Big Pharma Is Missing the Nanotechnology Opportunity

Lux Research report finds that pharmaceutical giants invest less money and

people in nanotech than other industries - despite pressure to replace fading

blockbuster drugs

Feb 15, 2005, 00:00 ET from Lux Research

    NEW YORK, Feb. 15 /PRNewswire/ -- The U.S. National Institutes of Health
 counts nanomedicine as one of its top five priorities, the National Cancer
 Institute committed $144 million to nanotechnology research in October 2004,
 and 40% of nanotech venture capital since 1998 has gone to life sciences
 start-ups. Yet despite nanotechnology's promise in improving how drugs are
 developed and delivered, major pharmaceutical companies are committing almost
 no money or people to nanotechnology research -- exposing them to strategic
 risks, according to a new report from Lux Research entitled "Why Big Pharma Is
 Missing the Nanotech Opportunity."
     "Nanotech presents many opportunities to pharmaceutical giants, ranging
 from better delivery of existing drugs to entirely new therapies based on
 nanomaterials," said Lux Research Vice President of Research Matthew M.
 Nordan. "But big pharma is not investing in nanotech today.  If this trend
 continues, nanotech will play out in pharmaceuticals just as biotechnology
 did, with major pharmaceutical companies leaving money on the table and
 allowing new competitors to take root."
     Lux Research bases its conclusions on in-depth interviews conducted with
 individuals accountable for nanotechnology at 33 global corporations with
 annual revenues exceeding $5 billion.  The interview data reveals that:
      * No life sciences interviewee rates nanotech as a high corporate
        priority, as opposed to 78% of interviewees in electronics and
      * Only one out of six life sciences respondents claims to have an
        explicit strategy for nanotechnology, compared  with two-thirds of
        those in other electronics and materials.
      * Big pharma companies on average commit 16 people and less than half of
        one percent of R&D spending to nanotechnology research, whereas
        like-sized electronics and materials firms commit more than 100 people
        and more than 8% of R&D.
     Lux Research's analysis finds that large drug manufacturers pay little
 attention to nanotechnology for three reasons:  Organization, history, and
 hubris.  First, big pharma companies typically entrust accountability for
 nanotechnology to an executive responsible for drug discovery, pharma's
 biggest cost driver -- but nanotech's big near-term impact is in drug
 delivery. Second, big pharma companies learned during the biotech revolution
 that they could avoid their own investment and instead in-license drugs from
 start-ups at a late stage -- but greater pressure on big pharma's drug
 pipelines today gives nanotech start-ups a negotiating advantage.  Finally,
 many big pharma executives claim they've been "doing nanotech" for years by
 developing small-molecule drugs or engineering proteins -- however, few can
 claim the materials science expertise that truly novel nanotech innovations
 depend on.
     Pharmaceutical companies' laissez-faire attitude towards nanotech will
 have consequences.  "Big pharma will have to contend with a new wave of
 superbranded generics that will erode market share.  This trend began with the
 approval of American Pharmaceutical Partners' nano-enabled Abraxane cancer
 therapy this January," said Nordan.  "On the other hand, opportunity exists
 for a forward-thinking drug manufacturer to go on the offensive and acquire
 competitive capabilities by picking up a nanoscale reformulation specialist,
 as mid-cap pharma manufacturer Elan and medical devices leader Baxter already
 have.  We think Kereos in the U.S., Nanocarrier in Japan, and Solubest in
 Israel look like prime targets."
     The report provides interview data comparing the nanotech strategy,
 staffing, and R&D spending of global life sciences companies versus like-sized
 competitors in the electronics and IT sectors, and also profiles 14 start-up
 and mid-cap companies developing nanoscale drug delivery technologies.  It is
 available immediately to clients of Lux Research's Nanotechnology Strategies
 advisory service.  For information on how to become a client, contact Rob
 Burns, Vice President of Sales, at (646) 723-0708.
     About Lux Research:
     Lux Research is the world's premier research and advisory firm focusing on
 the business and economic impact of nanotechnology and related emerging
 technologies.  Lux Research provides continuous advisory services, customized
 consulting, and reference studies to corporations, start-ups, financial
 institutions, and public sector organizations.  Our founders and our research
 staff are the most widely recognized nanotechnology visionaries throughout the
 world.  Visit for more information.

SOURCE Lux Research