Focus shifts to the emerging economies

President BarackObama’s recent UShealthcare reformmeasures have

already generated muchnoise in the life sciencessector. However, the sec-tor’s long-term focus is cen-tred on the world’s emerg-ing economies.

As specialists gather forthe annual BiotechnologyIndustry Organization meet-ing in Chicago this week,they do so against a back-drop that has alreadychanged – with the prospectof much more to come.

Already last year, MrObama started makingalterations, with measuresincluding lifting long-stand-ing restrictions on stem cellresearch, and putting for-ward influential nomineesto run institutions from theFood and Drug Administra-tion to the National Insti-tutes of Health.

His stimulus packagehelped lay the foundationsfor a shift to electronicpatient records, compara-tive effectiveness researchto judge the value of medi-cal interventions more rig-orously, and efforts to boostdisease prevention andhealth promotion.

Healthcare reform,in spite of its many short-comings, will begin toexpand insurance coverage,offering the prospect ofa larger market for com-panies that can demon-

strate the value of theirproducts.

There will be pain ahead,with Leerink Swann, thehealthcare specialist group,estimating rebates, dis-counts and taxes mean thelong-term costs for the drugindustry may exceed$100bn.

Several US companies,including Eli Lilly, haveissued earnings down-grades, although some aresceptical about the extent ofthe net negative impact.

Andrew Witty, chief exec-utive of GlaxoSmithKline,says that, despite a modestdip in US sales so farthis year, “I’m increasinglyconfident about whereour business is headed. Allthe signs are that it isstabilising.”

Intense lobbying allowedthe industry to rebuff freshcalls for reimportation ofdrugs being sold at lowerprices in Canada, and towin lengthy periods of“data exclusivity”, whichwill slow the introductionof cheaper “biosimilars”

even after patents on bio-logical medicines expire.

That means innovativepharmaceutical companiesmay potentially feel lesspain than other parts of thehealthcare sector, includinginsurers and providers.

The reform package willalso help improve disclo-sure, with new federaltransparency requirementsrequiring drug companiesto publish their paymentsto doctors for the first time.

That comes at a timewhen US regulators – nerv-ous about the globalisationof the industry and espe-cially the drive towardslow-cost outsourced manu-facturing based abroad –are stepping up factoryinspections and warnings.

There is also growingscrutiny of industry-fundedcontinuing medical educa-tion and other questionableethical practices. GSKand regulators alike arecurrently under criticismfor the extent of “informedconsent” given to patientsin its Tide trial for its

diabetes drug Avandia.AstraZeneca was forced

last month to pay $520mand sign a corporate inte-grity agreement, followingalleged mismarketing of itsantipsychotic Seroquel,ahead of litigation bypatients seeking compensa-tion for side-effects theyclaim are linked to the drug.

But most investors aremore concerned about thelonger term prospects ofreturns from new markets,as sales of traditional drugsin established markets looksluggish.

There is little optimism inwestern Europe, where spi-ralling budget deficits since2008 are triggering cutbacksin public spending.

A number of countrieshave already imposedaggressive reductions indrug payments; others arelikely to follow. Japan isalso stagnant.

The result of pressures inestablished markets isunprecedented diversifica-tion: nearly all the largepharmaceutical companies,and many of their smallerand speciality peers, areexpanding into fast-growingemerging markets, in par-ticular China.

Many are also broadeningtheir product range, shift-ing away from reliance onpatented medicines into ani-mal health, generic drugs,vaccines, consumer health-care and related activitiesto smooth the uncertaintiesof prescription drugs.

While volumes rise, thedownside is lower margins,as well as the structuraluncertainties of the devel-oping “pharmemerging”markets, where much

Andrew Jack notesunprecedenteddiversification inproduct ranges andmarkets in face ofeconomic pressures

Inside this issueUS healthcare Anna Fifieldconsiders how changes willaffect patients, doctors andbusinesses Page 2

PharmaceuticalsDrug groups feel pricepressure around the globe,says Andrew Jack Page 2

UK biotech Investorsgrow wary of small­scaledrug developers, reportsJohn O’Doherty Page 3

Regenerative medicineClive Cookson looks attherapies under test to

tackle damage to the brain(see below) or nervoussystem Page 4

Electronic recordsProgress is slower thanhoped for, and costs arehigher, to modernisemedical records, writesNicholas Timmins Page 4

Iconic image: President Obama’s healthcare reforms have already generated much noise in the sector Getty Continued on Page 4

THE LIFE SCIENCESINDUSTRYFINANCIAL TIMES SPECIAL REPORT | Tuesday May 4 2010

InsideGenetically modified cropscontinue their march but so farthey havebenefitedfarmersrather thanconsumers,says CliveCooksonPage 3

www.ft.com/life­sciences­2010 | twitter.com/ftreports

2 ★ FINANCIAL TIMES TUESDAY MAY 4 2010

The Life Sciences Industry

Drug groups feel price pressure around the globe

President Barack Obama’shealth reforms were longand drawn-out to negotiateand will prove still moreprotracted to implementfully. But they have alreadyprompted some pharmaceu-tical companies to diversifyin order to survive.

The drug industry workedclosely with the WhiteHouse in an effort to reduceits pain, but long-termgains from increasedhealthcare insurance cover-age are currently out-weighed by the short-termsqueeze of larger “rebates”– discounts on drugs sold to

government medical pro-grammes – and an excisetax to come.

In recent weeks, Eli Lilly,Bristol-Myers Squibb andJohnson & Johnson wereamong the large US phar-maceutical companies thatadjusted earnings forecastsdownwards for the currentfinancial year, warning ofpressure on sales in theworld’s largest medicinesmarket.

More modest tweaks havebeen made by a number ofEuropean companies withUS operations, includingGlaxoSmithKline of the UKand Novo Nordisk of Den-mark.

Both said during theirfirst quarter results presen-tations that they expected asmall drop in aggregate USsales during 2010, with simi-lar or larger declines nextyear.

Despite the focus on theUS, pricing pressures ondrug companies are also

being felt elsewhere aroundthe world.

A recent report by Citi,the US investment bank,cautioned: “We believe cutsto European governmentbudgets present a greaterunderappreciated risk in2010.”

It argued that thesmaller, less diversified spe-ciality companies would behardest hit, led by Almirallof Barcelona, Spain, andMerck KGaA of Darmstadt,Germany.

With budget deficits as aproportion of gross domes-tic product particularlyhigh in the UK, France andSpain, cuts in healthcareare in prospect – and reduc-ing spending on commodi-ties such as drugs is likelyto prove an easier targetthan hospital closures orjob and wage reductions formedical staff.

