1995: Business

Biotechnology investors had a terrible year in 1994. This is
bad for people with AIDS, because it makes it hard for
companies to raise money to develop new treatments and test
them.

BioCentury, a weekly fax newsletter which reports on the
business of biotechnology, found that only the largest
companies, with market capitalization over $500 million, held
their own in stock prices during 1994. The 190 smaller
companies which BioCentury follows lost an average of 37
percent in shareholder value; the "infectious diseases and
AIDS" group of companies lost 42 percent. This is on top of
other losses in 1993.

BioCentury's analysis showed that the actual performance of
the industry was not bad in 1994; the success rate for new
drugs was about what would be expected in the pharmaceutical
industry. The problem, some experts suggested, may have been
the great unpredictability of which drugs will work. Some
were expected to do well, but instead failed in clinical
trials.

Comment

In this business climate, advocates for people with AIDS,
cancer, and other serious diseases should think carefully
before pushing for price-control laws or other mechanisms to
hold down the prices of newly-developed pharmaceuticals. The
few drugs which do work must pay not only for their own
research and development, but also for the many more research
and development projects which fail. Otherwise, investors
will keep losing money until they stop putting more money in
to this high-risk area, and new treatments will not be
produced.

The impossibility of predicting which new drugs will actually
work in people also reinforces the need for many small,
screening trials, to see which potential treatments do seem
to be working, and to learn more about them as a basis for
further development. The danger, in both corporate and
government research, is that too much of the available money
and other resources will be diverted to a few large projects,
because they have more political influence than small ones.

[Note: For information about BioCentury, call 415/595-5333.]