Biotechnology is a pernicious business. Forty percent of all startups are shuttered after providing no return whatsoever to investors. A further 50% return something, but less than the capital invested.

This year, just eight biotechnology companies have filed for initial public offerings (IPOs), of which only one has successfully gone public. (For comparison, last year 35 went public.) Peter Winter of Burrill & Company says that "Companies will either disappear or tread water for a little bit."

So, in this time of recession, biotech is a bad bet, right? Wrong. I've been canvassing opinions from venture capitalists on the state of the industry and, surprisingly, they are fairly buoyant. Here's what I found.

There has been a transformation in biotech investment strategy over the past decade, such that the IPO numbers quoted above...


1. B.L. Booth, "When less is more," Nat Biotechnol, 25:853-7, 2007. 2.

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