Schering-Plough
-
-
-
-
-
-
-
-
15.6
1
Abbott Laboratories
-
-
-
-
4.5
2
4.5
2
15.0
9
Total
1.2
8
23.4
13
73.0
31
74.4
36
350.5
134
Excluding mega mergers
1.2
8
2.1
12
14.9
29
16.3
34
115
128
Company
Roche
Value
($bn)
0.2
2010
Total deals
Bristol-Myers Squibb
Novartis
3
Source: www.epvantage.com
_____________________
19
Genetic Engineering & Biotechnology News, "Infectious Disease Molecular Diagnostics: Market Review and Opportunities,"
(Vol. 31, No. 20), November 15, 2011.
20
Genetic Engineering & Biotechnology News, "Infectious Disease Molecular Diagnostics: Market Review and Opportunities,"
(Vol. 31, No. 20), November 15, 2011.
18
After spending $74.4bn in 36 deals in 2010, the drop to $23.4bn in 13 deals represents a substantial decline
for the big pharma group in 2011 but some pretty sizeable deals happened. By far the largest M&A deal was
Takeda Pharmaceutical’s $13.1bn purchase of Nycomed, a deal that broadened the Japanese pharmaceutical
company’s global footprint and boosted its position in the global marketplace. Another major acquisition is
Gilead Sciences’ $11bn purchase of Pharmasset and its Phase III hepatitis C virus (HCV) nucleotide
analogue, representing the largest acquisition ever of a clinical-stage biotech company.
Top 10 Pharma/Biotech M&A Deals in 2011 and 2010
Acquiring Company
Deal Type
Target
Year
Rank
Deal Value
($bn)
2011
1
2
3
4
5
6
7
8
9
10
Takeda
Gilead Sciences
Teva Pharmaceutical Ind.
Forest Laboratories
Alexion Pharmaceuticals
Amgen
Alkermes
Daiichi Sankyo
Teva Pharmaceutical Ind.
Shire
Company Acquisition
Company Acquisition
Company Acquisition
Company Acquisition
Company Acquisition
Company Acquisition
Business Unit
Company Acquisition
Majority Stake
Company Acquisition
Nycomed
Pharmasset
Cephalon
Clinical Data
Enobia Pharma
BioVex
Elan Drug Technologies
Plexxikon
Taiyo Pharmaceutical Ind.
Advanced BioHealing
13.1
11.0
6.8
1.3
1.0
1.0
1.0
0.9
0.9
0.8
2010
1
Novartis
Alcon
38.0
2
3
4
55
6
7
8
9
10
Sanofi
Teva Pharmaceutical Ind.
Valeant Pharmaceuticals
Astellas Pharma
Abbott Laboratories
Pfizer
Grifols
Celgene
Johnson & Johnson
Majority Stake +
Company Acquisition
Company Acquisition
Company Acquisition
Company Acquisition
Company Acquisition
Business Unit
Company Acquisition
Company Acquisition
Company Acquisition
Company Acquisition
Genzyme
Ratiopharm
Biovail
OSI Pharmaceuticals
Piramal Healthcare Solutions
King Pharmaceuticals
Talecris Biotherapeutics
Abraxis BioScience
Crucell
20.1
5.0
4.5
4.0
3.8
3.6
3.4
2.9
2.2
Source: www.evaluatepharma.com
Strategic Alliances
It’s no secret the pharma industry is facing some formidable challenges this decade. In 2011 alone, the
patents to more than 10 blockbuster drugs worth nearly $50 billion in combined annual sales are due to
expire.21 The year before that, major drug companies cut 53,000 jobs on top of the 61,000 jobs cut during
2009 — much deeper cuts than most other sectors. And, though R&D spending has risen over the past fiveyear period, the FDA has approved fewer new drugs.22
_____________________
21
Life Science Leader, "Strategic Alliances: The Cure For What Ails Pharma?"
22
Life Science Leader, "Strategic Alliances: The Cure For What Ails Pharma?"
19
To address these challenges, the pharma industry has begun to form strategic alliances, also called strategic
partnerships. These relationships between pharma and CROs, pharma and biotech, and even large pharma
can reduce costs and decrease product cycle times. Strategic alliances also allow companies to share risks
and rewards as well as offer the opportunity to learn from each other.
Partners
Top 10 Pharma/Biotech Partnering Deals of 2011
Date
Value
Subject
($bn)
Boehringer Ingelheim,
Eli Lilly
Jan 2011
2.4
Lundbeck, Otsuka
Nov 2011
1.8
Co-development and co-promotion
agreement for up to five innovative
psychiatric and neuroscience products
Amylin Pharmaceuticals,
Eli Lilly
Nov 2011
1.6
Terminated their alliance for Bydureon
(exenatide)
Alios Biopharma, Vertex
Jun 2011
1.5
Worldwide licensing agreement for
ALS-2200 and ALS-2158
Aveo Pharmaceuticals,
Astellas
Feb 2011
1.4
Collaborative R&D and
commercialization agreement for
tivozanib
Emergent BioSolutions,
US Government
Oct 2011
1.2
Contract Service and supply agreement
for BioThrax
Amgen, Micromet
Jul 2011
1.0
Collaborative R&D agreement for BiTE
antibodies against three undisclosed solid
tumor targets
Servier, miRagen
Therapeutics
Oct 2011
1.0
Development agreement for miR-208
and miR-15/195 plus additional target
Janssen Biotech,
Pharmacyclics
Dec 2011
975 mil
Co-development, licensing and
marketing agreement for PCI-32765
Evotec, Roche
Sept 2011
830 mil
Worldwide development and licensing
agreement for MAO-B inhibitor
Source: www.currentpartnering.com
Licensing, development and option
agreement to co-market and co-develop
insulin analogues
20
Venture Capital & Funding
Investment in biotechnology by venture capitalists jumped 22% in 2011, with $4.7 billion going into 446
deals, according to the MoneyTree Report released by PricewaterhouseCoopers and the National Venture
Capital Association.
Biotechnology was the second largest
investment sector for the year, which
totaled $28.4 billion and 3,673 deals
across all sectors - the third highest
annual investment total in the past ten
years.
Investment in medical devices rose 20%,
finishing the year as the fourth largest
sector with $2.8 billion going into 339
deals.
The life sciences sector, which combines
both biotech and medical devices,
accounted for 27% of all venture capital
dollars invested in 2011.
At a time when access to capital has
become more challenging and VCs are
Source: www.pwcmoneytree.com and www.nvca.org
having to hold their existing portfolio
companies longer, it is worth examining
where investors are placing their bets with regard to the next generation of start-ups. Not surprisingly the
new released Ernst & Young report "Beyond Borders: Global Biotechnology Report 2011 " reveals that
companies with a cancer focus commanded the largest share of significant rounds (those over US$5 million).
Companies focused on diagnostics, inflammation and central nervous system ailments also attracted a
healthy share of this
What are VCs funding? US and European seed and first-round
funding. It is worth noting
financings over US$5 million
Hematology/
Cardiovascular,
Blood and
2%
lymphatic Infection, 3%
system, 3%
Other, 4%
Cancer, 23%
Autoimmune,
4%
Respiratory
system, 7%
Ophthalmic, 7%
Diagnostics, 13%
Metabolic
Endocrinology,
10%
Central nervous
system/
Neurology,
11%
Inflammation,
13%
that very little of the money
going to fund new
companies went to
cardiovascular firms — a
sign, perhaps, that investors
are increasingly wary of a
segment that is likely to face
stiff competition from
blockbuster products that are
going off-patent and also
require large and expensive
clinical trials at a time of
increased regulatory opacity.
The top five metropolitan
regions receiving Life
Sciences venture capital
funding during 2011 were
21
New England ($987 million), Silicon Valley
($889 million), San Diego ($458 million), New
York Metro ($245 million) and Philadelphia
