MEDICINE AND AGRICULTURE in .NET

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MEDICINE AND AGRICULTURE
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Drug Discovery Screening, Lead Development, Preclinical Trials, and Regulatory Approval
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Phase I III Clinical Trials and New Drug Application Regulatory Approval
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Phase IV Clinical Trials Time
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FIGURE 3.2 Continuum Model applied to the drug development process.
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improvement in the underlying drug technology, such as a new formula tion, may occur prior to completion. With the Continuum Model as a tool for assessing the relative matu rity of a biotech product or service, consider the secondary biotech markets in medicine and agriculture, described here.
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MEDICAL BIOTECH
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Although medicine is a secondary biotech market, it has the long-term po tential to signi cantly outgrow the traditional pharmaceutical market. As introduced in 1, the medical biotech industry includes genomic cancer therapy, tissue and (potentially) human cloning, genomic diagnostic tools, infectious disease therapies, gene therapy, and xenotransplantation. It also includes the relatively undeveloped markets associated with genetic engineering and life extension. In many ways, clinical medicine is a practi cal test for the continued groundwork that has been laid by scientists in volved in genomics and proteomics research. Medical biotechnology is a vast market. In the United States, health
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Medical Biotech
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care is $1.3 trillion industry that accounted for 13 percent of the Gross Do mestic Product (GDP) in 2001. In addition, the percentage has been rising. This gure represents an increase from 12 percent of GDP in 1990, 8.8 per cent of GDP in 1980, and 7.0 percent of GDP in 1970. The percentage of GDP devoted to health care in the United States represents a signi cantly larger share of the nation s economic output compared with many other in dustrialized countries, as shown in Figure 3.3. According to the Organiza tion for Economic Cooperation and Development (OECD), the proportion of GDP expended on health care outside of the United States ranges from 7.4 percent for the Czech Republic to 9.4 percent for France in 2001. Despite the marketing prowess of the pharmaceutical industry, pre scription drugs accounted for only 9 percent of the U.S. health-care spend ing in 2000, according to the U.S. Centers for Medicare and Medicaid Services (CMS), as shown in Figure 3.4. Only two areas in the health-care economy received a smaller proportion of total U.S. health-care spending,
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United States France Canada Iceland Netherlands Czech Republic
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Percentage of GDP
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FIGURE 3.3 Health-care expenses as a percentage of Gross Domestic Product
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(GDP) for selected industrial countries, 2001.
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Source: OECD
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Other 24%
MEDICINE AND AGRICULTURE
Prescription Drugs 9% Nursing Homes 7% Administration 6%
Physicians 22%
Hospital Care 32%
FIGURE 3.4 Distribution of U.S. health-care spending, 2000.
Source: CMS
nursing homes at 7 percent, and administration at 6 percent. In compari son, pharmaceutical products accounted for approximately 15 percent of total health expenditure in Europe in 1999, according to the European Federation of Pharmaceutical Industries and Associations (EFPIA). Phar maceutical expenditure in Japan accounted for almost 17 percent during the same year, according to the Japan Pharmaceutical Manufacturers Asso ciation (JPMA). The most signi cant area of spending was on hospital care, which accounted for about a third of total spending. The spending on physi cians was also signi cant, and accounted for nearly a quarter of total ex penditure. The remainder of costs, categorized as other by the CMS ranged from a variety of clinical support services to costs associated with home care.
Cloning and Genetic Engineering
In assessing the market potential of controversial medical biotech topics such as human cloning and genetic engineering, it s important to quantify the value of the most promising mature or nearly mature technologies.
Medical Biotech
However, with controversial biotechnologies, mature technology doesn t guarantee adoption. For example, even if human cloning were to be proven completely reliable, safe, and repeatable as de ned by the completion stage of the Continuum Model it would likely be illegal or at least con troversial in many countries. For example, in 1999, the American Medical Association (AMA) Council on Ethical and Judicial Affairs called for a ve-year moratorium on attempts to clone a human child, even though the AMA s Committee on Scienti c Affairs (CSA) opposed unconditionally banning research and applications of human cloning. Similarly, Australia banned human cloning in 2002. For countries in which cloning may be le galized, there is insuf cient market experience to predict a reasonable mar ket value for the service. However, there are data available on the market potential without controversial genetic manipulations. For example, a reasonable estimate of what couples would be willing to pay for a healthy, normal child can be inferred from the current market for in vitro fertilization (IVF). The pro cedure, which involves the placement of a fertilized egg in the woman s uterus, is available for couples who are infertile or otherwise unable to re produce by normal means. The egg may come from the woman or a fe male donor. In terms of potential market size, infertility affects over 6 million American couples, or roughly 10 percent of couples of reproductive age. In the United States, the cost of an IVF procedure ranges from $10,000 to $27,000, depending on the number of operations required to achieve preg nancy, on whether a donor egg is required, and on the source of the donor egg. With over 70,000 procedures performed annually, the market value of traditional IVF is between $700 million and $1.9 billion. Because the current procedure for genetic engineering or palliative eu genics in human beings involves IVF, the 70,000 IVF procedures performed annually in the United States represents the initial market for the value added activity. The procedure involves little more than selecting the best egg from the fertilized eggs that can be implanted into the woman s uterus. A fertilized egg containing an unwanted gene, based on an analysis of the DNA contained in the egg, can be discarded in favor of an egg free of the defect. The rst of these palliative eugenics procedures were performed in 2001 and 2002 in the United States for patients with heritable anemia, pre disposition to Alzheimer disease, and phenylketonuria. The procedures had the same success rate as traditional IVF. Within a year of the rst pro cedures, over a thousand successful palliative eugenics procedures were performed in research settings, indicating that the underlying technology is mature enough to constitute a real product, even if social pressure is against establishing a large market for the procedure.