It is less well known than it should be, but the biotech industry is up there with the airlines in having prodigious cumulative losses as its industry-wide financial legacy. According to Arthur Levinson of Genetech, total biotech industry losses since a 1976 inception are more than $100-billion. The industry, in other words, lives on via the good investing graces of venture capitalists and other investors.
But that may finally be changing:
Publicly traded American biotechnology companies lost only $2.1 billion in 2005, down from $4.9 billion in 2004, according to the latest annual scorecard compiled by Ernst & Young, the accounting and consulting firm.
More important, the firm said, the loss last year was equivalent to only 4 percent of the $47.8 billion in combined revenue from the 329 public companies in the biotech industry. That is the first time that figure has ever been below 5 percent.
Okay, okay, this may seem like small financial potatoes, but as a biotech investor you have to find solace where you can. And hey, some sunny sorts are even putting forward the idea that biotech will finally be profitable on an annual (not cumulative) basis by the end of the decade. Happy days!