Picking Up the Biotech Tab

Drugs like Genentech's Herceptin show what biotech can do when it comes to innovating blockbuster treatments, says Robert Langreth on the Forbes Treatments blog. Indeed by 2014, analysts predict that the top five bestselling drugs will have come from biotech. The problem is, no one wants to pay for the next generation of treatments, like those derived from stem cells, that could be hitting the market around 2020, Langreth says. The "biotech revolution," he says, was brought about by academic innovation and a stock market eager to invest in new ideas. Some biotechs worked out great, but a majority of small companies touting some product or other fizzled. "A chastened stock market doesn't want to gamble on biotech IPOs that could hit the jackpot but are far more likely to end up as clunkers," Langreth says. One answer, analysts say, may be to eliminate capital gains taxes for investors who buy and hold stock from young, untried biotech companies to give them an incentive to invest.