Analysts Say Lack Of Cash Will Hamper Biotech Research As '94 Gets Under Way

With projects on hold and downsizings, mergers, and acquisitions on rise, only firms with products in clinical trials can progress Among the myriad issues confronting the biotech industry in 1994, the most pressing problem companies will face is a lack of adequate financing, say industry observers. Fueled by concerns over potential drug-pricing controls related to national health care reform and two highly publicized biotech prod

Susan Dickinson
Feb 6, 1994


With projects on hold and downsizings, mergers, and acquisitions on rise, only firms with products in clinical trials can progress
Among the myriad issues confronting the biotech industry in 1994, the most pressing problem companies will face is a lack of adequate financing, say industry observers.

Fueled by concerns over potential drug-pricing controls related to national health care reform and two highly publicized biotech product failures, public financing has plummeted, they say, while many firms are running out of reserve capital. The New York-based accounting firm Ernst & Young reported late last year that public financing of biotechs fell by two-thirds, from $3.2 billion for the year ending June 1992 to $1.1 billion for the year ending June 1993. Meanwhile, 58 percent of public biotechs have less than two years' worth of cash reserves on hand.

The lack of capital is having a major impact on science at these firms,...

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