Already, Turkey hasintroduced substantialexplicit across-the-board

price cuts, and Germanyand Spain have imposedreductions.

Others, led by Greece,have done so by default,accumulating large unpaidbills as the country strug-gles with large public sectordebts.

There are intensifyingpressures elsewhere.

Charles Ditkoff, globalhead of healthcare invest-ment banking at Bank ofAmerica Merrill Lynch,argues that the Japanesemarket offers little domes-tic growth, as the govern-

ment seeks to pare healthcosts, driving companies tolook abroad for expansion.

That helps explain Astel-las’ unusual decision, for aJapanese company, tolaunch a hostile cross-border bid for OSI in theUS, following its failure toacquire CV Therapeuticslast year.

Following Roche’s ini-tially hostile full takeoverof Genentech in the US in2009, its Swiss rivalNovartis began its ownassertive buy-out at Alcon,the eyecare specialist,despite vocal objectionsfrom minority investorsover the price.

A second recent Japanesetakeover – by Sankyo, ofRanbaxy, the Indian genericdrugs company – reflectedthe industry-wide trend forbold diversification.

Andrew Witty, the chiefexecutive of GlaxoSmith-Kline, has made much ofshifting his group away

from “white pills inwestern markets”, mostrecently this year pushingdown this traditional seg-ment of the business tojust over a quarter of totalsales.

In its place has comefresh investment in gener-ics, consumer health, der-matology and vaccines;and far greater expansionin emerging markets, whereeconomic growth is drivingup healthcare spending, incontrast to the stagnationin many richer countries.

Sanofi-Aventis of Francehas also sought to expandits portfolio, reinvesting inMerial, an enlarged joint-venture for animal healthwith Merck, the New Jer-sey-based US group, along-side generic deals and ini-tial steps into glucose moni-toring.

Even after Pfizer acquiredWyeth last year in the US,it has retained an appetitefor acquisitions, with a

recent bid for Ratiopharmof Germany, the genericscompany, although it ulti-mately lost out to Teva ofIsrael. It continues to lookfor partners, after sealinginitial deals in India lastyear. And AstraZeneca, theAnglo-Swedish group thatwas one of the last largedrug companies to resist ashift into generic drugs, hasrecently changed tack,arguing that it too is inter-ested in alliances to expandin developing countries andsustain sales of medicineseven after patents expire.

After the surge in mega-mergers of 2009, most bank-ers doubt there willbe much activity on such ascale in the months ahead.

What seems certain – aslarger companies continueto seek to enrich their pipe-lines and accelerate theirdesire to outsource researchand development – is thatfresh deals will be donewith biotech companies.

PharmaceuticalsBut the larger onescontinue to seekto develop newproducts, saysAndrew Jack

After the mega­mergers of 2009,most bankers aresceptical there willbe much activity inthe months ahead

Cross­bordercare stuck inwaiting room

When Antoine Elkhoury, aSwedish dentist, startednoticing pangs of pain inhis neck six years ago, hisfirst instinct was to gothrough the Swedish healthservice for care. But aftertwo operations left himunable to swallow and inconstant pain, he took mat-ters into his own hands.

Like thousands ofpatients every year in theEuropean Union, MrElkhoury sought treatmentin another country andclaimed the money back–after much effort – from hishome country’s health sys-tem.

In his case, consultationsin the UK, Germany and anoperation in Spain finallyresolved his injury. But hethinks he is lucky to haverecouped most of the€20,000 of €23,000 he spent,although the process tookfive years.

“We are all in the EU. Ifit’s a doctor in Sweden or inSpain who cures me – itreally shouldn’t matter,” hesays. “There should be freemovement for patients. Likefootball players: if theyhave the right to play wher-ever they want in Europe,why should I not have theright to get medical treat-ment wherever I want?”

Mr Elkhoury’s view issupported by the EuropeanCourt of Justice (ECJ) inLuxembourg. Over the pastdecade, it has ruled repeat-edly that European treatiesgive patients the right toaccess healthcare anywherein the EU.

The principle it sticks tois that if a patient is unableto get a procedure donethrough the domestichealth provider, thatpatient can go to anotherEU country – typically to aprivate hospital – and thenbe reimbursed to a levelequivalent of what it wouldhave cost at home.

That has not yet beentranslated into a reality.Proposals to legislate alongthe lines laid down by thecourt were first tabled bythe European Commissionin 2008, but are stalledbecause national govern-ments cannot agree on thedetail.

The focus of the cross-border health proposal isplanned care, as opposed toemergency care for thosewho fall ill or have an acci-dent while visiting anotherEU country. In the lattercase, the European HealthInsurance Card systemensures any emergencycare is invoiced to thepatient’s country of origin.

A similar piece of legisla-tion governs the healthcosts of British retirees liv-ing in Spain, for example, toensure the Spanish govern-ment does not shoulder aburden that should beborne by Britain.

But nothing comparableexists for planned care. In

part, this is because theissue is muddied by an ideo-logical debate about privateversus public healthcare.

The cross-border proposalwould give patients theright to free private health-care, but not in their homecountry. That is taboo forhealth authorities in manycountries, who want “their”patients to use the domesticsystem.

It also attempts to recon-cile vastly different health-care systems. Britainmostly relies on its state-run National Health Serviceto deliver procedures, forexample, whereas the Neth-erlands relies on a networkof private insurers.

Questions over how todeal with the administra-tive burden is one reasonwhy the bill is stalled.

“Nobody loves the cross-border healthcare direc-tive,” admits one EU diplo-mat. “You’re effectively tell-ing health ministers thatpart of their budget will endup overseas. But some ver-sion of it is going to hap-pen: the ECJ has ruled itmust.”

However, it will not be fora while yet: Spain, whichholds the rotating presi-dency of the EU in the firsthalf of 2010, has been themost stubbornly opposed tothe proposal.

It claims a cross-bordersystem might leave it €2bna year out of pocket – anamount other diplomatschallenge. Portugal, Greeceand Poland also oppose it.

“Spain doesn’t like theidea of Spanish patientsgoing overseas to getplanned health procedures.It mostly has to do withtheir health system beingadministered by theregions, which have troubledealing with each other, letalone foreign providers,”says one person close to thetalks.

The Commission, for itspart, says it will keep onpushing for a legislativeanswer, though it stressedthat only about 1 per centof patients are concerned.

Aides to John Dalli, wholooks after the health port-folio, say he is keen to finda solution to the impasse,but admits the situation is“tricky”.

