The Sept. 11 attacks on the World Trade Center and the Pentagon have accelerated government interest in the biotech industry's ability to address non-conventional threats, including the possibility of attacks using biological agents. However, the emergence of a large-scale military-industrial complex to deal with bioterrorism is doubtful, hampered by the lack of a compelling economic model, a dismal military track record in managing medical research, and serious limitations on the ability to test the efficacy of biodefense agents in humans.

Except for a handful of companies that will win large contracts for vaccines, the scale of defense investments in life sciences research will remain puny compared to the industry's aggregate R&D spending and to NIH grantmaking.

Indeed, not counting the Army, fiscal 2001 R&D funding for bioterrorism is less than $500 million (see "U.S. Government Funding for Biochemical Defense," A2)

The relatively modest government investments may have some trickle-down effect for companies whose technology platform can be extended into the defense arena in the short run, particularly in segments where the traditional defense contracting model can be more readily applied, such as biosensors and other detection and diagnostic technologies.

The longer run impact is even less quantifiable, although the now heightened military awareness of biotech research may find its way into new programs beyond vaccines and therapeutics into such areas as human performance enhancement and other ideas.

The most formidable obstacles to applying biotechnology to reducing the dangers of biological terrorism and war are economic, not technical, according to Leighton Read, a biotech industry veteran who now is a venture capitalist at Alloy Ventures (see Ebb & Flow, A14).

"The economic issues loom largest. There are formidable technological challenges, but we know how to organize massive efforts to tackle technical challenges," he told BioCentury. "This industry, like all others, will respond to incentives. If the incentives are there, people will respond, and if not they won't. Right now it isn't clear that the incentives are there."

The cost-plus contracting model that the military has used to stimulate innovation in aviation, information technology and other fields is unlikely to stimulate biomedical breakthroughs. Investors seeking a stake in the next blockbuster drug won't get excited about the prospect of developing a product that everyone hopes will be purchased once, stockpiled and never used.

"It is very difficult to get your hands around the market opportunity when the government is the only customer," Read said. "It is in all of our interest to have a stockpile of safe, effective stable medicines that could be used to treat or prevent the potential harm from chemical and biological warfare agents. But there is a public policy problem. It is not so expensive to do discovery - the real area where the barriers will keep us from getting a stockpile is in the development. Performing the downstream development tasks and building GMP manufacturing facilities is where the major economic issues lie."

The track record

The Sept. 11 attacks "rudely awakened people to the idea we're in an era of asymmetrical warfare," said George Poste, CEO of Health Technology Networks and a member of the Department of Defense Science Board, in which he chairs the Task Force on Bioterrorism.