The first few months of 2005 have deflated investors' hopes for a biotech boom, industry analysts say.

During 2003 and 2004, global investment in biotechnology — including money raised in public share offerings, as tracked by publisher BioWorld, based in Atlanta, Georgia — was picking up again after a slump in the previous couple of years.

No one expected a repeat of the money rush that anticipated the human genome sequence. But there had been high hopes for a more modest revival.

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SOURCE: BIOWORLD

“Overall, 2004 was a very good year” for the sector, says Brady Huggett, managing editor of BioWorld. “But things started to taper off as the year came to a close, and that's continued.”

So biotechnology firms are finding it tough to raise money on the stock market right now. Huggett says average initial public offerings in the sector have been bringing in about $50 million apiece — not enough to sustain a typical research-based company for long.

The generally lacklustre performance of stocks so far this year has made many companies shy of making an initial public offering. And on 28 February, Massachusetts-based Biogen IDEC had to withdraw Tysabri, a treatment for multiple sclerosis, halving the value of the company's own stock and dragging down confidence in the sector as a whole.

But it's the state of the science that dictates market sentiment, Huggett says. And although stem cells and RNA interference show long-term promise, their commercial application remains some way over the horizon.