Metro ($176million).23
The four states with the nation’s largest biotech
clusters were faced with similar challenges
shared by most U.S. regions seeking to build
their life science presence. Hurdles included a
capital squeeze particularly for early-stage
biopharmas, the reality of the industry’s
international growth, and the need to attract new
businesses and retain existing ones. All four
top-tier biotech states—California,
Source: www.genengnews.com
Massachusetts, North Carolina, and Maryland—
did, however, find numerous ways to address these challenges. They rolled out new financing programs or
improved existing ones. In some cases they reached out to regions around the world and in others they
identified promising niches within their clusters. Signs of success can be seen in a series of new construction
and expansion projects that are under way.
Biocom, the life science industry group for the San Diego region, is stepping up efforts to help smaller
biotechs find partners, Joseph Panetta, president and CEO, told Genetic Engineering & Biotechnology News
(GEN). San Diego biotechs captured $317.66 million in venture capital in the first three quarters of 2011,
down from $331 million in the first nine months of 2010.24 The number of biotechs reportedly dipped from
45 to 41 between 2010 and 2011.25
During 2011, Massachusetts basked in the expansion activity of pharma and biotech giants. Seven projects
totaling more than 1.5 million square feet began construction, according to Richards Barry Joyce &
Partners LLC. The largest, at 1.1 million square feet, is composed of two 550,000 sq. ft. buildings for
Vertex. Biogen Idec also has two properties under construction, Broad Institute is working on an
expansion, Pfizer has lease with MIT to relocate the company’s cardiovascular, metabolic, and endocrine
diseases (CVMED) and neuroscience research units, and another facility is being built on a speculative
basis by Skanska. The construction wave will continue into next year, Susan Windham-Bannister, Ph.D.,
president and CEO of the Massachusetts Life Sciences Center (MLSC) told GEN, fueled by cutbacks
elsewhere in the nation. Novartis plans to break ground on a new building in 2012 and Ipsen announced
plans to build a $45 million R&D facility.
North Carolina is also dealing with a tight state budget, scrambling to plug a $2.4 billion deficit for the fiscal
year that started July 1. State legislative leaders cut about $2 million, or 10%, of the North Carolina
Biotechnology Center’s $19.5 million subsidy, leaving the center with about $17.5 million for the fiscal year.
Lawmakers also failed to create the proposed Life Science Development Corp., which was to finance
companies with $100 million from a 15-year private investment from banks and institutions.
______________________
23
Biotechnology Historical Trend Data for the year 2011, PricewaterhouseCoopers MoneyTree Report.
24
Genetic Engineering & Biotechnology News, "Largest US Biotech Clusters Faced Similar Challenges This Year as Seen
Elsewhere," December 27, 2011.
25
Genetic Engineering & Biotechnology News, "Largest US Biotech Clusters Faced Similar Challenges This Year as Seen
Elsewhere," December 27, 2011.
22
Disappointments such as these were more than balanced out by other activity. In 2011, officials increased
from 5% to 7.5% the percentage of pension funds the state can invest in alternative investments in biotech,
green tech, and IT. Last month state treasurer Janet Cowell announced a $35 million “accelerator” offshoot
to the $232.3 million North Carolina Innovation Fund launched last year. This accelerator offshoot is aimed
at early-stage biotechs. Venture capital was a brighter spot for the state, with investors reportedly pumping
about $146.2 million in biotech startups during the first three quarters of 2011 compared with $112.6 million
a year earlier.26 But the number of biotech companies winning funding dipped during that period, from 11 to
8.
Maryland biotech startups seeking capital will have a new option in 2012: the new InvestMaryland fund.
The state will auction off up to $100 million of tax credits to insurance companies that pay state premium
insurance taxes. The auction is expected to yield a minimum $70 million, of which 67% will be allocated to
three or four venture capital firms to invest in promising startups in biotech as well as cleantech, green tech,
and mobile health. The remaining 33% will be deposited into the state’s 15-year-old Maryland Venture
Fund. The state this year kept stem cell program funding at FY 2011’s $12.4 million, about half what was
available three years earlier. State funding for Maryland Biotechnology Investor Tax Credits is also stable at
$8 million, the same as FY 2011 and $2 million above FY 2010.27
Top 5 biotech venture capital deals, 1st half of 2011
Symphogen
Tesaro
Circassia
Radius Health
$131M
$101M
$98M
$91M
Merrimack
$77M
Source: www.fiercebiotech.com
Top 15 Biotech Venture Capital Deals of 2010
1. Pacific Biosciences - $109M
2. Reata Pharmaceuticals - $78M
3. Relypsa - $70M
4. Pearl Therapeutics - $69M
5. NanoInk - $65M
6. TetraLogic Pharmaceuticals - $59.83M
7. Achaogen - $56.31M
Source: www.fiercebiotech.com
8. Otonomy - $49.07M
9. Tetraphase Pharmaceuticals - $45M
10. Agile Therapeutics - $45M
11. Incline Therapeutics - $43M
12. NeuroTherapeutics - $43M
13. Cellular Dynamics International - $40.6M
14. Calistoga Pharmaceuticals - $40.22M
15. Sagent Pharmaceuticals - $40M
_______________________
26
Genetic Engineering & Biotechnology News, "Largest US Biotech Clusters Faced Similar Challenges This Year as Seen
Elsewhere," December 27, 2011.
27
Genetic Engineering & Biotechnology News, "Largest US Biotech Clusters Faced Similar Challenges This Year as Seen
Elsewhere," December 27, 2011.
23
R&D Outsourcing
As biopharmaceutical companies look to cut costs and improve speed-to-market, more of them plan to
outsource R&D and clinical trials and shift this work overseas to places such as China and India, finds a
survey released by global consulting firm Booz & Company. This study confirms that outsourcing will
become an increasingly important part of the competitive landscape and provides key insights into why and
how the outsourcing process will radically evolve in the next two to three years. For example, many
biopharmaceutical companies will begin outsourcing formerly core activities such as clinical trial monitoring
and protocol development to contract research organizations (CROs). This shift will be driven by new
service offerings in real-time data processing and virtual platforms that allow people around the world to
securely access clinical data in real time. Outsourcing more of these critical activities along the entire R&D
spectrum will transform the nature of outsourcing relationships. To see a full copy of the study, please visit:
http://www.booz.com/media/uploads/BoozCo-BayBio-Outsourcing-Life-Sciences.pdf
Healthcare Reform
The United States may finally be on the verge of making its much-delayed, long-anticipated, often-feared
