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Executive Summary

IBA AND ABC BIOTECH ASSOCIATIONS ARE HEADED FOR CONSOLIDATION, probably during the first quarter of 1993. The boards of the 11- year-old Industrial Biotechnology Association and the nine-year- old Association of Biotechnology Companies are understood to be essentially in agreement that the two organizations should be spliced. Although no public announcement of a merger has been made, a number of individuals close to the discussions indicate that a merger is imminent. The two groups have talked about joining previously but have been held apart because of polarized political positions and personalities. Three years ago, in mid-October 1989, both associations publicly acknowledged that they had discussed a merger. At that point, ABC said that a full-fledged combination of the two groups was "premature." ABC suggested instead that closer collaboration between the two groups would be appropriate ("The Pink Sheet" Oct. 16, 1989, T&G-7). ABC has 315 members, made up of biotech companies, biotech research centers, non-profit and government-affiliated entities and other organizations interested in biotechnology. IBA has a smaller number of member companies (143), but its membership includes most of the major, established firms participating in biotechnology. IBA claims that its member companies are "responsible for more than 85% of the sales, revenue and research and development expenditures in biotechnology." IBA and ABC have taken opposing positions on several Washington issues in the past. The most notable disagreement has been a long-standing dispute over changes to the orphan drug act. IBA (with Amgen, Genentech and Lilly among the membership) has argued for retention of exclusivity protections for orphan products. ABC, on the other hand, has represented the interests of some of the companies prevented from entering the market by orphan exclusivity clauses. In 1990, Genetics Institute resigned from IBA over the dispute. Some of the more visible orphan exclusivity fights are winding down to a conclusion. There are only two years of orphan exclusivity left for Lilly's human growth hormone. Genentech's exclusivity ends Oct. 16, but the product is sheltered by Lilly's protection. The follow-up products waiting to enter the market mimic the Lilly non-methionyl sequence. Given the slow pace of Congress on orphan drug legislation, interest is presumably waning among the excluded manufacturers in another legislative attack on the Lilly-Genentech position. Without the irritant of the heated orphan dispute, the two associations appear closely aligned. Both, for example, supported the FDA user fee negotiations this summer (see related story, p. 3). Personnel changes -- at the associations and in the member companies -- have worked to make the combination more feasible. For example, ABC's current Chairman Thomas Wiggans (exec VP at CytoTherapeutics) was previously president of Serono Labs, one of the IBA member firms. ABC also has a new executive director, William Small, who took over after Pamela Bridgen left after about two years in that post. The association also has begun to rely less heavily on its outside counsel. IBA has been headed since December 1985 by Richard Godown. A former general counsel of the National Association of Manufacturers and an associate director of the Business Roundtable, Godown has overseen a three-fold increase in IBA's membership. One tangible sign of the pending merger is an advertisement in a recent head-hunting publication for an executive director for a position that fits the combined associations.

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