Published October 3, 2022 | 4 min read
Key Points
- Innovation has always been a key driver of value creation in biotech and continues to grow at an accelerated rate.
- Biotech can be unpredictable, with big valuation swings on data points that can surprise even experts in this space.
- Genetic medicine leads a surge of innovation in biotech, with gene editing offering the potential to deliver functional cures with a simple one-and-done administration.
- Companies and investors should separate short-term setbacks from long-term success and focus on the signals of future value.
Innovation accelerates growth
Cutting-edge innovation has always been a key driver of value creation in biotech and continues to grow at an accelerated rate. Looking forward, we predict advances in new drug targets, design, manufacturing, as well as the delivery of advanced cell and gene therapies, with expansion into new diseases, particularly in the cancer, neurology, and rare disease spaces.
Many biotech firms have also begun to approach aging as a disease. A review of US clinical trial listings suggests that the number of trials starting each year since 2011 addressing aging conditions has tripled from 85 to 255, growing at a CAGR of 12%, outpacing the growth of new trial starts.
Genetic medicine leads a surge of innovation
Gene editing has quickly emerged as one of the most promising approaches within genetic medicine. This technology, which involves deletion, insertion or correction of DNA, enables scientists to precisely tackle the genetic root cause of the disease. Rapid advancements in this field are creating a robust product pipeline and attracting record amounts of capital.
Until more clinical studies play out, investors need to weigh the promise of gene editing against potential safety and regulatory risks. Looking ahead, the ultimate “winners” in this field may not necessarily be the companies with the most attention-grabbing technology, but those that can successfully target the right indications and cleverly design clinical trials.
AI accelerates innovation
Over the next decade, we will see if AI can truly lead to molecules that can better navigate the clinical and regulatory hurdles of drug development, potentially saving billions in costs, and to what extent human input and rational design is still essential in therapeutics.
There are high expectations for AI-based drug development, but validation is likely years away and the actual advantages may be more incremental than in other fields. The seeds of biotech and big tech collaboration are being planted, between giants such as Microsoft and Novartis, but also between smaller firms with AI-driven pipeline and discovery platforms.
The individual revolution
The rise of gene editing, among other factors, may contribute to creating a new economy around the monetization of data and catalyze a wider range of tailored DNA-based treatments. Personalized therapeutics are expected to move from rare diseases to more common indications, potentially expanding the total addressable market and leaving fewer patients behind.
However, there’s work to be done to address the need for more scalable, sustainable, equitable and inclusive healthcare. To succeed, the industry will have to reconcile apparently contradictory terms – safeguarding patients’ data while enabling innovation through broad access to that data to scale clinical knowledge and predict and prevent disease. This may require a shift from the industry’s linear pipeline-model thinking to a more platform-driven approach that can more effectively apply data, analytics and technology to make healthcare more accessible in the future.
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