transition to universal healthcare coverage. Like the coming wave of generic drugs, this change would be
nothing short of momentous — a dramatic expansion in the world’s largest (and most laissez-faire) drug
market. Indeed, recognizing healthcare’s paradigm-shifting power, the Obama administration is positioning
healthcare reform as one of three investments in the future (energy and education are the others) that will lay
the foundation for a more competitive 21st-century economy. For drug companies, expanded coverage will
likely bring new pricing regimes where buyers have concentrated bargaining power. Meanwhile, the push
for electronic medical records to increase efficiency could produce vast volumes of data for companies to
mine in developing better treatments — creating new winners and losers, including perhaps from competitors
and collaborators that emerge from outside the traditional healthcare sector. Healthcare reform will likely
include the adoption of pay-for-performance metrics. The challenge for the drug industry will be to make
sure that these metrics maintain the right incentives for innovation rather than simply aim to lower costs.
Personalized Medicine
Since the mapping of the human genome in 2003, the pace of discovery, product development, and clinical
adoption of what we know as personalized medicine has accelerated. Personalized medicine may be
considered an extension of traditional approaches to understanding and treating disease, but with greater
precision. A profile of a patient’s genetic variation can guide the selection of drugs or treatment protocols
that minimize harmful side effects or ensure a more successful outcome. It can also indicate susceptibility
to certain diseases before they become manifest, allowing the physician and patient to set out a plan for
monitoring and prevention. Physicians will be able to go beyond the “one size fits all” model of medicine to
make the most effective clinical decisions for individual patients.
Pharmaceutical and biotechnology companies are increasingly turning to personalized medicine in order to
improve the drug development process and also to speed up the approval of new drugs. One of the biggest
challenges for the biotechnology and pharmaceutical companies in the 21st century will be to develop and
deliver drugs that fit the individual patient’s biology and pathophysiology. This change from blockbuster
medicine to personalized medicine will, to a large extent, influence the way that drugs are going to be
developed, marketed and prescribed in the future.
24
According to a recent report "Personalized Medicine Market Worldwide (2010 - 2015)" issued by Research
and Markets, the personalized medicine market worldwide is projected to grow 11.56% annually and reach
U.S. $148.4 billion by 2015.28 The fastest growth is expected to come from the proteomics and genomics
segment. Targeted biologics is one of the most exciting areas of therapeutic medicine and may represent one
in every four newly commercialized drugs in the future. It is expected to grow steadily with a compound
annual growth rate of 10%.29
Generic Drugs
During the past five years, the use of generic small molecules has increased drammatically in the United
States. In 2010, 78% of all prescriptions in the country were generics, compared with 63% in 2006.30
Because of several imminent patent expirations in the next three years, it is projected that by 2015, 86% of
all small-molecule prescriptions in the United States will be filled by generics. Such high use of generics is
likely to steal share from biologics and require cost and comparative effectiveness data to justify their use in
approved indications.31
In 2010, FDA released a roadmap for the approval of biosimilars. This raised the debate about
"interchangeability" (when one drug can be substituted for another by a pharmacist), which is a key facet of
the rise of generics and erosion of sales for small-molecule brand drugs that are off patent; as yet, it remains
unclear how many biosimilars will qualify for interchangeability. The FDA has established a pathway for
two types of biosimilars, one of which will be a superior product (with interchangeability in the label) and
the second, a "regular" standard product (with no interchangeability).32 Cheaper off-patent biologics could
substantially lower the financial burden on patients and payers, but could lead to an overall decline in sales
of the market and price erosion.33
Stem Cell Research: Lifting the Ban
In an important symbolic victory for the biotech industry, President Obama issued an executive order in
March 2009 lifting the restrictions imposed by President Bush on federal funding for research on human
embryonic stem cells. The reversal was expected, as the president — long a proponent of stem cell research
and regenerative medicine — had pledged a policy shift on the campaign trail. Advocates have stressed,
however, that the change is more a symbolic move for industry than a true financial driver. Federal research
grants, distributed almost exclusively to government agencies and academic research centers, will not
generally end up in biotechnology companies. Thus companies pursuing embryonic stem cell research will
still need to raise funding from investors, which has become more challenging during the economic crisis.
______________________
Research
29
and Markets, "Personalized Medicine Market Worldwide (2010 - 2015)," February 17, 2011.
Research and Markets, "Personalized Medicine Market Worldwide (2010 - 2015)," February 17, 2011.
30
IMS Institute for Healthcare Informatics, "The Use of Medicines in the United States: Review of 2010," April 2011.
31
Nature Biotechnology, "What's fueling the biotech engine - 2010 to 2011," Volume 29, Number 12, December 2011.
32
Steven Kozlowski, M.D., Janet Woodcock, M.D., Karen Midthun, M.D., and Rachel Behrman Sherman, M.D., M.P.H.,
"Developing the Nation's Biosimilars Program," New England Journal of Med. 365, 385-388 (August 4, 2011).
33
PR Newswire, "Biosimilar erosion of branded ESA market share will be more rapid in the US than in Europe," November 4,
2010.
25
Breakthroughs in stem cell research are occurring at a rapid pace thereby providing exciting evidence of the
potential for stem cells to treat many health problems from cardiovascular disease to neurological disorders.
Menlo Park, California-based Geron Corporation, for example, has published the results of its experiments
that show that when certain cells (called OPCs) derived from stem cells were injected in rats that had spinal
cord injuries, the rats quickly recovered. According to the company, “Rats transplanted seven days after
injury showed improved walking ability compared to animals receiving a control transplant. The OPCtreated animals showed improved hind limb-forelimb coordination and weight bearing capacity, increased
stride length, and better paw placement compared to control-treated animals.”
REMS: Monitoring Safety
Public attention has focused on drug safety in recent years, largely due to several high-profile products
receiving media attention, including:

