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Consolidation, IPOs, and Tighter Wallets Will Define Biotech in 02

PALM SPRINGS, Calif., Jan. 29 - The hey day of biotech funding may have passed. But 2002 will see some big mergers, the return of the IPO, and a tighter VC environment, according to Mary Tanner, senior managing director for the pharmaceutical and biotech industries at Bear, Stearns & Co.

 

Speaking on Monday at LabAutomation2002, which runs here through Wednesday, Tanner called the venture capital environment of the last several years "unprecedented" and said that there would be greater competition for VC money as pharma took time to utilize the recent technology bought from biotech.

 

"These things go in cycles," said Tanner, who compares the recent VC environment to the money that fueled the US railroad boom in the 1800s. There's been "an enormous wave of accepting of lab techniques. The pace of the next years won't be as much, [there are] absorption issues. It's like a mouse going through a snake right now. It will take at least five years to digest, [or] for the enormous bulge of first time investment to be over."

 

"We're producing from all of these technologies more data than knowledge," added Tanner. Getting to increased efficiency and better drug targets "will be a stepwise function, but it will take much longer than people think."

 

In the short term, Tanner sees an increase in biotech consolidation, citing her experience helping put together the Amgen-Immunex deal and calling it "the first of many biotech mergers to come." She also predicts that the second half of 2002 will see an increase in IPOs.

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