Mr Elkhoury now sits onthe board of a Scandinavianassociation of patients withneck injuries lobbying foreasier cross-border health.He estimates 95 per cent ofpatients he meets are notreimbursed, often becausethey fall through bureau-cratic cracks. “You have toget prior approval fromyour health authority to besure of getting your moneyback, and that is not alwayseasy,” he says.

His vision is that if cross-border healthcare could bemade to work, a network ofspecialist clinics might becreated to help patientsacross the bloc with com-plex problems, such asspine injuries or rare dis-eases.

But for now his focus isto make cross-border caremore accessible:

“Why should I have towait for a year or more toget medical attention whenthere is a doctor in the EUwho can cure me? It makesno sense.”

EU legislationStanley Pignal onefforts to givepatients the rightto access healthservices anywherein Europe

Conventional theory had itthat only westerners couldafford to die as a result oflifestyle choices – by over-consumption of food, ciga-rettes and alcohol and toolittle exercise.

People in the developingworld were assumed to dieof infectious diseases“beyond their control”,such as malaria, cholera ortuberculosis. But this divideseems to have broken down.

Of all global deaths, 60per cent are now caused bynon-communicable (“life-style” or “chronic”) dis-eases, and a full 80 per centof those occur in developingcountries.

Ala Alwan, assistant

director-general at theWorld Health Organization(WHO) explains: “More peo-ple die in developing coun-tries from non-communica-ble diseases because expo-sure to the risk factors –tobacco, being overweight,physical inactivity and alco-hol – are more prevalent.

“High calorie diets tendto be cheaper than healthydiets and we know poorerpeople tend to smoke anddrink more than average.”

In short, their overcon-sumption comes not despitetheir poverty but because ofit. Dr Alwan notes thatdeveloping world health-care systems are also lesswell equipped to deal withthe consequences.

Caught in time, one-thirdof cancers are treatable andabout half of long-termcomplications associatedwith diabetes can beavoided.

But without effectiveintervention, the resultscan be devastating.

Every year in the develop-ing world, an estimated 8mpeople die prematurely as aresult of non-communicablediseases – with “prema-turely” defined as at lessthan 60 years old.

In many developing coun-tries, the commonest causeof gangrene and amputationis now untreated diabetes.

Of course, all this has abig impact on development.According to the WHO, a 10per cent drop in the deathsassociated with non-com-municable diseases wouldhave an impact on somekey development goalsequivalent to a decade ofgrowth.

“Developing countriesface a huge loss in produc-tivity as a result of disabil-ity and premature death,”says Dr Alwan, “On top ofthat, a huge amount ofmoney has to be divertedfrom other causes to pay fortreatment.”

Such conditions may posechallenges, but they also

offer opportunities fordrugs companies.

In the case of Eli Lilly, aUS-based pharmaceuticalmanufacturer, almost 90 percent of its operations arenow focused on non-com-municable rather thaninfectious diseases, with aparticular focus on diabe-tes.

“We’re seeing a bigincrease in sales in develop-ing countries: China, India,Russia, Brazil, Mexico,”says Thane Wettig, vice-president of global market-ing for Lilly Diabetes.

According to Mr Wettig,the biggest obstacle totreatment in the developingworld is not cost – his com-pany offers different prices

to countries with differentbudgets – but governmentpolicy.

“Governments allocatefar fewer resources to non-communicable diseasesthan infectious ones, partic-ularly when you take intoaccount their respectivemortality and morbidityrates,” he says.

There are also practicalproblems of distribution.Diabetes medicines requirerefrigeration, but fewpatients can afford this. Asa result, drugs quickly gooff and people sometimeshave to walk miles to clin-ics to replenish supplies.

Given that treatment canbe expensive and compli-cated, policymakers are tak-ing a step back along thedisease chain and trying tostop people from falling ill.

Preventive measures aresimple and cost-effective.Public bans on smoking andtobacco advertising can beimplemented and taxincreases on alcohol and

unhealthy foods can raiserevenue. So why don’t morecountries take action?

“Vested interests are amajor constraint,” says DrAlwan, “The clearest exam-ple is the tobacco industry.Their marketing campaignsare impeding preventiveefforts . . . and they havehuge lobbying power.”

Another problem, says DrAlwan, is a lack of supportfrom development agencies:“Although national preven-tion programmes are low-cost and evidence-based,they are not a priorityamong international agen-cies and donors.”

A global action plan callson governments and devel-opment agencies to improvemonitoring, prevention andtreatment of “lifestyle dis-eases” by 2013.

There is a long way to go.Just 8 per cent of theWHO’s budget is spent onnon-communicable diseases,compared with 35 per centon communicable ones.

Chronic diseasesRowenna Davissays risk factors aremore prevalent indeveloping countries

Poor find unhealthy choices are cheaper

Reforms getstarted withsmall butcertain steps

President Barack Obamamight have achieved apolitical milestone withhis overhaul of the US’s

inefficient healthcare system, butit will be years before the practi-cal effects are felt.

For all the controversy that thereform effort generated in Wash-ington – where protesters ralliedagainst a “government takeoverof healthcare” and labelled MrObama a “socialist” – relativelylittle will change immediately.

The biggest components of the2,457-page bill that the presidentsigned into law in March do notkick in until 2014. The legislationrequires US citizens and residentsto buy health insurance andinvolves subsidies and insurancemarket reforms.

However, the first signs ofchange will come fairly soon.

Starting this year, children willbe allowed to stay on their par-ents’ health insurance policiesuntil age 26; insurers will not beable to deny children coverage onthe grounds of pre-existing healthproblems; and the prescriptiondrug “doughnut hole” – the gapthat means the elderly have topay the full cost of some medi-cines – will be closed.

“So, on the one hand, the lawmight not provide the kind of helppeople are expecting in the firstfew years,” says Drew Altman,president of the Kaiser FamilyFoundation, a non-partisan policygroup. “On the other hand, thesky will not immediately fall, asmany people seem to believe it

might. In fact, most people willsee little or no change to theirhealthcare arrangements.”

Mr Obama acknowledged thatthe reform package – which fellfar short of what he initiallyenvisaged – would not solve everyproblem in the $2,500bn health-care system.

The reforms will extend cover-age to 32m uninsured Americans,meaning about 94 per cent of thepopulation will have health insur-ance once all the provisions takeeffect in 2018. Many will buy sub-sidised coverage from the healthinsurance exchanges that statesare due to establish in 2014.

But even then, about 23m peo-ple will remain uninsured, abouta third of whom will be undocu-mented immigrants.

After more than a year of poli-ticking, there is still a lot of con-fusion among Americans aboutwhat impact the reforms willhave, with many still doubtingthe changes are in their bestinterest.

According to the latest Galluppoll, 45 per cent said the reformswere a good thing, while 49 percent said they were bad.