Merck's Vioxx, a prescription painkiller that was pulled from the market in 2004 due to potential
cardiovascular risks

Selective serotonin reuptake inhibitors (SSRIs), a widely used type of antidepressant medication that
was linked to higher suicide rates.34

Tysabri, a multiple sclerosis drug voluntarily withdrawn after three clinical trial subjects developed
progressive multifocal leukoencephalopathy (PML), a serious viral infection of the brain.35 (Tysabri
was later reintroduced with a mandatory risk minimization program).36
While there is some debate on the validity of the science behind these drug safety issues, the events attracted
widespread media coverage and criticism of the FDA, creating a political climate in which there was strong
support for major changes in the US drug safety system.
With the signing of the Food and Drug Administration Amendments Act (FDAAA) in September 2007,
sweeping changes were made in the FDA. The Act’s greatest impact on future drug approvals could be
through its mechanism for post-marketing safety surveillance, the risk evaluation and mitigation strategy
(REMS). Of course, post-approval studies are not new, but as of 2008, these are no longer voluntary postmarketing commitments, but rather, enforceable studies with predetermined time frames and outcome
targets.
Most of the legislation dealing with drug safety is in Title IX of the Act. Below is a summary of the key
changes related to drug safety introduced in the law.
1. Increased authority to monitor drugs after approval
The FDAAA gives the FDA authority to require studies at the time of approval or after approval based on
new safety information. The agency can also require labeling changes or other risk minimization activities,
_______________________________
34
Food and Drug Administration, FDA Public Health Advisory: Suicidality in Children and Adolescents Being Treated With
Antidepressant Medications (FDA, Rockville, MD, 14 October 2004)
35
FDA News, "FDA Approves Resumed Marketing of Tysabri Under a Special Distribution Program", 5 June 2006
36
FDA News, "FDA Issues Safety Alert on Avandia", 21 May 2007
26
if necessary. The ability to require new studies must be based on scientific data and is limited to certain
specific purposes including:

Assessing a known serious risk related to the use of the drug

Assessing signals of serious risk related to use of the drug

Identifying an unexpected serious risk when available data indicates the potential for a serious risk.
The ability to require a study is further limited by the need to find that the adverse event reporting and the
active post-market risk identification and analysis system, which are to be established under the Act, will not
be sufficient to meet the purposes without the study. While the FDA has been able to request these actions
for some time, their ability to enforce the requests was limited, and significant public concern arose over a
2006 FDA report that concluded that sponsors had failed to start 65% of the approximately 1200 requested
studies.37
Under the new legislation, the sponsor must submit a timetable for completion of the study or trial, provide
periodic reports on the status of the required study (including whether enrollment has begun), the number of
participants enrolled, the expected completion date, and any difficulties encountered in completion. The
study must also be registered on www.clinicaltrials.gov. The FDA can levy civil monetary penalties for
noncompliance with post-approval study requirements.
2. New requirements for risk management
The FDAAA enables the agency to require REMS (Risk Evaluation & Mitigation Strategies), both as part of
the drug approval process and once the drug is on the market. REMS are comprehensive risk management
programs aimed at ensuring that a drug's benefits outweigh its risks.
As of December 2008, the FDA had approved 21 REMS from companies submitting new drug applications
(NDAs). For an updated list, please visit the following website: www.fda.gov. The majority of these
REMS have required the submission of a medication guide to address drug- and drug class-specific issues
and provide further information to help patients avoid serious adverse events.
In a few cases, the FDA also required that the programs include steps to assure safe use, such as the
certification of prescribers and pharmacies and enrollment of patients in special programs to ensure that they
fully understand the associated risks.
REMS programs are not restricted to new drugs seeking approval; the FDA can also require them for
existing, approved products. The FDA posted its first list of previously approved products requiring REMS
in March 2008, which included products such as Biogen Idec and Elan’s multiple sclerosis drug, Tysabri,
and Celgene’s multiple myeloma and MDS therapy, Revlimid.
3. Safety-related labeling changes
The Act gives the FDA new authority to require labeling changes based on new safety information. The
FDA must promptly notify the sponsor if it becomes aware of new safety information that should be included
_____________________
37
J. Wechsler; "Safety Concerns Drive Demand for Registries," Applied Clinical Trials, June 2006, 26-30.
27
in the labeling of the drug. After notification, within 30 days the sponsor must submit a supplement
proposing changes or notify the FDA that they do not believe a labeling change is warranted and state why
not.
4. Increased transparency
The Act aims to improve transparency and communication about risks by requiring manufacturers to post the
results of all clinical trials involving approved drugs. The FDA can then use the data, along with data
generated from post-approval studies and risk management programs, to demand labeling changes to
approved products. The FDA can also require labeling changes or other actions based on data that it gathers
through its own surveillance system.
The FDA can now require drug companies to develop and propose a REMS (which can include a medication
guide, patient package insert or a communication plan) to ensure that the benefits of a drug outweigh the
risks.
28
VII. FDA Regulations
Biological Products
Both the FDA’s Center for Drug Evaluation and Research (CDER) and Center for Biologics Evaluation and
Research (CBER) have regulatory responsibility for therapeutic biological products, including premarket
review and oversight. The categories of therapeutic biological products regulated by CDER (under the FDC
Act and/or the PHS Act, as appropriate) are the following:
 Monoclonal antibodies for in vivo use.
 Most proteins intended for therapeutic use, including cytokines (e.g., interferons), enzymes (e.g.
thrombolytics), and other novel proteins, except for those that are specifically assigned to the
Center for Biologics Evaluation and Research (CBER) (e.g., vaccines and blood products). This
category includes therapeutic proteins derived from plants, animals, humans, or microorganisms,
and recombinant versions of these products. Exceptions to this rule are coagulation factors (both
recombinant and human-plasma derived).
 Immunomodulators (non-vaccine and non-allergenic products intended to treat disease by
inhibiting or down-regulating a pre-existing, pathological immune response).
 Growth factors, cytokines, and monoclonal antibodies intended to mobilize, stimulate, decrease or
otherwise alter the production of hematopoietic cells in vivo.
Categories of Therapeutic Biological Products Remaining in CBER
 Cellular products, including products composed of human, bacterial or animal cells (such as
pancreatic islet cells for transplantation), or from physical parts of those cells (such as whole
cells, cell fragments, or other components intended for use as preventative or therapeutic
vaccines).
 Gene therapy products. Human gene therapy/gene transfer is the administration of nucleic acids,
viruses, or genetically engineered microorganisms that mediate their effect by transcription and/or
translation of the transferred genetic material, and/or by integrating into the host genome. Cells
may be modified in these ways ex vivo for subsequent administration to the recipient, or altered
in vivo by gene therapy products administered directly to the recipient.
 Vaccines (products intended to induce or increase an antigen specific immune response for
prophylactic or therapeutic immunization, regardless of the composition or method of
manufacture).
 Allergenic extracts used for the diagnosis and treatment of allergic diseases and allergen patch
tests.
 Antitoxins, antivenins, and venoms
 Blood, blood components, plasma derived products (for example, albumin, immunoglobulins,
clotting factors, fibrin sealants, proteinase inhibitors), including recombinant and transgenic
versions of plasma derivatives, (for example clotting factors), blood substitutes, plasma volume
29
expanders, human or animal polyclonal antibody preparations including radiolabeled or
conjugated forms, and certain fibrinolytics such as plasma-derived plasmin, and red cell reagents.
Please refer to the Transfer of Therapeutic Biological Products to the Center for Drug Evaluation and
Research at http://www.fda.gov/oc/combination/transfer.html for updates that further define the categories of
biological products that are regulated by CDER and CBER.

