Executive Editor

DRESDEN, Germany - The question of how the biopharmaceutical industry will be reshaped over the next decade may not be so much a matter of whether more biopharma companies may join the few "bio" firms in the top 10 global pharma companies, but more one of "How do you tell the difference?"

That's the view of James Mullen, CEO of one of the larger bio players, Cambridge, Mass.-based Biogen Idec Inc., who made the observation during the opening plenary session at last week's BIO-Europe 2005 conference.

He and other panelists grappled with questions of challenges facing both the biopharmaceutical industry as a whole and individual companies operating within the space, occasional investor indifference and regulatory minefields during a session that drew a substantial number of the 1,500 attendees gathered for the three-day meeting held in the International Congress Center in this historic city on the eastern edge of Germany.

Asked by session moderator Fred Frank, vice chairman of New York-based Lehman Brothers Inc., whether they can envision a point 10 years down the road when half of the top 10 global pharmaceutical companies actually will be biopharma firms, joining Thousand Oaks, Calif.-based Amgen Inc. and South San Francisco-based Genentech Inc. as the lone pair of biotech firms currently on that list, panelists had a variety of responses.

In Mullen's view, the blurring of lines between "traditional" pharma companies and those who go by the "biopharma" tag will continue to the point that "it will be difficult to tell the difference."

Estaban Pombo-Villar, head of strategic alliance management for Novartis AG, the Basel, Switzerland-based firm that is taking giant strides up the rankings of global pharma companies, said there "may be one or two more" biopharmas among the top 10 listing a decade hence.

Others that might be logical candidates for such a spot won't make the list because "they'll be acquisition targets of big pharma," he said.

Simon Best, chairman of Edinburgh, Scotland-based Ardana Bioscience Ltd., said he doesn't know if biotech companies will make up half the top 10 by 2015, but he's certain that "50 percent or more of the products supporting top 10 companies will be bio-type products."

Frank followed up by asking the panelists to identify factors they see as possible limits to future growth.

Pombo-Villar answered in a broad context, noting that he "believes in a business model of there always being new ways of doing things," in essence saying there really aren't limits.

R. Christopher Seaton, senior vice president for global licensing at Bayer Healthcare Corp.'s facility in Tarrytown, N.Y., said he sees investor dollars going into later-stage development. "You won't see a lot of private dollars going into discovery research," he said.

Mullen played off that response, saying, "It tends to go in cycles - while funding for some [levels of development] may become more scarce, investors may be more willing to fund other levels, such as Phase II products."

Responding to a question about continuing consolidation in the industry, Robert Wills, vice president of alliance management at Johnson & Johnson, said he does see continued consolidation, but warned that growth via acquisition can be difficult. He wryly observed in reference to the New Brunswick, N.J.-based company's ongoing problems with its proposed purchase of Indianapolis-based medical device manufacturer Guidant Corp., "it isn't always easy."

As part of the "not easy" tack, Wills noted that for a company the size of J&J to grow, "[we'll] have to add $5 billion in new business a year to our existing business."

Frank made many of his other questions more company-specific, asking Pombo-Villar, for instance, about how Novartis will focus its push into China and India.

"The only way we can get there," Pombo-Villar said, "is by accessing innovation." He said his company, and others, "have to be able to predict with better success how mechanisms of drugs work."

He added a seminal belief that "innovation now will mark the future of the industry."

Pombo-Villar added that "what's happening in China and India will help in product development" overall.

Frank asked Seaton how Bayer Healthcare would evolve over the next decade. "We're moving away from one-size-fits-all medicine," Seaton said.

He said that the future clearly involves drugs tied in with specific diagnostics, adding that Bayer's pharmaceutical operations are "collaborating with our diagnostics division to product specific diagnostic tests tied to pharmaceuticals."

In 10 years, Seaton said, "it will be a rare drug that does not have a diagnostic test associated with it." In fact, he said he foresees the time when companies essentially will "give away" the diagnostic in order to get providers to buy the drug to which those tests are attached.

In general, he forecast that what he termed "the era of personalized medicine" will bring "a more fractured industry, with . . . more room for small- and mid-sized companies."