According to the latest report released by Ernst and Young ("E and Y report"), 44 per cent of publicly listed biotech companies reported having less than a year's worth of operational funding. This is an increase of 25 per cent from the previous year.
As a result of the current financial crises biotech companies are finding it more difficult to secure investments from financial institutions. This lack of funding puts several smaller biotech companies at an immediate risk of going out of business.
With a lack of investment to rely on, there is potential for some of the smaller firms to be acquired by larger pharmaceutical firms. However, not all of these smaller companies will be able to survive the economic downturn.
The E and Y report was not all gloomy for the industry as revenues of publicly traded biotech firms grew by 12 per cent to 89.7 billion in 2008 and for the first time ever, it was reported that the industry in the U.S. reached aggregate profitability.
For more information, please see: http://www.reuters.com/article/rbssBiotechnology/idUSN0441810720090505