Image: Anne MacNamara

Like prudent squirrels bracing for a harsh winter, biotech managers are scrambling to conserve money in an effort to keep their companies alive during the current financing downturn. Biotechs have not gone under in droves, despite the funding turn back. Most have survived using strategies such as licensing and partnership deals, innovative financing, and simple cost cutting, including layoffs. "We haven't seen the kind of consolidation you would expect. It is a little surprising," says Jill Kiersky an analyst who follows biotech at Morningstar in Chicago.

One key to the industry's resilience is that many companies were awash in capital before the funding drought began. Based largely on enthusiasm for genomics, 72 biotech companies went public from December 1999 to the first quarter of 2001 and raised $6.8 billion (US) in financing, according to Recombinant Capital, a Sanfransico biotech consulting firm.

But 20% of the members of...

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