Buffalo Business First article: Ony Inc. growing global reach
SUBSCRIBER CONTENT: May 16, 2014, 6:00am EDT

Life science firms grow global reach

Jodie Manetta, a medical technologist at ONY Inc., works on samples in the lab at the Amherst life science company. Drugs manufactured at the site are distributed around the world.

Around the world, every day, babies are born prematurely with breathing difficulties because their lungs have not had time to finish developing.

Addressing the problem is ONY Inc., a privately owned life sciences company that grew 25 years ago out of the University at Buffalo.

The company manufactures Infasurf, a treatment used to prevent and treat respiratory distress in premature infants and one of just three FDA-approved drugs to treat the lungs of those premature babies.

Though the majority of ONY’s sales take place here in the U.S., overseas business has been growing and now makes up about 10 percent of sales. And international business is projected to make up an increasing percentage of revenue in the coming years.

“In the past, we relied on people finding us rather than us going out and finding people, so we are looking to change that,” said Dr. Edward “Ted” Egan, a neonatologist who founded and leads the company.

Though the U.S. and Europe remain among the largest world markets, life science companies are paying more and more attention to emerging markets like Asia, India and Africa.

According to a Deloitte outlook report on global life science, the global market for the pharmaceuticals, biotechnology and life sciences industry generated total revenues in excess of $1.1 trillion in 2011, including nearly $800 billion from pharmaceuticals alone, with the Americas representing 46 percent of the total.

The report points to sluggishness in developed regions as one reason why companies are increasingly targeting growth in places such as China, India and Brazil.

Fueling demand are drivers such as aging populations, rise in chronic disease and a growing middle class with disposable income, the report stated.

But just because there’s demand doesn’t mean the decision to jump into new markets is an easy one. Egan said each overseas licensee has to get the pharmaceutical approved in the place where they plan to sell it and that takes time, he said.

ONY relies on partners in South America, Asia, Africa and Europe to represent the company and identify the right places willing to put its drug into its inpatient critical care units.

“The biggest issue is if you want to aggressively do it, there’s a big upfront cost. You have to expend money, time and resources to go out and find partners,” he said. “It’s a relatively expensive drug, so they have to have a health care system that is willing and able to expend a significant amount of money on individual patents, and have the hospital infrastructure to use the drug.”

Making the leap to international business often brings a major investment in filing for separate patents in other countries to protect intellectual property, said Martin Casstevens, business formation and commercialization manager at the University at Buffalo Office of Science Technology Transfer and Economic Outreach (STOR).

“Getting international patent protection could cost you in excess of $100,000,” he said. “The big question on the IP side is do you just go get a U.S. patent and live with whatever business you can generate in the United States, or are your future investors demanding you have worldwide coverage.”

The answer often depends largely on what the company is selling, he said.

“You may not need a patent in every market in the world, but in the life sciences you’d be foolhardy to invest tens of millions of dollars in a life science drug if you didn’t have patent protection,” Casstevens said.

Another option is to partner with companies that have a U.S. presence. That’s one way Cognigen Corp. has found to generate dollars from foreign customers, including multinational pharmaceutical companies based in Japan, Switzerland and the U.K. who have operations here in the U.S.

The Amherst company does contract work for biotech clients and pharmaceutical giants to validate to regulatory agencies that their drug is safe and effective.

But because it runs the contracts through the U.S.-based operations, it doesn’t have to worry about things like exchange rates, language challenges or cultural issues, said Ted Grasela, president and CEO.

“Sometimes you have to go to Paris to meet with the decision-makers and you have to develop a rapport, but then they’ll put you off to the local groups to manage the execution of the projects,” he said. “The U.S. drug market is so valuable that many companies establish a beach-head here to run their development programs.”

International sales account for more than 60 percent of business at Immco Diagnostics Inc., which sells autoimmune disease test kits and reagents to labs worldwide from operations in Amherst and Buffalo.

That’s expected to grow partly due to new opportunities since the company was acquired last fall in a $32.75 million deal with Dublin-based Trinity Biotech PLC.

After expansions in India and China in recent years, the company next expects to grow in the Middle East and Africa, said William Maggio, president and CEO. Becoming part of Trinity is helping the company grow because of existing relationships in new countries.

“We’ve seen the greatest expansion in the Middle East and Africa as those markets become more sophisticated,” he said. “Obviously there’s great wealth in the Middle East, with hospitals that have the kind of motivation required to run our assays.”

For growing companies, relying on overseas funding also helps get through tough economic times here in the U.S., said Yakov Kogan, CEO of Cleveland BioLabs. The Buffalo company develops cancer and anti-radiation treatments, but remains in the start-up phase.

About 16 percent of revenue over the past five years came from foreign governments, including investment and development deals in Russia.

He pointed back to 2008-09, when the U.S. financial markets were hurting while economies like Russia were flourishing due to oil exports.

“We were able to neutralize the different health of financial markets to secure VC funding,” Kogan said. “Working in multiple markets allows you to work against the cyclical nature of the U.S. market, in global finance terms.”

Tracey Drury covers health/medical, nonprofits and insurance