Biotechnology Research Services
Companies in this industry engage in biotechnology research and development to produce processes or prototypes of new or genetically altered products using microorganisms and cellular and biomolecular techniques. Major US organizations engaged in biotechnology research include the Scripps Research Institute, Howard Hughes Medical Institute, and Jackson Laboratory; institutes affiliated with government research agencies and major universities, such as the Whitehead Institute (MIT); and the research departments of large biotechnology companies such as Amgen, Genentech, and Genzyme. Large organizations based outside the US include the Biotechnology Research Institute (Hong Kong), Flanders Institute for Biotechnology (Belgium), and the Babraham Institute and the Wellcome Sanger Institute (both in the UK).
Global R&D expenses for the top biotechnology regions -- the US and Europe -- are about $40 billion, according to Ernst & Young. Among countries, South Korea allots more than 20% of its public R&D expenditures to biotech; Germany, about 18%, and Spain, 13%, according to the World Economic Forum. About two-thirds of biotech research expenditures are for health applications.
The US biotechnology research services industry includes about 3,900 establishments (single-location companies or units of multi-location companies) with combined annual revenue of about $21 billion. The industry does not include manufacturers or contract research organizations that test products for market.
Demand for biotechnology research in the fields of agriculture (food and biofuel), medicine, and science is driven by the global need to produce more food for a rapidly expanding population, the need for alternatives to oil and gas, and scientists' desire to find solutions for complex scientific and medical issues. The profitability of individual companies depends on the discovery of potentially marketable new products. Large companies enjoy economies of scale in purchasing expensive equipment. But because the market for potential products is so large, small biotechnology companies can co-exist successfully with large ones if they have expertise in a particular line of research. The US industry is concentrated: the top 50 firms account for about 55% of revenue.
Biotech firms face stiff competition from pharmaceutical and other companies seeking to be first with a new product or discovery. The lure of patentable discoveries through research into biological processes is strong, and motivates new companies to join the industry. Since biotech research may result in potentially lucrative new processes and prototypes applicable to several industries, funding is often provided by venture capital firms hoping to cash in on new products.
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Biotechnology research is used primarily to produce drugs, therapies, vaccines, and medical diagnostic tests (also called red biotech). It's also used
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