February 2, 2004 Investor's Business Daily by GLORIA LAU

In drug production. It turns out that cow serum -- a purified derivative of cow blood -- is commonly used to produce many of the new biologic drugs on the market.

These drugs can do everything from fight cancer to help rheumatoid arthritis patients walk again. Many are proteins or other cell-based products that can't be otherwise mass-produced.

Regulators worldwide require that the drugs be tested for safety and effectiveness on animals and people before they grant marketing approval.

But the serum producers say they can't guarantee that the serum is free of all viruses and bacteria. Because of that, regulators are concerned about cow serum safety.

Japanese and European authorities have urged drug makers to start using more synthetic serums. The Food and Drug Administration started encouraging the same, but hasn't issued a hard deadline. A spokesman for the agency didn't return phone calls seeking comment.

Given recent headlines about mad cow disease, some might wonder about the risk of contracting disease from drugs that use cow serum.

Shawn Smith, the bioproduction business segment director at biotech Invitrogen Corp., said the risk is "infinitesimal."

"You're really talking about 0.01% risk or something like that," he said. "Sensitivity to that risk continues to grow, though the sensitivity is based more on emotion than pure science."

The risk is low because of the heavy priority firms put on cleanliness, says Rod Kelley, vice president of safety and quality at Sigma Aldrich Corp., a midsize producer of cell culture media.

"The bovine cell culture media goes into an environment that we clean before and after (processing)," he said.

Invitrogen is the biggest producer of bovine and synthetic media in the world, and Sigma is among the top five producers. They and rivals sell their serums to researchers and drug companies.

More than 60% of the biologic drugs on the market have involved the use of bovine-based products at some point during their development or production.

A long list of popular biologics on the market rely on cow serum. Each brings in $600 million to several billion dollars a year in sales.

One expert, who asked not to be quoted, says the list includes Genzyme General's Cerezyme for Gaucher disease; Amgen Inc.'s Enbrel for rheumatoid arthritis and Epogen, which stimulates the production of red blood cells to combat anemia; and Johnson & Johnson's Procrit for anemia and Remicade for rheumatoid arthritis and Crohn's disease.

Choose Your Risk

For patients in need of drugs that rely on cow serum, the health risk is a matter of perspective, says analyst Adam Chazan of Pacific Growth Equities.

"Say you're dying of cancer, would you rather die or get your drug and risk mad cow?" he said.

One company, Serologicals Corp., has developed a way to reduce the risk: a patented purification process that inactivates infectious prions.

Unlike Invitrogen, Sigma and others, Serologicals doesn't sell bovine serum for use as cell culture media. Instead it sells a bovine-based vitamin supplement called Ex-Cyte. Drug makers mix it into their cell culture media to make the bovine serum work better.

Researchers took Ex-Cyte and purposely infected it with prions, the defective proteins that cause mad cow. They ran Ex-Cyte through Serologicals' purification process, tested it and found the prions were inactivated.

"There have been no reported incidents of Mad Cow transmitted to humans by drugs, but there's a perceived risk," said David Dodd, Serologicals' chief executive. "Our patented process provides the assurance that drugs are being made with the highest quality materials."

One Word: Synthetics

Almost all research and early- stage testing of biologics is done with cow serum. In late-stage testing, drug makers are starting to be more careful. A growing number produce their drugs with newer synthetic serum substitutes.

Invitrogen's Smith says the future of the industry is in synthetics. That's where his firm is putting its research and development efforts.

Invitrogen still gets a third of its revenue from selling bovine serum products, analyst Chazam estimates. Most rivals depend on bovine serum sales as well.

The overall industry generates $750 million in yearly sales. 55% to 60% of that comes from the U.S. Invitrogen holds 35% to 40% of the market.

Demand for cell culture media, including bovine serum and synthetics, breaks down into two parts: basic research use and production use, where drug makers grow medicines for patient use.

Each segment accounts for half of total sales. Production use grows 20% to 30% a year in sales, while research grows 10% a year.

In research, Invitrogen controls 40% of the market. Sigma has 20%. The rest of the business is fragmented.

In production, Invitrogen controls 35%, rival Australian firm JRH holds just less than 35% and Fisher-Scientific International controls more than 25%.