The Medicare Rights Center, anon-profit organisation for “olderadults and people with disabili-ties”, has been receiving a “steadystream” of calls about thechanges, says Joseph Baker, thecentre’s president. “I would callthem the ‘worried well’,” he says.

“They don’t feel any impactnow, but are worried that theremight be a negative impact.”

Some of the $940bn cost of thebill over the first decade will berecouped through savings in theMedicare scheme.

“We focus on the relief they willsee in drug costs and primarycare, and explain that the cost-savings will happen over manyyears,” Mr Baker says. “Mostfolks calm down after that.”

Doctors are also uncertainabout how the reforms will affectthem.

“Some physicians are confusedbecause of the misinformation,”says Lori Heim, president of theAmerican Academy of Family

Physicians, which supported thebill.

“They think there are going tobe cuts in their Medicare pay-ments, as commissions look atwhat services are under- or over-valued, but they have nothing tobe concerned about there, becausefamily physicians have been

undervalued for years,” she says.The initial changes will also

reduce administration. “Everytime an insurance companychanges its policies, we getcaught in the middle,” Dr Heimsays. “We’ve all had patients whoget sick and then their insurancecompanies drop them, so we endup trying to treat the patient anddealing with their insurer.”

But doctors also warn of thechallenges – by most physicianorganisation estimates, the USwill need 50,000 more primarycare doctors to deal with theinflux of patients when insurancebecomes mandatory.

There has been plenty of opposi-tion among business to theirreforms.

The loudest squeals have comefrom the insurance industry,which came under sustainedattack from the Obama adminis-tration for what it said wereunfair practices.

Insurance companies will facetough new regulations, but theywill also have the opportunity tosell insurance to 32m new custom-ers.

The final bill did not set up arate review authority that wouldhave had the power to cap pre-mium increases, as Mr Obamahad wanted, because of Congres-sional rules.

Karen Ignagni, president of theAmerica’s Health Insurance Plansindustry group, repeatedly saidthe reforms will do nothing tocontain healthcare costs.

“The access expansions are asignificant step forward, but thislegislation will exacerbate thehealthcare costs crisis facingmany working families and smallbusinesses,” Ms Ignagni said afterthe reforms were enacted.

She added that the administra-tion should look at ways to con-trol what hospitals and other pro-viders charge.

US healthcareAnna Fifield considershow changes will affectpatients, doctors andinsurance companies

A US doctor talks to a patient as Barack Obama signs the healthcare reform bill into law on March 23 Getty

After more than a yearof politicking, there isstill a lot of confusionabout what impact thereforms will have

Ala Alwan:‘Poorerpeople tendto smoke anddrink morethan average’

ContributorsAndrew JackPharmaceuticalsCorrespondent

Clive CooksonScience Editor

Nicholas TimminsPublic Policy Editor

Anna FifieldUS Political Correspondent

Stanley PignalBrussels Correspondent

John O’DohertyUK Companies Reporter

Rowenna Davis,Joseph MiltonFT Contributors

Ursula MiltonCommissioning Editor

Steven BirdDesigner

Andy MearsPicture Editor

For advertising contact:Hope KayePhone +1 212 641 6548Email: hope.kaye@ft.com

FINANCIAL TIMES TUESDAY MAY 4 2010 ★ 3

The Life Sciences Industry

Investors grow wary of small­scale drug developers

Over the past tumultuous year,biotech groups, in common withbusinesses across the UK, havestruggled to access financing.Many have found the going tootough.

One example is Alizyme,which went into administrationin July last year. The group hadbeen developing an anti-obesitydrug, which had reached late-stage clinical trials in Japan.However, a lack of fundingand uncertainties surroundinglicensing payments from its

development partners pushed itout of business.

It was followed soon after byYork Pharma, the dermatologyspecialist, which went intoadministration after it was un-able to repay in full a $1m loanit received from Uluru, the USdermatology group.

However, a number of biotechcompanies were able to accessfunding to keep going – not bysecuring lines of credit, but byissuing equity.

Last May, the drug developerLipoxen raised £2.9m to helpfund its blood-clotting product,and in October last year, Sin-clair Pharma raised £18m in ashare issue, which it used tobuy two drugs from Belgium’sSolvay for treating burns.

Phytopharm, which developsdrugs for Parkinson’s and motorneuron disease, has beenanother of the recent fundingsuccesses. In October, it

announced positive results forits Parkinson’s treatment, andits shares initially quintupledon the news. Thanks to the trialresults, the group was able toraise £25m in December to fur-ther its research.

Lombard Medical, whichmakes stents used to keep arter-ies around the heart open, alsotapped investors for cash. InJanuary last year, the groupraised £6.4m and this January,it secured a further £13m tospend over the course of thisyear, until such time as it hopesto receive approval in the US forits Aorfix stent.

More recently, Vernalis,which develops oncology andneuropathic pain drugs, raised£28m in a placing last month.

“It hasn’t been great, butthen I’d argue that it hasn’tbeen terribly bad either,” saysShawn Manning, a biotechanalyst at Singer Capital, of

the recent investment climate.While funding difficulties may

have pushed some companies tothe wall, industry watchersbelieve that what could be moredamaging for the long-termhealth of a volatile sector is nota general lack of appetite forfinancing small companies,

but a specific biotech-relatedunease.

This was intensified recentlyby upsets to some companies’revenue plans, most of whichwere due to high-profile drug orlicensing failures.

Investors in Ark Therapeutics

lost out in December, when theEuropean Medicines Agencysaid it was not going to approvethe group’s Cerepro treatmentfor brain cancer. The shares arenow trading about 70 per centbelow their December levels.

Last month, shares in Anti-soma fell more than 70 per centin one day on news that one ofits key lung cancer drugs indevelopment did not prolong lifein humans.

Also in March, shares in thedrug delivery group Vecturalost almost a quarter of theirvalue over a few days. The fallswere triggered by a decisionfrom Sandoz, the generics armof Novartis, to relinquish itsrights to Vectura technology ona generic lung drug.

Even Vernalis had a bump inMarch, less than a fortnightafter its placing. Its sharesdropped almost 30 per cent,after results from a study of its

drug for diabetes-induced neuro-pathic pain showed little differ-ence from a group given a pla-cebo treatment.

“It hasn’t done us any favoursfor 2010, because if you lookback on some of the companiesthat raised money recentlythey’ve gone away and thatmoney is down the drain nowand they had complete failures,”says Andy Smith, a biotech fundmanager at Axa Framlington,who foresees difficulties in fund-ing for the year ahead.

