Biotechnology companies are no longer able to turn heads with the winds of a gassy idea as they once did, and as Internet stocks are for the moment doing. For all the stern talk about biotechnology's poor business plans and scarcity of products, is it really possible to say with a straight face that Internet companies and their valuations are grounded in reality, are more concrete? The simple fact is that people who want to make a quick buck are following the latest craze. When it ends, the Internet stock implosion ought to make biotech consolidation look like a Sunday picnic.

Many biotech companies are now in the mezzanine stage, the middle years, and for many the timing of their arrival at this financial point could not be more unfortunate (see Will investors return to biotechnology?, p.128). According to Burrill & Company, the top 20 publicly traded biotech companies accounted for approximately two–thirds of the total biotech industry market capitalization in 1998. Capital markets are for the moment investing in profitable companies and leaving the rest behind. Period.

But the timing of this flight–from–biotechnology could not be more unfortunate for investors too. For while there is still a surfeit of hair–brained biotech company schemes, there is everywhere evidence of a mature industry coming into focus, with biotech companies that understand that IPOs are not MacArthur Foundation grants. These companies recognize their responsibilities and have products to sell and market share to claim (with 14 new drugs approved in 1998 and more on the way). Some of biotechnology's current problems are certainly of its own making—and the journal does not endorse the wild–eyed boosterism that often accompanies any scientific advance, whether incremental or earth–shattering—but there is now a significant group of companies that understand how to use the tools of the new biology to make useful, and commercially successful, products.

When confronted by the new investor litany "why should I buy biotech when I can buy Internet and make a 400% return on my investment in 3 hours?", one Wildean wag at the Hambrecht & Quist 17th Annual Healthcare Conference held last month in San Francisco said, "Well then, the next time one of your relatives gets cancer, you can send her a book from Amazon.com."

Bitter, but true. Biotechnology's financial attributes are not the only things about it that are at the moment undervalued. The smartest investors know that this will not remain so for long. There is too much of real concern and of real value up ahead.