Establishment Registration
Blood Establishments - All owners or operators of establishments that manufacture blood products
are required to register with the FDA, pursuant to section 510 of the Federal Food, Drug, and
Cosmetic Act, unless they are exempt under 21 CFR 607.65. A list of every blood product
manufactured, prepared, or processed for commercial distribution must also be submitted. Products
must be registered and listed within 5 days of beginning operation, and annually between November
15 and December 31. Blood product listings must be updated every June and December.
Human Cells, Tissues and Cellular and Tissue-Based Products (HCT/Ps) Establishments Establishments that manufacture HCT/Ps that are regulated solely under section 361 of the PHS Act
and the regulations in part 1270 are required to register and list under 21 CFR Part 1271 in 2001.
Establishment that manufacture HCT/Ps that are: 1) Drug, 2) Medical Devices, 3) Biological
Products, 4) Hematopoietic stem cells from peripheral and cord blood, 5) Reproductive cells and
tissues; or 6) Human heart valves and human dura mater, are required to register with FDA and list
HCT/Ps using the registration and listing procedures in 21 CFR part 1271, subpart B. HCT/P
establishments that only manufacture HCT/Ps currently under IND or IDE do not need to register and
list their HCT/Ps until the investigational HCT/P is approved through a Biologics License
Application (BLA), a New Drug Application (NDA), or a Premarket Approval Application (PMA);
or cleared through a Premarket Notification Submission 510(k).

Investigational New Drug Application - A drug that passes animal safety studies may move into human
testing following the submission of an investigational new drug (IND) application to the FDA. Most
studies, or trials, of new products may begin 30 days after the agency receives the IND. During this time,
FDA has an opportunity to review the IND for safety to assure that research subjects will not be
subjected to unreasonable risk.
Almost every new drug goes through multiple clinical trials, beginning with early studies (Phase I) in
small groups of patients to test safety. Larger mid-stage trials (Phase II) examine safety and obtain
preliminary efficacy data. The final stage of pre-market testing (Phase III) seeks to gather convincing
efficacy data in the specific patient population the drug's developer hopes to treat.
There are three IND types:
o
An Investigator IND is submitted by a physician who both initiates and conducts an
investigation, and under whose immediate direction the investigational drug is administered or
dispensed. A physician might submit a research IND to propose studying an unapproved drug,
or an approved product for a new indication or in a new patient population.
o
Emergency Use IND allows the FDA to authorize use of an experimental drug in an emergency
situation that does not allow time for submission of an IND in accordance with 21CFR , Sec.
30
312.23 or Sec. 312.34. It is also used for patients who do not meet the criteria of an existing
study protocol, or if an approved study protocol does not exist.
o
Treatment IND is submitted for experimental drugs showing promise in clinical testing for
serious or immediately life-threatening conditions while the final clinical work is conducted and
the FDA review takes place.
There are two IND categories:
o
o
Commercial
Research (non-commercial)
The IND application must contain information in three broad areas:
o
Animal Pharmacology and Toxicology Studies - Preclinical data to permit an assessment as to
whether the product is reasonably safe for initial testing in humans. Also included are any
previous experience with the drug in humans (often foreign use).
o
Manufacturing Information - Information pertaining to the composition, manufacturer,
stability, and controls used for manufacturing the drug substance and the drug product. This
information is assessed to ensure that the company can adequately produce and supply
consistent batches of the drug.
o
Clinical Protocols and Investigator Information - Detailed protocols for proposed clinical
studies to assess whether the initial-phase trials will expose subjects to unnecessary risks. Also,
information on the qualifications of clinical investigators--professionals (generally physicians)
who oversee the administration of the experimental compound--to assess whether they are
qualified to fulfill their clinical trial duties. Finally, commitments to obtain informed consent
from the research subjects, to obtain review of the study by an institutional review board (IRB),
and to adhere to the investigational new drug regulations.
All Biological IND submissions must be made in triplicate and should be addressed as follows:
Center for Biologics Evaluation and Research
HFM-99, Room 200N
1401 Rockville Pike
Rockville, MD 20852-1448
Tel: (301)827-1800