“It puts people off investingany more money into the sector,having believed what the com-panies said, raised money andthen lost it again. I think whatwe will be entering into for UKbiotech in particular, is a sort ofdesert period.”

But notwithstanding thedisappointments, there isstill considerable scope forlarge returns.

“There are parts of UK lifesciences that have done verywell, such as diagnostics compa-nies, which had a fantastic2009,” says Paul Cuddon, a bio-tech analyst at KBC Peel Hunt.

While he agrees that investorsare now more wary of small-scale drug developers with onlyone drug candidate, he reckonsthat pharmaceutical groupswith broader pipelines, as wellas medical device companiesmay now find more favour, as asafer way of investing in the lifesciences market.

“Although therapeutic biotechhasn’t done very well, medicaldevices have had a fantasticyear, and that’s where we’relooking for the next round ofappetite to come from.

“You want broad revenuespread with multiple pipelinecandidates. Those are the sortsof things that investors findinteresting.”

UK biotechMedical devicecompanies may nowfind more favour as asafer investment, saysJohn O’Doherty

The geneticallymodified cropmarches on

In agricultural biotechnology, thebig theme is still the march ofgenetically modified crops acrossthe world’s farmland.

While farmers have yet to adoptgenetic engineering or cloning of ani-mals to a significant extent – even inthe GM-friendly US, fears of consumerresistance to biotech meat and milkoutweigh any likely benefits – theyhave embraced biotech plants in someof the world’s most important grow-ing regions.

The most authoritative annual sur-vey of GM planting, carried out by theInternational Service for the Acquisi-tion of Agri-biotech Applications,showed a 7 per cent annual increaselast year in the area covered to 134mhectares (330m acres) in 25 countries.

But GM food crops are still concen-trated in the western hemisphere. TheUS accounts for almost half theworld’s GM planting (64m hectares),followed by Brazil (21.4m ha) andArgentina (21.3m ha).

Although India and China are bigbiotech growers, their GM crops arealmost entirely cotton, cultivated forfibre rather than food. The picturemay change soon in China, where reg-ulators issued biosafety certificates inNovember for insect-resistant rice and“phytase” maize (which has an addedgene to make the crop more digestiblein animal feed).

But GM food had a setback in India

in February, when the governmentunexpectedly rejected an applicationto grow an insect-resistant strain ofbrinjal (aubergine) and demandedmore safety tests.

“Agbio” companies continue to facestrong consumer and political resist-ance to GM crops in Europe, whereonly 95,000ha were grown last year –mainly insect-resistant maize inSpain.

The industry celebrated a success inMarch in its long struggle to get morecrops approved in Europe. After a 13-year wait, the European Commissionallowed BASF of Germany to plant itsGM potato called Amflora to produceindustrial starch – but not spuds forhuman or animal consumption.

Many other GM crops, approvedelsewhere in the world, are still wait-ing for a go-ahead from the EC. Threemore GM maize products are believedto be at the front of the queue.

Worldwide, the GM scene is domi-nated by four crops (soyabeans,maize, cotton and canola or oilseedrape), two traits (herbicide toleranceand insect resistance) and one com-pany (Monsanto).

Herbicide-tolerant genes let thefarmer spray a broad-spectrum weed-killer, usually Monsanto’s RoundUp,to kill all weeds without harming thecrop. The Bt insect resistance gene,derived from Bacillus thuringiensisbacteria, reduces the amount of pesti-cide required to protect the crop.

Crops with combined or “stacked”traits are becoming increasinglyimportant. This year, Monsanto willlaunch SmartStax maize, which haseight added genes coding for threetraits. It is herbicide-tolerant and pro-tects against insects.

GM products so far have deliveredtheir direct benefits to the farmer

rather than the consumer. A reportlast month by the National Academyof Sciences in Washington DC said:“Many US farmers who grow geneti-cally engineered crops are realisingsubstantial economic and environ-mental benefits, such as lower produc-tion costs, fewer pest problems,reduced use of pesticides and betteryields, compared with conventionalcrops.”

A new wave of GM crops, to bereleased over the next few years, maybring more obvious benefits to theconsumer, in the form of better nutri-tional qualities, and to agriculturalproduction, in the form of more resist-ance to stresses such as drought,salinity and extremes of temperature.

An important development will bethe commercial launch of drought-tolerant GM maize, scheduled for 2012.

Although GM gets all the attention,there are alternative ways to use sci-ence to improve crops. For exampleAustralia’s CSIRO announced lastmonth a salt-tolerant wheat thatyields 25 per cent more on saline soilsthan its parent variety.

The Australian scientists isolatedtwo salt tolerance genes in Triticummonoccum, a wheat species that growson poor, arid soils in the Middle East,and introduced them into durum

wheat, which is widely cultivated forpasta production – through non-GMbreeding aided by the latest molecularmarking technology.

A more general way of introducingnew traits into crops without insert-ing foreign genes is “site-directedmutagenesis”. Cibus, a privately

owned company based in San Diego,is a leader here with its proprietaryRapid Trait Development System orRTDS. This uses the plant’s owngenetic machinery to change its DNA.

Cibus has reached agreements witha variety of companies and organisa-tions – most recently the Flax Council

of Canada – to use RTDS on theircrops. Stephen Evans-Freke, Cibuschairman, says the technology makesit possible to commercialise new traitsmore quickly than GM, because regu-latory approval is much morestraightforward when no externalgenes are introduced.

Agriculture and foodTypes introduced so farhave benefited farmersrather than consumers,writes Clive Cookson

Global growth in area

Biotech cropsGlobal area, 2009

0

20

40

60

80

100

120

140

1996 9897 99 01 02 03 04 05 06 07 08 092000

Million hectaresBy country (Million hectares)14 million farmers in 25 countries planted 134 million hectares in 2009, an increase of 7% or 9 million hectares over 2008

S. Africa2.1

Chile0.05

Argentina21.3

Uruguay0.8

Portugal0.05

Spain0.1

Burkina Fasso0.1

Philippines0.5

Egypt0.05

Brazil21.4

Paraguay2.2

3.7China

Romania0.05

Poland0.05

Slovakia0.05

Czech Rep0.05

Source: ISAAA

Total hectaresIndustrial worldDeveloping world

Bolivia0.8

Costa Rica0.05

US64.0

Mexico0.1

Honduras0.05

Colombia0.05

Canada8.2

8.4India

Australia0.2

Price hangs on patient outcomes

When the UK government’smedicines advisory bodyexpressed doubts nearly adecade ago about the valueof using several new drugsfor multiple sclerosis, theDepartment of Health cameup with a ground-breakingcompromise to avoid thepolitical backlash.

