BDO USA, LLP released their 6th annual study on July 12th, finding that the biotech industry is continuing to grow substantially thanks to high investment in research and development (R&D). The report, titled the “2017 BDO Biotech Briefing”, found that across all mid-market biotech companies, R&D spending increased from an average of $65.9 million in 2015 to an average of $80.6 million in 2016, an 18% increase.
Ryan Starkes, leader of BDO’s Life Sciences practice and assurance partner, spoke about the trend in the research in a recent press release, saying that, “Plans to continue to streamline approval processes, increase competition and transparency around drug pricing, and facilitate advancements in medicine and digital health technology are likely to expand innovations with the potential to improve treatment for millions.”
When examined by size, biotech companies with less than $50 million in revenue grew the most, increasing R&D spending by 24% from $65.4 million in 2015 to $81.2 million in 2016, followed by biotech companies with more than $50 million in revenue, who increased R&D spending by 20% from $66.4 million in 2015 to $80 million in 2016.
Other findings from the report indicate plentiful employment opportunities within biotech companies, a lessened focus on cash reserves in place of greater investment, equity rates are declining while debt financing is on the rise, and the areas of gene therapy, oncology, immunology, and rare diseases are areas of increasing investor interest.
BDO provides tax, assurance, consulting, and advisory services to public and private companies. The report examines the recent 10-K SEC filings of companies on the NASDAQ Biotechnology Index, excluding those reporting more than $300 million in revenue and dividing what remains into two groups, those with less than $50 million and revenue and those with more than $50 million in revenue in order to identify metrics and trends within each.