Biologics License Application - Biological products are approved for marketing under the provisions of
the Public Health Service (PHS) Act. The Act requires a firm who manufactures a biologic for sale in
interstate commerce to hold a license for the product. A biologics license application is a submission that
contains specific information on the manufacturing processes, chemistry, pharmacology, clinical
pharmacology and the medical affects of the biologic product. If the information provided meets FDA
requirements and the establishment passes the inspection, the application is approved and a license is
issued allowing the firm to market the product. Form 356h specifies the requirements for a BLA. This
includes:
o
Applicant information
31
o
Product/Manufacturing information
o
Pre-clinical studies
o
Clinical studies
o
Labeling
Some responsibilities of a licensed biologics manufacturer include:
o
complying with the appropriate laws and regulations relevant to their biologics license and
identifying any changes needed to help ensure product quality
o
reporting certain problems to FDA’s Biological Product Deviation Reporting System
o
reporting and correcting product problems within established timeframes
o
recalling or stopping the manufacture of a product if a significant problem is detected



Post-Approval - Every approved drug comes with an official product label, in a standardized format,
whose contents are developed by the FDA and the company marketing the drug. The label contents
include the approved indication, as well as a description of the drug, its side effects, dosage, clinical trial
summaries and other information useful to physicians. Although doctors may prescribe a therapy "offlabel" for indications not expressly approved by the FDA, manufacturers are prohibited from marketing
off-label indications, and insurance does not always cover such uses.
The story does not end with approval and labeling. Companies often conduct additional Phase II and
III trials in other indications and may apply for approval through a supplemental BLA. If approved, the
new indication is added to the product label.
Companies also conduct Phase IV trials to refine knowledge about the drug. In addition, drug makers
are required by law to report adverse events to the FDA, and they are subject to ongoing
manufacturing and marketing rules.
General Biological Product Standards

Potency - Tests for potency shall consist of either in vitro or in vivo tests, or both, which have been
specifically designed for each product so as to indicate its potency in a manner adequate to satisfy the
interpretation of potency given by the definition in 600.3(s) of this chapter.

General Safety Test - A general safety test for the detection of extraneous toxic contaminants shall be
performed on biological products intended for administration to humans. The general safety test shall
be conducted upon a representative sample of the product in the final container from every final
filling of each lot of the product. If any product is processed further after filling, such as by freezedrying, sterilization, or heat treatment, the test shall be conducted upon a sample from each filling of
each drying chamber run, sterilization chamber, or heat treatment bath.
32

Sterility Test

Purity - Products shall be free of extraneous material except that which is unavoidable in the
manufacturing process described in the approved biologics license application. In addition, products
shall be tested as provided in paragraphs (a) and (b) of this section.

Identity - The contents of a final container of each filling of each lot shall be tested for identity after
all labeling operations shall have been completed. The identity test shall be specific for each product
in a manner that will adequately identify it as the product designated on final container and package
labels and circulars, and distinguish it from any other product being processed in the same laboratory.
Identity may be established either through the physical or chemical characteristics of the product,
inspection by macroscopic or microscopic methods, specific cultural tests, or in vitro or in vivo
immunological tests.

Constituent Materials -

Total Solids in Serums - Except as otherwise provided by regulation, no liquid serum or antitoxin
shall contain more than 20 percent total solids.

Permissible Combinations - Licensed products may not be combined with other licensed products
either therapeutic, prophylactic or diagnostic, except as a license is obtained for the combined
product. Licensed products may not be combined with non-licensable therapeutic, prophylactic, or
diagnostic substances except as a license is obtained for such combination.

Cultures

Labeling Standards
 Container Label
(a) Full label - The following items shall appear on the label affixed to each container of a product
capable of bearing a full label:
(1) The proper name of the product;
(2) The name, address, and license number of manufacturer;
(3) The lot number or other lot identification;
(4) The expiration date;
(5) The recommended individual dose, for multiple dose containers.
(6) The statement: "`Rx only'" for prescription biologicals.
(7) If a Medication Guide is required under part 208 of this chapter, the statement required under
208.24(d) of this chapter instructing the authorized dispenser to provide a Medication Guide to
each patient to whom the drug is dispensed and stating how the Medication Guide is provided,
33
except where the container label is too small, the required statement may be placed on the
package label.
(b) Package label information - If the container is not enclosed in a package, all the items required for
a package label shall appear on the container label.
(c) Partial label - If the container is capable of bearing only a partial label, the container shall show as
a minimum the name (expressed either as the proper or common name), the lot number or other lot
identification and the name of the manufacturer; in addition, for multiple dose containers, the
recommended individual dose. Containers bearing partial labels shall be placed in a package which
bears all the items required for a package label.
(d) No container label - If the container is incapable of bearing any label, the items required for a
container label may be omitted, provided the container is placed in a package which bears all the
items required for a package label.
(e) Visual inspection - When the label has been affixed to the container a sufficient area of the
container shall remain uncovered for its full length or circumference to permit inspection of the
contents.
 Package Label
The following items shall appear on the label affixed to each package containing a product:
(a) The proper name of the product;
(b) The name, address, and license number of manufacturer;
(c) The lot number or other lot identification;
(d) The expiration date;
(e) The preservative used and its concentration, or if no preservative is used and the absence of a
preservative is a safety factor, the words "no preservative";
(f) The number of containers, if more than one;
(g) The amount of product in the container expressed as (1) the number of doses, (2) volume, (3)
units of potency, (4) weight, (5) equivalent volume (for dried product to be reconstituted), or
(6) such combination of the foregoing as needed for an accurate description of the contents,
whichever is applicable;
(h) The recommended storage temperature;
(i) The words "Shake Well", "Do not Freeze" or the equivalent, as well as other instructions, when
indicated by the character of the product;
(j) The recommended individual dose if the enclosed container(s) is a multiple-dose container;
34
(k) The route of administration recommended, or reference to such directions in an enclosed
circular;
(l) Known sensitizing substances, or reference to an enclosed circular containing appropriate
information;
(m) The type and calculated amount of antibiotics added during manufacture;
(n) The inactive ingredients when a safety factor, or reference to an enclosed circular containing
appropriate information;
(o) The adjuvant, if present;
(p) The source of the product when a factor in safe administration;
(q) The identity of each microorganism used in manufacture, and, where applicable, the production
medium and the method of inactivation, or reference to an enclosed circular containing
appropriate information;
(r) Minimum potency of product expressed in terms of official standard of potency or, if potency is a
factor and no U.S. standard of potency has been prescribed, the words "No U.S. standard of
potency."
(s) The statement: "`Rx only'" for prescription biologicals.
 Proper name; package label; legible type
(a) Position - The proper name of the product on the package label shall be placed above any
trademark or trade name identifying the product and symmetrically arranged with respect to
other printing on the label.
(b) Prominence - The point size and typeface of the proper name shall be at least as prominent as the
point size and typeface used in designating the trademark and trade name. The contrast in color
value between the proper name and the background shall be at least as great as the color value
between the trademark and trade name and the background. Typography, layout, contrast, and
other printing features shall not be used in a manner that will affect adversely the prominence of
the proper name.
(c) Legible type - All items required to be on the container label and package label shall be in legible
type. "Legible type" is type of a size and character which can be read with ease when held in a
good light and with normal vision.
 Divided manufacturing responsibility to be shown
If two or more licensed manufacturers participate in the manufacture of a biological product, the
name, address, and license number of each must appear on the package label, and on the label of the
container if capable of bearing a full label.
35
 Name and address of distributor
The name and address of the distributor of a product may appear on the label provided that the
name, address, and license number of the manufacturer also appears on the label and the name of
the distributor is qualified by one of the following phrases: "Manufactured for _____", "Distributed
by ______", "Manufactured by _____ for _____", "Manufactured for _____ by ____",
"Distributor: _____", or "Marketed by _____". The qualifying phrases may be abbreviated.
 Bar code label requirements
Biological products must comply with the bar code requirements at 201.25 of this chapter. However,
the bar code requirements do not apply to devices regulated by the Center for Biologics Evaluation
and Research or to blood and blood components intended for transfusion. For blood and blood
components intended for transfusion, the requirements at 606.121(c)(13) of this chapter apply
instead.
In-vitro Diagnostic (IVD) Products Regulation