It proposed an experimentby which it would pay forthe medicines – Avonex,Betaferon, Rebif and Copax-one – at a discount to themanufacturers’ prices, oncondition that their effectswere monitored closely.

If they performed muchbetter or worse than ini-tially claimed, the pricewould be modified accord-ingly.

The government’s advi-sory body – the NationalInstitute for Health andClinical Excellence (Nice) –has been keenly watchedaround the world for its pio-neering efforts to ensurenew drugs offer cost as wellas clinical benefits. So hasthe multiple sclerosis “risksharing scheme” itself.

On paper, it offered atempting solution to theuncertainties of assessinginnovative treatmentsbefore significant data havebeen collected in ordinarypatients, rather than the

smaller number recruited tothe more artificial set-up ofa trial.

But the experience, inpractice, is a cautionarytale for healthcare systemseverywhere seeking bettervalue for money frompharmaceutical companies,by taking innovativeapproaches to pricing thatare more closely linked topatient outcomes.

It took from 2002 until2005 before 5,500 patientswere recruited into the MSscheme, and until 2007 forthe first evaluation phase tobe completed.

The results were onlyfinally made public in theBritish Medical Journal atthe end of last year. Theywere inconclusive, with theauthors arguing it was toosoon to judge whether ornot the drugs had providedvalue. No changes in pric-ing were recommended.

Some researchers who fol-lowed the programme ques-tioned its value from thestart. They argued it wasethically impossible toexclude MS patients, whichmeant it was difficult toestablish a “control” groupnot taking the new drugs,against which to measuretheir impact.

In the period since, criticshave said that the schemelocked in an approach usingdrugs which have sincebecome outmoded, whilestalling the introduction ofsubsequent innovations.

“There are serious ques-tions about why thisscheme has failed todeliver,” says Simon

Gillespie, chief executive ofthe MS Society. “TheDepartment of Healthshould face up to the realitythat their scheme is not fitfor purpose.”

Yet pharmaceutical com-panies have since adaptedand adopted many moreinnovative pricing schemes.

“It is not uncommon forsome classes of drugs to beeffective in only one inthree patients who takethem,” says Steve Black,health systems specialist atPA Consulting Group, whocites anti-cancer treatmentsand psychoactive medi-cines. “We might have tospend tens of thousandsbefore knowing whether a

drug will have any effect.”In the UK, after Nice

rejected Janssen Cilag’sdrug Velcade for multiplemyeloma – a cancer of thewhite blood cells – in 2006,the company agreed a risk-sharing scheme by whichthe NHS would pay only forthat sub-group of patientsin which it showed signifi-cant benefit.

A dozen variations onsuch outcome-basedschemes have since beenintroduced in the country,ranging from money-backguarantees on drugs to freetreatment beyond an agreednumber of paid-for doses,

such as Lucentis for age-related macular degenera-tion – an eye disease thatcauses loss of vision.

Elsewhere, a similar pat-tern is taking hold. NathanSwilling, a partner atSimon-Kucher, a Germanconsultancy, says risk-shar-ing for expensive new can-cer drugs, such as Bayer’sNexavar, has become allbut obligatory in Italy.

The drugs are offered athalf the list price for up tothree months, and then atthe full price in the smallergroup of patients whorespond to treatment.

In Germany, Novartis hasagreed with two sick fundsto offer refunds for patientswho suffer bone fracturesafter taking Aclasta forosteoporosis. It believes itsdrug, taken once-yearly byinjection, significantlyimproves outcomes byboosting compliance com-pared with alternativesrequiring daily or weeklypills.

One challenge is findingmeaningful measurementsto assess patients’ progress,and which can be crediteddirectly to the drug undertest. The risk to drug com-panies, is that onceschemes are agreed, theyspread to other markets,and become generalised dis-counts.

But faced with the alter-native – a growing reluc-tance on the part of healthauthorities to reimburse –companies increasinglyaccept that linking chargesto outcomes is a priceworth paying.

Charging schemesAndrew Jackfinds some drugcompanies choosingto be paid by results

‘What we will beentering into for UKbiotech in particular isa sort of desert period’

SimonGillespie:‘The [MS]scheme isnot fit forpurpose’

4 ★ FINANCIAL TIMES TUESDAY MAY 4 2010

The Life Sciences Industry

Focus shifts over to the emerging economies

healthcare spending is inthe form of out-of-pocketexpenditure by individualpatients.

Another tactic in Europeand increasingly the US isexperimentation with newapproaches to pricinglinked more explicitly tothe demonstrable value ofdrugs.

There is a fresh emphasison patient compliance, sym-bolised by Novartis’ recentdeal with Proteus to createa “chip in a pill” to monitoradherence to dosingregimes.

For the biotech sector,the “engine” that createsdrugs, there are signs ofhope. A report by Ernst &Young suggests that estab-lished centres in the US,

Europe, Canada and Aus-tralia had an aggregate netprofit for the first time lastyear of $3.7bn, after netlosses of $1.8bn in 2008.

As large pharmaceuticalgroups start to cut costs intheir own formerly sacro-sanct research and develop-ment divisions, they willbe spending more on in-licensing – buying therights to other companies’products – and acquisitions.

Yet there is also a price topay. Andrew Baum, phar-maceutical analyst withMorgan Stanley, worriesthat intensifying competi-tion driven by outsourcingdrug discovery could lead tooverpayment. “The compa-nies may end up destroyingvalue,” he says.

Just as fundamentally,the Ernst & Young data

suggest that much of bio-tech’s new-found profitabil-ity has been the result of itsown intensifying round ofcost-cutting in researchbudgets.

Investment was down 21per cent in 2009 after yearsof high growth.

Coupled with the difficul-ties for smaller companiesin seeking funding, thereare longer term worriesthat the consequence willbe shrinkage in the collec-tive industry pipeline.

Some culling may be jus-tified, but it raises the pros-pect of an uncertain futurefor promising treatments.

With patent expiries gath-ering pace and few signs ofblockbusters on the scale ofthe past, there is much talkof collaborative alliancesbetween companies and

academic centres, and“open innovation” to helpclose the gap.

Kasim Kutay, a partner atMoelis, an investment bank,says he has seen considera-ble interest from other com-panies in the decision ofGSK and Pfizer to mergetheir HIV drugs that areboth in development and onthe market into the joint-venture ViiV Healthcare.

Companies are seekingnew ways to share risks,such as AstraZeneca’s part-nerships with Merck oncancer medicines and Bris-tol-Myers Squibb on diabe-tes, or Eli Lilly’s co-fundeddrug development projectswith Quintiles, a clinicalresearch group.

