U.S. biotechnology companies revenues grew 8 percent last year but the increased profitability was driven largely by cost cutting and reduced levels of research and development funding, according to a report released today by accounting firm Ernst & Young.
The annual report describes a biotech industry that is recovering from the economic downturn but also faces serious challenges going forward.
"While the biotech industry’s aggregate performance improved in 2010, there is now a widening gap between large, established companies and those at earlier stages for whom access to capital continues to be difficult,” said Glen Giovannetti, Ernst & Young’s global biotechnology leader, in a release summarizing the report's findings.
The performance of the biotech sector in North Carolina largely mirrored this trend.
The market cap of publicly traded biotechnology companies in the state increased 42 percent last year and revenues were up 12 percent, according to the E&Y report. R&D spending was flat, however, up just one percent.
The report concludes that biotech sector's performance over the next five years may be characterized by steady profits, but not the strong growth rate that it has experienced during earlier periods.