We’re living in a new a golden age of biotechnology in Massachusetts.
By this I don’t mean the sheer number of start-ups and other young local companies hoping to make their marks. Nor am I highlighting the impressive list of global pharmaceutical giants that have planted their corporate flags in Cambridge over the past decade — as important as that development has become.
To me, this golden age is about important new drugs and therapies, the kind that have legitimate blockbuster potential. More local companies than ever are developing products like that and bringing them to market.
In the process, those companies are becoming bigger and more serious commercial ventures. I suspect even more will fit that description before long.
For so many years, the local biotech industry consisted of two big companies — Biogen Idec Inc. and Genzyme Corp. — and then everybody else. A crowd of very small businesses trailed far behind the leaders.
Biogen and Genzyme literally helped invent their industry decades ago — the first real golden age of local biotech. “Those companies pioneered their own commercial pathways when the major pharma companies were ignoring those products,” says Josh Boger, the retired chief executive of Vertex Pharmaceuticals Inc. of Cambridge. “I give them a huge amount of credit for pioneering commercial models.”
Today, Biogen and the Genzyme business acquired last year by Sanofi are still going strong. In fact, investors are more bullish than ever on Biogen’s prospects.
But a group of smaller companies showing serious commercial potential is the really intriguing part of the story. Those companies — some with long, research-heavy histories — have emerged from the pack with realistic blockbuster ambitions.
PAriad Pharmaceuticals Inc. of Cambridge — which spent two decades in research and development mode — is waiting for the Food and Drug Administration to pass judgment on its promising new treatment for chronic myeloid leukemia. Stock analysts believe Ariad’s treatment can generate $1 billion in annual sales within five years.
PEarlier this year, Ironwood Pharmaceuticals Inc. of Cambridge won FDA approval for its treatment for irritable bowel syndrome, a condition affecting millions of patients who have had limited therapeutic options. Many analysts say the Ironwood drug also has the potential to generate $1 billion or more in annual sales.
PCubist Pharmaceuticals Inc. of Lexington has built steady momentum with antibiotics and nearly tripled sales over the last five years. Cubist should approach or exceed the $1 billion sales mark next year and has a new crop of products on the way.
PVertex Pharmaceuticals, which also spent decades in the lab without commercial success, hit the biggest home run of all with its hepatitis C treatment. Vertex went from zero to more than $1 billion in annual product sales between 2010 and 2011. Then it followed up by rolling out a new therapy for a completely different disease — cystic fibrosis — earlier this year.
It would have been hard to imagine any of these four business stories a decade ago. Then, biotech companies typically licensed out the rights to drugs with commercial potential. Often, big drug companies simply bought the smaller development business. Investors rarely encouraged companies to grow a business with big, long-term ambitions.
I asked some biotech executives about our current crop of companies and why they seem to be producing many more drugs. Cubist president Rob Perez didn’t quite see it that way.
“You have more products now that are complete winners or absolute losers, but you don’t have as many as you used to in the middle — the $100 million or $200 million” drugs that were incrementally different from existing therapies.
Perez says cost pressure on health care providers squeezed the smaller products. Drugs must be significantly different or better than existing alternatives to have a shot today, he says.
That may indeed be the case. But drug companies with small- to medium-scale sales potential rarely became big businesses. That would be very hard to pull off.
Today’s biotech companies with the most potential have very good products and a plan to keep most of the commercial opportunity for themselves. Best of all, most are developing real drug pipelines that could turn a few of them into giants before long.