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FDA approvals on decline
February 2008
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SAN DIEGO—According to Sagient Research Systems' biotechnology research service BioMedTracker, the FDA's drug approval rate declined 13 percent in 2007 while the rate of approvable letters issued increased by 40 percent and non-approvable letters increased 22 percent. The firm also noted that the average absolute stock price change from an approvable letter issuance dropped to 12.89 percent in 2007 from 21.42 percent in 2006.
"The FDA has received a lot of criticism over several high-profile adverse events cases. This has triggered an overly cautious approach to new drug approvals at the FDA," says Michael Hay, senior analyst and product manager for BioMedTracker. "Other potential reasons for the decline in approval rates cited in our report include an increase in adverse event reports, increased workload for FDA employees, and a high rate of turnover at the FDA."
The decrease in price changes following an approvable letter may be directly linked to institutional investors' lower expectations that the FDA will in fact approve drugs, he adds, saying: "It has become less of a surprise when a new drug is given an approvable or an outright non-approvable letter."

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