What will Obama's new administration mean for biopharma?

These are tumultuous times. While economic fear and uncertainty continue to be front and center, the election of Barack Obama has brought many people a feeling of optimism and hope for the future. As it is easy to become caught up in the media coverage of the financial crisis, it is time to turn to the future and predict the implications of the economy and President-Elect Obama's administration on the bio-pharmaceutical industry.

The worldwide economic slowdown and plunging stock markets have laid waste to the financing mechanisms we have grown to rely on. Venture capital firms are putting aside reserves for their existing portfolio investments to ensure those companies continue to conduct business and move forward with development plans as they strive to find the appropriate growth and exit strategies. Initial public offerings are unlikely to occur in the next few years for companies without a product on the market or at least with regulatory approval. However, large pharmaceutical companies, because of their large cash holdings, are increasingly gaining a position of strength in licensing discussions for smaller companies. The face of the industry will change as companies compete to survive in the bear market. We will undoubtedly see some companies fail, some unable get their ideas off the scientific bench and other companies succumbing to M&A deals with well capitalized big pharma.

Barack Obama announced last week the nomination of Tom Daschle for Secretary of Health and Human Services, which has oversight of the FDA. Daschle, the former Democratic Senate Majority Leader from South Dakota, is a somewhat surprising choice given the fact that he leans to the republican center of the Democratic Party. Prior to becoming the Majority Leader, Daschle served as a member of US Senate Committee on Agriculture, Nutrition, and Forestry. Given the fact that Daschle had worked on legislation pertaining to agriculture and food safety, I predict he could put a greater emphasis on clinical trials to produce more safety data and require more long-term exposure data for new drugs. There are obvious questions as to how the leadership of the FDA will change with the new administration and under Daschle's presumed direction. Questions remain as to who may replace Andrew von Eschenbach as the FDA Commissioner.

We can expect that if appointed, Daschle will bring significant focus to reforming the health insurance and drug payment structures. Although, perhaps not directly effecting the FDA regulations and policies for new drug approvals, major reforms in the health care industry may effect biotech and pharmaceutical companies' prescription drug payment structures. Similar to the uncertainty surrounding the future economy, the extent of reforms that lay ahead for the health care industry remain unknown, but we can be certain that if Obama's administration and Daschle hold up to their claims, some sort of change is swiftly approaching.

While much of our business is unpredictable, one things is clear: more data equals longer trials and more patients, and this translates into greater costs. This will require those of us responsible for managing clinical trial design and execution to work that much harder to design studies to address specific clinical questions. At the same time, we will have to take great pains to ensure our budgets, both internal and outsourced costs, are stripped down to only the activities absolutely critical to ensuring quality data can be collected.