According to Ernst & Young’s 27th annual biotechnology industry report, the global biotechnology industry has continued its recovery, but small and midsize companies have apparently been unable to gather the evidence needed to demonstrate the value of their products while they are under development thus hindering the companies’ future ability to “raise capital, obtain attractive deal valuations and be successfully reimbursed for their drugs upon approval.” Ernst & Young Global Life Sciences Leader Glen Giovannetti said, “In today’s increasingly outcomes-focused, evidence-driven health care systems, biotech companies cannot afford to pursue an R&D strategy that only focuses on whether or not their drug works. They need to also understand whether it will be valued and reimbursed by payers.”

The report showed that the industry’s established biotech centers in the United States, Europe, Canada, and Australia increased their revenues by 8 percent from 2011. Research and development spending apparently slowed, growing just 5 percent in 2012 compared to 8 percent in 2011. Net income reached a record high of US$5.2 billion, which exceeded the previous year’s net by US$1.4 billion. Venture funding continued to decrease, but remains resilient, according to the report.

Because smaller biotech companies are focusing on efficiency initiatives far more often than on “measures to collect evidence to demonstrate product value,” Giovannetti said, “It’s time for biotech firms to debunk any myths that may be holding them back. The shift to evidence is happening faster than many might have expected, and it affects companies regardless of their size, maturity or disease focus. Many evidence-focused initiatives—engaging stakeholders earlier on issues of value and reimbursement, rethinking trial design or exploring pre-competitive data collaborations—don’t cost much and could even avoid the expense of additional studies. The question is not whether you can afford to do this, but whether you can afford not to.” See Ernst & Young Press Release, April 23, 2013.