More than 90% of drugs entering clinical development fail to get to market, due to the lack of effectiveness or adverse side effects not detected in animal tests. These false positives could be avoided with pre-clinical tests using stem cell technologies, potentially saving drug developers millions, according to Kalorama Information' s new report Stem Cells: Worldwide Markets for Transplantation, Cord Blood Banking and Drug Development

The discovery and commercialization of a new drug costs in excess of $1 billion and requires more than 14 years. Early toxicity testing is a particular problem, since there are currently no good models for determining whether a drug will be toxic in humans. Some unsafe products advance through testing and approval, only to be pulled from the market later at a huge expense, as was the case with Vioxx and Bextra.

Though stem cell-based drug development technologies are in an early stage of development, and will most likely not become available before 2012 at the earliest, their prospects are promising.

"The excitement around stem cells has understandably been in the potential for therapy, but drug development is where they may have the most impact on healthcare." notes Bruce Carlson, publisher of Kalorama Information. "Stem cell technology could provide a virtually endless supply of liver or heart cells for testing, saving developers tens, if not hundreds of millions of dollars in direct testing fees, as well as indirect costs related to drug recalls."

Recognizing stem cells' potential, GlaxoSmithKline, AstraZeneca and Roche established a new venture in 2007, Stem Cells for Safer Medecines Ltd, to develop effective ways of using human ES cells to screen for potentially dangerous side effects of new drugs before they go into clinical trials.