Establishment Registration - Manufacturers (both domestic and foreign) and initial distributors
(importers) of medical devices must register their establishments with the FDA. All establishment
registrations must be submitted electronically unless a waiver has been granted by FDA. All registration
information must be verified annually between October 1st and December 31st of each year. In addition
to registration, foreign manufacturers must also designate a U.S. Agent. Beginning October 1, 2007,
most establishments are required to pay an establishment registration fee. Please find below the schedule
of registration fees for each fiscal year.
Year FY 2008 FY 2009 FY 2010 FY2011 FY 2012
Fee $1,706
$1,851
$2,008
$2,179 $2,029
More information about FDA establishment registration can be found at:
http://www.fda.gov/MedicalDevices/DeviceRegulationandGuidance/Overview/default.htm#reg.

Classification of IVD Products - FDA classifies IVD products into Class I, II, or III according to the
level of regulatory control that is necessary to assure safety and effectiveness. The classification of an
IVD (or other medical device) determines the appropriate premarket process.
Class I Devices: include commodity products such as stethoscopes, scalpels, and other commodity
products that pose relatively little patient risk. Makers of these products need only register their
establishment, conform to Good Manufacturing Practices (GMP) and notify the FDA at least 90 days
before they start marketing the devices. GMP's are standards set by the FDA for ensuring manufacturing
quality. More information about GMP requirements can be found at:
http://www.fda.gov/MedicalDevices/DeviceRegulationandGuidance/PostmarketRequirements/QualitySy
stemsRegulations/default.htm.
36
Class II Devices: include devices that present a moderate degree of risk to the patient. Examples include
x-ray machines, endoscopes, and surgical lasers. Manufacturers have to provide the FDA with some
evidence of safety and efficacy and meet certain performance standards. In addition, they are responsible
for post-market surveillance and maintenance of patient registries.
Class III Devices: these are sophisticated products that present significant risk to patients and must go
through extensive clinical trials before undergoing FDA reviews. Included in this category are life
supporting devices, such as implantable cardiac pacemakers, angioplasty catheters, stents, and similar
devices that prevent potentially dangerous medical conditions such as heart attacks and cardiac
arrhythmias.

Premarket Notifications - Premarket notifications are also known as 510(K). This is a more commonly
used filing and applies to devices that are Substantially Equivalent (SE) to approved products already on
the market. Many Class I devices are exempt from the 510(K) process, although other regulations apply.
Once the device is determined to be SE, it can then be marketed in the U.S. The SE determination is
usually made within 90 days and is made based on the information submitted by the submitter. Detailed
information about the 510(K) process can be found at:
http://www.fda.gov/MedicalDevices/DeviceRegulationandGuidance/Overview/default.htm#reg
In many cases, descriptive data and a labeling review are sufficient, though some devices may require
further clinical studies to support a 510(K). Before marketing a device, each submitter must receive an
order, in the form of a letter, from FDA which finds the device to be substantially equivalent and states
that the device can be marketed in the U.S. This order "clears" the device for commercial distribution.
The submitter may market the device immediately after 510(K) clearance is granted.

Premarket Applications - Premarket applications (PMA) apply to most Class III devices due to the level
of risk. PMA is the most stringent type of device marketing application required by FDA. The applicant
must receive FDA approval of its PMA application prior to marketing the device. PMA approval is
based on a determination by FDA that the PMA contains sufficient valid scientific evidence to assure that
the device is safe and effective for its intended use(s). An approved PMA is, in effect, a private license
granting the applicant (or owner) permission to market the device. The PMA owner, however, can
authorize use of its data by another.
FDA regulations provide 180 days to review the PMA and make a determination. In reality, the review
time is normally longer. Before approving or denying a PMA, the appropriate FDA advisory committee
may review the PMA at a public meeting and provide FDA with the committee's recommendation on
whether FDA should approve the submission. After FDA notifies the applicant that the PMA has been
approved or denied, a notice is published on the Internet (1) announcing the data on which the decision is
based, and (2) providing interested persons an opportunity to petition FDA within 30 days for
reconsideration of the decision.
On October 26, 2002 the Medical Device User Fee and Modernization Act of 2002 was signed into law.
This law authorizes FDA to charge a fee for medical device product reviews. These fees apply to
Premarket Approvals (PMAs), Product Development Protocols (PDPs), Biologics Licensing
Applications (BLAs for certain medical devices reviewed by FDA's Center for Biologics Evaluation and
Research), certain supplements, and Premarket Notification 510(k)s.
The fee must be paid for the above listed applications, unless the applicant is eligible for a waiver or
exemption. Small businesses may qualify for a reduced fee. Payment must be received on or before the
37
time the application is submitted. If the applicant has not paid all fees owed, FDA will consider the
application incomplete and will not accept it for filing.
FY 2012 Device Review User Fees (U.S. Dollars)
Application
Standard Fee Small Business
Premarket Application (PMA, PDP, BLA, PMR)* $220,050
$55,013
First premarket application from firms with
gross receipts or sales ≤ $30 million
Not Applicable Fee is Waived
Panel-track Supplement
$165,038
$41,259
Efficacy Supplement (for BLA)
$220,050
$55,013
180-day Supplement
$33,008
$8,252
Real-time Supplement
$15,404
$3,851
Annual Report
$7,702
$1,925
30-day Notice
$3,521
$1,760
* PMA=Premarket Approval; PDP=Product Development Protocol; BLA=Biologics License Application;
PMR=Premarket Report (for a reprocessed device)
Source: www.fda.gov
The following types of applications require no fee.




