By Kenneth Ludlum
Chief Financial Officer, RiboGene Inc.

With little easing in sight to the biotechnology industry's capital formation crisis, one keeps coming back to the question of where the industry is headed from here. The answer is that we are headed in a very different direction than where we have been in the past. And we still have a way to go before we finish the current chapter of the industry's book. While investor interest is surely cyclical, when interest returns a very different set of criteria will drive the capital allocation process.

Before we review what the future holds, it might be useful to review the developments that have had the biggest impact on the industry's current condition. A few observations from today's world and the recent past also may discover relevant markers for the industry's direction.

First, the biotechnology industry still is in an early stage of development. Most of the industry's advances have been the discovery and development of various technologies and a small number of product commercializations. Yet the defining structural characteristics of the business have not occurred. Yes, the refinement of partnering arrangements, which enlist financial support at an early stage of product development yet retain economic benefits to developed products, is a characteristic probably unique to our industry. The art of fusing academic talents and commercial capabilities into organized efforts to move science and product development forward also clearly distinguishes our industry from almost all others.

Yet while the industry has developed these and other unique features, the main business and structural characteristics are still taking shape. Common business characteristics such as technology life cycle, the sales/marketing/distribution paradigm, manufacturing economics, scale requirements and sustainable financial structure - all of which dictate the eventual size and number of industry participants - are yet to be fully defined.

Life after technology

Most new growth industries go through distinct phases as