Last year’s round of phar-maceutical company mega-mergers helped defer the

pain of growing patentexpiries, but did little toassuage investors’ concernsthat research and develop-ment remains highly riskyand wasteful.

Mr Kutay says: “Manyshareholders are scepticalof the hype around mega-mergers beyond cost-cut-ting. They don’t buy theargument about scale bene-fits and boosting researchand development productiv-ity.”

In future, innovation willbe required from the drugindustry, not only inscience, to develop medi-cines, but also in manage-ment and commercialstrategies to persuade cau-tious payers to buy thoseproducts, which clearlyshow both clinical valueand cost effectiveness.

Regulation undergoes review on both sides of the AtlanticFrom bandages to X-raymachines, thermometers topacemakers, the term “med-ical device” encompasses abroad and diverse range ofhealthcare products.

The Medical and Health-care Products RegulatoryAgency (MHRA), which reg-

ulates such devices in theUK, says 80,000 types areused in British healthcare.

The market for medicaldevices is large and oftenoverlooked and expandingrapidly, both in the US andin Europe. Market researchcompany Datamonitor esti-

mates the global marketgrew 9 per cent from £172bn($266bn) to £187bn between2007 and 2008.

The European marketwas worth £46.5bn in 2009,while in the US, 2010 reve-nues are estimated at £97bn– a compound annualgrowth rate of 6.5 per centover the past decade –according to strategic con-sultants Frost & Sullivan.

Medical devices havegrown in complexity andprevalence, and Europeanand US regulatory systems– devised in simpler times –are being reviewed andrevised.

Revisions to the Euro-pean system came intoforce this March, and USregulation is under review.Medical device regulationdiffers between the US andEurope, although the twosystems overlap in places.

Before the revisions, theEuropean regulatory frame-work had been unchangedsince 1998. Rene van deZande, president of EmergoGroup, a consultancy thatadvises medical device man-ufacturers worldwide, says:“Over the past 10 years,enforcement was lacking.Now everything comes withenforcement.”

US regulation, overseenby the Food and DrugAdministration (FDA), hasbeen periodically tweakedsince its introduction in1976, but the entire systemis now under review byboth the FDA and the Insti-tute of Medicine (IOM) ofthe National Academies,and may be overhauled.

Both regions require man-ufacturers to register withthe relevant authority andimplement “Quality Man-agement Systems” (QMS),ensuring that design, manu-facturing processes andlabelling are up to standard.

New devices are classifiedinto one of three groupsbased on potential risk topatients, each with differentregulatory requirements.

Class I devices range fromexamination gloves to hand-held surgical instruments.They are the least risky,and subject to minimal reg-ulatory scrutiny. Class IIincludes surgical needlesand X-ray machines, whileClass III devices, subject tothe strictest regime, includepacemakers and cerebralstimulators. Class IIIdevices are mainlyimplanted in the body andsustain or support life.

In Europe, QMS and tech-

nical files are required forall new devices. For ClassIII devices, design dossiersmust also be provided.

These documents and sys-tems are audited by repre-sentatives, appointed in theUK by the MHRA. Finally, aDeclaration of Conformity –confirming that the devicecomplies with the applica-ble directives – is submit-ted.

CE Certificates, whichcertify a product has metEU requirements, are thenissued for new devices.

In the US, Class II devicesrequire what is termed“Premarket Notification510(k)” clearance. By show-ing that a “substantiallyequivalent” device –termed a predicate– has alreadypassed the510(k) steps u c c e s s -fully, man-u f a c tu r e r scan speed up andease the process of regula-tion for new devices. Pre-market Notification applica-tions are reviewed, eitherby the FDA or by anappointed third party,cleared, and the companyand device FDA registered.

Mr van de Zande says

that third-party review of510(k) relieves the pressureon the FDA, but has beencriticised.

Dick Thompson of theFDA says third partyreview was recently with-drawn for radioactivedevices, although there areno plans to abandon thethird party review pro-gramme as a whole.

New Class III devicesrequire FDA-approved clini-cal trials, followed by appli-cation for PremarketApproval (PMA) and inspec-tion of manufacturing facili-ties.

Producing predicates canallow devices that mightotherwise fall into Class III,the most heavily regulated

category, to bec a t e g o -

rised

instead as Class II.Mr van de Zande says this

is a problem: “They takebits of devices which arealready cleared, and com-bine them into a 510(k).”These are known as multi-ple, or split predicates, andthe new device may bear lit-tle relation to those used aspredicates.

Mr Thompson says:“There are some concernswith how predicates aredefined and used. TheAgency is in the process ofgathering comments todetermine whether thereare in fact problems, what[these] are and what can bedone about them.

Mr van de Zande hopesthe changes will address alack of transparency inFDA processes, somethinghe says is “important, bothfor the FDA and industry”.

The FDA is consultingexperts and holding town

hall meetings aroundthe US to contribute

to an improvedregulatory sys-tem.

Mr Thomp-son says thatnobody knows

what thechanges will be.

Medical devicesJoseph Miltonlooks at approvalprocedures

Medicaldevicesencompassa huge rangeof products,including thisear thermometer

Electronic records Making slow progress

Across the world, the drive tocreate electronic medicalrecords is making progressslower than hoped for, whilecosts are higher.

“They are not a quick fix,”says Joe Swedish, the chiefexecutive of Trinity Health, aUS hospital provider, which hasinvested $400m in an electronicrecord for 8,000 physicians at44 hospitals.

That judgment can be echoedin England, where an ambitious,decade­long £12bn drive todeliver an electronic record to50m of its citizens is at leastfour years late, and will not bedelivered in full in anyforeseeable future.

Billed as the world’s biggestcivilian IT programme, the UK’sConnecting for Health suffersfrom what might be called the“prophet in its own country”syndrome. Some achievementsare admired from abroad: peoplein England see only the failures.

Growing numbers of Britain’sprimary care physicians, itsfamily doctors, send patients’records electronically when apatient moves home – cuttingweeks of waiting when writtenfolders of notes had to betransferred. The country hasreplaced X­ray film with digitalimages, saving money, improvingdiagnostic accuracy and avoidinglost films that repeatedly led towasted hospital appointmentsand unnecessary repeat X­rays.

With mixed success, a hospitalappointment can be bookedelectronically, with choice overwhere and when patients areseen. A communication systemknown as “the spine” holdsdatabases that include a singlenumber for every patient,ensuring accurate identity.

And there are the beginningsof a summary care record,available nationally round theclock, carrying details ofpatients’ medication andallergies that can help with out­of­hours emergency treatment.

“People who come and look atthis from abroad are reallyimpressed by much of what wehave done,” says ChristineConnelly, the healthdepartment’s chief informationofficer.