Special PMA Supplements-Changes Being Affected
PMA Manufacturing Site Change Supplements
Humanitarian Device Exemption (HDE)
BLA for a product licensed for further manufacturing use only.
The following exemptions or waivers apply.
Fee Exemptions and Waivers (No Fee for These)
Category
Exemption or Waiver
First premarket approval submission (PMA,
PDP, BLA, or premarket report) from a small
business with gross receipts or sales <$30
million.
One-time waiver of the fee that would otherwise
apply.
Any application for a device intended solely
for pediatric use.
Exempt from any fee. If an applicant obtains an
exemption under this provision, and later
submits a supplement for adult use, that
supplement is subject to the fee then in effect for
an original premarket application.
Any application from a State or Federal
Government entity.
Exempt from any fee unless the device is to be
distributed commercially.
38

Labeling Requirements - The label for IVD's must state the following information, except in cases
where it is not applicable. In addition, all information must appear on the outside container or wrapper,
or be easily legible through the outside container or wrapper. If the presence of any label information
will interfere with the test, the information may appear on the outside wrapper or container instead of the
label. If the immediate containers are too small, or otherwise unable to bear labels with sufficient space,
then the required labeling as listed below annotated with an asterisk (*) may appear on the outer container
labeling only.
Label requirements for the immediate container:
o
The established and proprietary names of the product, e.g., cholestrolometers;
* o
The intended use or uses, e.g., pregnancy detection, diabetes screening, etc.;
* o
A statement of warnings or precautions for users listed in 16 CFR part 1500
(hazardous substances) and any other warnings appropriate to user hazards, and a
statement "For In Vitro Diagnostic Use";
o
o
Name and place of business of the manufacturer, packer, or distributor;
Lot or control number traceable to the production history
- Multiple unit products must have traceability of the individual units;
- Instrument lot numbers must allow for traceability of subassemblies; and
- A multiple unit product that requires use of its components as a system should have the
same lot number, or other suitable uniform identification, on all units.
For Reagents:
o
Established (common or usual) name;
o
Quantity, proportion, or concentration of all active ingredients: e.&., mg., weight per unit
volume, mg./dl etc., and for reagents derived from biological materials the source and
measure of its activity, e.g., bovine, I.U., etc.;
o
Storage instructions, i.e., temperature, humidity, etc.;
o
Instructions for manipulation of products requiring mixing or reconstitution;
o
Means to assure that the product meets appropriate standards of purity, quality, etc., at the
time of use, including one or more of the following:
1. expiration date (date beyond which the product is not to be used);
* 2. statement of any visual indication of alteration;
* 3. instructions for a simple check to assure product usefulness;
* - The net quantity of contents.
39
Label requirements for inserts and outer packaging:
Labeling must contain in one place the following information in the format and order listed below,
except where information is not applicable, or as specified in a standard for a particular product class.
If the device is a reagent intended as a replacement in a diagnostic system, labeling may be limited to
that information necessary to adequately identify the reagent and to describe its use in the system. If
the device is a multiple purpose instrument used for diagnostic purposes, and not committed to
specific diagnostic procedures or systems, labeling can be restricted to those points annotated by an
asterisk (*).
*
o The proprietary and established product name;
*
o The intended use of the product and whether it is a qualitative or quantitative
type of procedure, e. g., screening, physician's office, home use, etc. ;
o Summary and explanation of the test, including a short history containing methodology
and the special merits and limitations of the test;
o The chemical, physical, physiological, or biological principles of the procedure.
For Reagents:
o The common name, if any, and quantity, proportion, or concentration or each reactive
ingredient; and for biological material, the source and measure of its activity;
o Appropriate cautions or warnings listed in 16 CFR Part 1500; the statement: "For In Vitro
Diagnostic Use;" and any other limiting statements appropriate to the intended use of the
product;
o Adequate directions for reconstitution, mixing, dilution, etc.;
o Appropriate storage instructions;
o A statement of purification or treatment required for use; and
o Physical, biological, or chemical indications of instability or deterioration.

Exemptions from Labeling Requirements - Shipments or other deliveries of IVD devices are exempt
from label and labeling requirements in the above headings and from standards listed under Part 861
provided the following conditions are met:
o A shipment or delivery for an investigation subject to Part 812, Investigational Device
Exemption (IDE), if the device is in compliance with the subject IDE; or
o A shipment or delivery for an investigation that is not in compliance with Part 812 (most IVD
are exempt from the IDE because of the following labeling) if the following conditions are
met:
- A product in the laboratory research phase, not represented as an IVD, that is prominently
labeled: "For Research Use Only. Not for use in diagnostic procedures;" and
40
- A product that is being shipped or delivered for product testing prior to full commercial
marketing that is prominently labeled: "For Investigational Use Only. The performance
characteristics of this product have not been established.

Investigational Device Exemption (IDE) - An investigational device exemption (IDE) allows the
investigational device to be used in a clinical study in order to collect safety and effectiveness data
required to support a Premarket Approval (PMA) application or a Premarket Notification [510(K)]
submission to the FDA. Clinical studies are most often conducted to support a PMA. Only a small
percentage of 510(K)'s require clinical data to support the application. Investigational use also includes
clinical evaluation of certain modifications or new intended uses of legally marketed devices. All
clinical evaluations of investigational devices, unless exempt, must have an approved IDE before the
study is initiated. Many IVDs are exempt from IDE requirements.