Sir

Sally Lehrman speculates that the volatile and declining US stock markets may eventually “trigger more investor interest” in biotechnology stocks (Nature 395, 104; 1998). The fundamentals of the biotech industry argue otherwise: there are too many companies pursuing too few products that are fantastically expensive to move through the regulatory pipeline.

The regulation of drugs has become so burdensome in the United States that the time required for development — from discovery to market approval — has more than doubled since 1964, from 6.5 to 14.8 years. During the 1990s the time from the start of clinical trials of a drug to its marketing approval has been lengthening. Such prolonged research demands an ever-increasing amount of capital. From 1977 to 1996, approvals of new chemical entities by the Food and Drug Administration (FDA) remained relatively flat, while research spending by pharmaceutical companies increased from $3 billion annually to almost $20 billion.

Bringing a drug to market in the United States now costs more than $500 million, by far the highest price tag in the world.

Biotech companies have enjoyed less than stunning success at jumping through the FDA's hoops. According to the FDA's website (http://www.fda.gov), the agency approved only two new biotech drugs in 1994, one in 1995, none in 1996, five during 1997, and none during the first quarter of this year. (These figures do not include duplicates of products already marketed by other companies.) That dubious record is reflected in the performance of biotech mutual funds, which, according to Charles Schwab & Co. (http://www.schwab.com), have consistently underperformed the Standard and Poor's 500 (a major stock index) during the past ten years.

These regulatory costs and delays have given rise to an inauspicious imbalance between products and companies. In April the Pharmaceutical Research and Manufacturers of America organization counted only 350 biotech-derived drugs in clinical trials from the 1,000 US biotech companies. Drug developers cannot afford to gamble on products that are not likely to be blockbusters.

Although biotechnology applied to pharmaceuticals has made signal contributions to medical therapeutics, it languishes far behind its potential. Life-saving products will continue to emerge, albeit at a trickle of what is possible, but from the vantage point of most companies and investors, there seems little reason for great optimism.