Recession takes cruel bite out of the biotech industry

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Just how bad a toll has the recession taken on the biotech industry? BIO crunched the numbers and found that a weak IPO market and the elimination of 100 biotech companies over the past three years--which either shut their doors or were acquired--conspired to shrink the list of public developers by 25 percent. And the Biotechnology Industry Organization says that acquisitions have actually been declining; from a high of 55 in 2008, dropping to 28 last year with only 21 so far this year.

"The biotech industry is significantly smaller than it was three years ago," said John Craighead, BIO's managing director for investor relations and business development. Craighead spelled out the trend at the group's investor forum in San Francisco, according to a report in Bloomberg.

While biotech IPOs have been making a slow comeback, Craighead also spelled out some discouraging figures for the lucky 13 which managed to debut. The companies cut the price on their offerings by an average of 30 percent below their initial forecast and 12 of the 13 saw their stock price decline after shares began trading.

But BIO did have a silver lining to offer investors. Only one in four public companies has less than a year's worth of cash on hand, compared to almost half at the end of 2008. But close to 40 percent of the financially healthy companies cut their staffs to shore up their bottom line.

- here's the story from Bloomberg

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