Understanding the Biotech Industry: Project Pipelines
By Becky Ravenelle
When many STEM students think of working “in industry” they often imagine running experiments using some of the same skills and techniques they perfected throughout their graduate program—but at a startup or biopharmaceutical company rather than their PI’s lab. Instead of directing their own projects, they imagine being guided by the aims of the company at which they are employed. What may be more difficult for STEM students to imagine is what these companies look like behind-the-scenes.
The ins-and-outs of product development and portfolio management are often not taught in graduate school, which leaves students at a disadvantage when pursuing non-academic career paths. One concept students should be familiar with in order to better understand the biotech industry is that of project pipelines.
“Pipeline” is the term used to describe all of the projects under development at a company. The pipeline covers work still in discovery and early preclinical phases, through clinical phases 1-3, and finally phase 4, also known as the post-marketing stage. The process by which a product moves through the pipeline can be time-intensive and costly, and not every product will make it all the way through.
In order to understand how and why the pipeline works, it’s important to know what each phase of the pipeline entails. If a drug shows promising preclinical success in a non-human model, it may enter clinical phase 1 trials to test for human safety. Phase 1 generally includes a small number of participants, which—depending on the drug—may or may not have the target disease. If the drug can be utilized without causing considerable side effects, it may be moved to clinical phase 2. In phase 2, up to several hundred people diagnosed with the target disease will be placed on the drug and undergo intensive monitoring for efficacy.
If the drug proves to be safe and effective, it becomes eligible for phase 3 clinical trials in which several thousand patients will be placed on the drug and monitored for up to several years prior to FDA approval. If approved, data collection actually continues through what is termed phase 4 when the drug becomes available on the healthcare market.
Understanding each phase of a company’s pipeline is important because decisions are made to move forward—or abandon entire projects—based on their performance through the pipeline in relation to their potential value for the company. Due to the high cost of clinical trials, just because a drug is safe and may show some promise in disease treatment does not mean it will automatically progress through the pipeline.
The Cost of Development
Getting a drug to market is challenging and expensive. Out of 25 initial projects, it will cost a company on average $2.6 billion dollars to get only one of those projects successfully through the pipeline. And even getting a drug or medical device to market does not guarantee a return on investment. In 2006, after extensive research and development, Pfizer paid a collaborating company $1.3 billion dollars for the exclusive rights to sell Exubera, an inhalable insulin device. When that device brought in only $12 million dollars in sales the following year, they took a $2.8 billion dollar loss.
Since most companies do not start with billions of dollars to put towards research and development—or to help them recuperate from losses—it is important to understand where the capital for this type of work comes from. Funding sources utilized by today’s biotech companies include grants, angel investors, venture capitalists, and industry partners. Although all of these sources are often utilized simultaneously, many companies still need additional capital to cover the entire cost of just one successful project. To meet their financial obligations, some companies will have an IPO, or initial public offering, in which shares of the company are sold to investors.
Potential in Biotech Careers
Although some students may enter graduate school knowing what they want to do with their degree, others are undecided or may be unsure of what career options are available outside academia. Biotechnology and pharmaceutical companies represent a substantial portion of the job market for STEM students. Understanding how these companies maintain research and development programs is a good first step in beginning to position yourself for these careers.
This blog post was written by a Graduate Center student who took part in a course on biotechnology offered through the Office of Career Planning & Professional Development. This programming was sponsored by the CUNY Central Office Career Success – Workforce Development Initiative.