Indiana's Drug Development Industry

Some highlights from The Indianapolis Business Journal's BioCrossroads: It can happen here:

"The devil’s always in the details. That’s why three months after launching an initiative to boost drug-development firms in Indiana, officials at BioCrossroads have written a report that attempts to show in detail the vast market opportunity they see."

The report, to be released Feb. 4, focuses on the conglomeration of firms that provide services to both large pharmaceutical companies, such as Indianapolis-based Eli Lilly and Co., and tiny biotech firms, such as West Lafayette-based Endocyte Inc.

Worldwide, those firms make up a $14 billion market, which is burgeoning at roughly 15 percent a year, according to the BioCrossroads report. There are even backlogs for some services, such as animal studies and other analysis required to get a new drug compound into human testing.

The growth of the drug development industry plays right into Indiana’s hands, said BioCrossroads CEO David Johnson, since Indiana already has numerous companies in that industry.

“As Hoosiers, I think, we’re almost to a fault modest. And we think the big trends of the future aren’t going to happen here … [but] on the coasts,” he said. “But this one is here.”

Maybe. But one life sciences consultant on the West Coast has his doubts. Joe Cortright, an economist and vice president of Impresa Consulting in Portland, Ore., said Indiana would have a hard time finding a niche between more established biotech clusters and the low-cost hot spots, China and India.

***

There are two main forces driving the growth of contract service providers.

First, big pharmaceutical firms are shedding thousands of jobs each, looking to save costs by outsourcing everything from scientific research to manufacturing to sales.

Pharmaceutical companies announced more than 32,000 layoffs last year. They are desperately trying to cut costs as they approach the patent expirations on the mega-blockbuster drugs that have sustained the industry for years.

Lilly has cut 5,000 jobs worldwide, including 2,200 at its Indianapolis headquarters, since mid-2004. Its officials have promised to cut more.

The second driver is a greater need of biotech firms to find partners to help them develop their drugs. Investors have poured billions of dollars into biotech firms; it typically takes years for any company to reach a point where those investments pay off.

But can Madison County get in on this?