Many “buts” follow, however.Some so large that the future ofthe programme is in thebalance. For the core aim of theprogramme was a completeelectronic record, to be rolledout from 2005, accessed from

hospital, primary care andcommunity settings.

To do that, huge contractswere let not to health ITspecialists but to IT integratorssuch as CSC, Accenture, Fujitsuand BT to install systems.Initially three, but soon only twokey software packages werechosen.

This was a highly centralisedsolution – one spectacularlydifferent from what could havebeen the alternative approach:defining what should be in therecord and what it should looklike, setting communicationstandards, and then letting thehealth system buy from acatalogue of approved products.

Had the integrators had goodproduct to hand, the centralisedapproach might well haveworked. It did with digitalimaging, when the programmetook existing packages ofhardware and software androlled them out across thecountry in less than two years.

But for the record software, itturned out that iSoft’s packagewas good at providing the datathe NHS needed for paymentmechanisms but lacked theclinical record, while the otherpackage, Cerner’s, had theopposite problem.

On top of that, installinghospital patient administrationsystems that underpineverything for payment and theelectronic record has proved fartougher than anyone imagined.

The result has been massivedelays and multiple misseddeadlines. The future of thehuge contract held by CSC is indoubt. And while BT hasperformed appreciably better onits regional contract in London,the scale of what it was todeliver has been cut back. Roll­out of the summary care recordhas been halted in much of thecountry until there is publicawareness of what it implies.

Even the ministers in chargenow accept that this mightyprogramme will no longer deliverthe comprehensive solutionoriginally envisaged.

The new government dueshortly in the UK will have todecide whether it is worthploughing on, or if a radicalrevamp can be afforded, giventhe costs of cancellation andconstrained public spending. Thefuture of Connecting for Healthhangs in the balance.

Nicholas Timmins

Possibilitiesmultiply fornerve cellregrowth

Regenerative medicinehas immense potentialfor renewing failingor damaged tissues

throughout the body, from theskin on the surface to organsdeep inside. But the most excit-ing prospect is for regenerationof the brain and nervous system,both because the unmet medicalneed is so great and because thescience is so challenging.

There are two complementaryapproaches to neural regenera-tion. The more traditional one iscell therapy – putting new neu-rons – nerve cells – or their pro-genitor cells into the brain ornervous system.

The first transplants of foetalneurons into Parkinson’s dis-ease patients took place in the1980s – with mixed results – andtoday several companies are onthe brink of clinical trials oftherapies based on stem cells.

They include: ReNeuron of theUK, which is about to test neu-ral stem cells in stroke patients;and Geron, from California,which plans to treat acute spi-nal injury with nerve cellsderived from human embryonicstem cells.

The other possibility is tostimulate the latent power ofsome human neurons to regen-erate themselves. Scientistshave long known that neuro-

genesis takes place in moreprimitive organisms, includingsome fish and amphibians, butone of the dogmas of 20th cen-tury neuroscience – that adulthumans do not make new braincells – was only overturned inthe late 1990s.

The discovery then of adultneurogenesis at the Salk Insti-tute in California has inspired agreat wave of research, as scien-tists and biotechnology compa-nies look for ways to increasethe low natural level of braincell generation, without riskingthe cancer that might accom-pany unnatural neural growth.

“Very little is known stillabout human neurogenesis,because it is difficult to look atthe growth of neurons in theliving human brain,” says MikeModo of the Institute of Psychia-try in London. “But in postmor-tems of stroke victims, there isclear evidence of neurogenesisafter the stroke.”

Sygnis Pharma, a German bio-technology company, wants toachieve this effect with a pro-tein called “granulocyte colonystimulating factor” or G-CSF,produced naturally in the brainafter a stroke – apparently act-ing both to reduce cell death inthe acute phase and to stimulatesubsequent regeneration ofblood vessels and neurons.

After successful animal tests,Sygnis is undertaking a clinicaltrial to assess the efficacy of itsG-CSF treatment – which thecompany calls AX200. About350 stroke patients are takingpart in the double-blinded trial;half will receive an infusion ofAX200 and the other half aplacebo saline solution.

Results are expected in themiddle of next year.

A Swedish company, Neuro-Nova, is following a similarapproach with two neuro-stimu-lating proteins – both in earlyclinical trials. One is a formula-tion of “platelet-derived growthfactor” (PDGF) to treat Parkin-son’s disease; the other contains“vascular endothelial growthfactor” (VEGF) for amyotrophic

lateral sclerosis (known in theUS as Lou Gehrig’s disease), themost common form of motorneuron disease.

A third neurogenesis com-pany, BrainCells of San Diego,is taking a different tack. It ispursuing the discovery made in2003 by one of its founders, René

Hen of Columbia University,that antidepressant drugsachieve some of their effects bystimulating the growth of neu-rons in the hippocampus, abrain area involved in learningand memory.

In contrast to Sygnis andNeuroNova, whose early work isfocusing on proteins that mighthelp people with serious oracute brain disease, BrainCellsis concentrating initially on“small molecule” chemicals thatpeople can take as pills or cap-sules, with a screening pro-gramme that has looked at hun-dreds of potential drugs to findthe ones that best trigger theproliferation of new neurons incell cultures.

Two of its drugs are alreadygiving promising results in clini-cal trials with patients sufferingfrom severe depression and anx-iety, who do not respond toexisting antidepressants.

In terms of results, there maynot be much practical differencebetween the two approaches tobrain repair – transplanting

neurons and stimulating thebrain’s intrinsic growth poten-tial – because animal experi-ments suggest that cell trans-plants are particularly good atstimulating neurogenesis. Thisis because the very presence ofnewly transplanted cells seemsto help the brain repair itself, byactivating its own “endogenous”stem cells and growth factors.

Mr Modo says that in cases ofserious brain injury or disease,a third component may be nec-essary for effective treatment.Shrinkage and neuronal deathoften leave a hole in the brain,which transplanted and regener-ated cells cannot fill on theirown.

A potential solution then is toadd a scaffold, made from bio-compatible materials and ladenwith neurostimulating factors,which can guide and supportthe cells as they grow.

Neural regeneration may be ayoung field, with much still toprove, but it is one of the fastestgrowing and most exciting inthe whole of bioscience.

Regenerative medicineClive Cookson looksat therapies under testto tackle disease andinjury of the brain ornervous system

A doctor examines magnetic resonance imaging (MRI) scans of the brain Science Photo Library

‘Very little is knownabout neurogenesisbecause it is difficultto look at the growthof neurons in theliving human brain’

Continued from Page 1