As everyone knows, there are two kinds of roller coaster riders: those who wander away with sweaty palms and a woozy gait after one trip, and the enthusiasts who jump back in line for another go-around.

After hurtling down 40 percent in March, the biotech industry has little choice but to get back in line. The industry had gains to give back, as the BioCentury 100 index had soared 120 percent between Dec. 31, 1999 and March 3, and market watchers knew the pace was unsustainable. And despite the downdraft, the BioCentury 100 was still up 41 percent on the quarter, leading the major indicators including the tech-laden NASDAQ Composite, which was up 12 percent on the quarter.

The group also beat its bigger sibling, as the AMEX Pharma Drug index fell 3 percent in the first quarter, while the big cap stock indexes were nothing to write home about (see "1Q Roundup", A9).

By contrast, biotech growth was clearly evident in The Carson Group indices, as its Tier II group of companies valued less than $1 billion gained $31.1 billion in market cap (56 percent) to $86.2 billion on the quarter. The Tier I companies valued over $1 billion added $25 billion (13 percent) in value to $215.2 billion.

The questions now are whether the selling is a temporary hitch - an adjustment to an overly rapid expansion following which the industry will continue to do well this quarter, or whether the growth spurt is over. Put another way, the issue is where the industry will build a new base - whether it will be at a new, higher level, or whether all the gains since last September will be erased and the group will sink to its previous level.

The view from the Street is that the downdraft will reverse itself, most notably for the product stories, and that much of the sharp downturn reflected momentum investors quickly unwinding positions and exiting the space. This view holds that the industry has matured to a point to justify and sustain higher market caps, and that the group will not find itself in a lengthy bear market.

But two factors point to the potential for continued short-term pressure on stocks: the large amount of paper in the financing queue, and what appears to be a shrinkage of investor dollars into health care funds. The main hurdle for the industry, therefore, is to find a way to price its new paper, without taking dollars away from support in the secondary market.

Financing queue

Even though the industry priced $5.2 billion worth of follow-ons and IPOs in the first quarter, $5.1 billion worth of paper remains on