Biotech: An industry of the living dead?

New York Times biotech reporter Andrew Pollack profiles the "zombies" of the biotech industry--companies that manage to stay afloat despite losing hundreds of millions of dollars and rarely (if ever) producing profitable drugs. For instance, Berkeley, CA-based Xoma has spent 25 years and over $700 million dollars on various failed programs without ever turning a profit. The problem, of course, is that it takes an average of seven to eight years for companies to bring a drug to market; on top of that, only one in five drugs that go into human trials will be approved by the FDA. Small biotechs don't have the money or the manpower to focus on more than a few programs at a time. When drugs don't pan out, they must start the whole process over again.

Given the fact that companies like Xoma, ImmunoGen, Repligen, Immunomedics, Biopure, Cytogen and OSI Pharmaceuticals continue to attract investors and spend money, one has to wonder how efficient the biotech industry really is, and at what price risk finally outweighs benefit. In fact, Genentech CEO Arthur D. Levinson claims the biotech industry has lost $100 billion dollars since 1976, making it "one of the biggest money-losing industries in the history of mankind." But despite the hit-or-miss gamble that is biotech investing, investors will keep coming back, hoping to strike it rich with a blockbuster biologic, massive buyout or rich licensing deal with Big Pharma.

- read this article from The New York Times

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