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Biotecnology

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Biotechnology

Biotechnology is the use of microorganisms, such as bacteria or yeast, or biological substances, such as enzymes, to perform specific industrial or manufacturing processes. This is a in depth look into the pharmaceutical side of biotechnology. Since pharmaceuticals is very important part of biotechnology. This paper is the F.D.A. and stock market effects on the biotechnology field.

The Food and Drug Administration said that it was eliminating special restrictions on drugs made by biotechnology companies in a step that could save the industry hundreds of millions of dollars and speed drug development. "We're wiping away the cobwebs and bringing our partnership with the biotech industry into the 21st century where it belongs," said the Secretary of Health and Human Services, Donna E. Shalala, who oversees the F.D.A. Biotechnology uses living organisms to create everything from slow-ripening tomatoes to complex gene therapy. When the field took off in the early 1980's, the F.D.A. regulated biotech drugs more strictly than traditional ones because doctors knew so little about how the medicines would act in people. That has changed. The F.D.A. has approved thirty two biotech drugs and vaccines, and more than 450 are now being tested. So the agency decided it was time to treat them the same as their competitors. The 1,311 biotech companies in this country will no longer have to get special licenses to operate manufacturing plants, sparing them thousands of pages of applications and months awaiting licensing inspections.

The F.D.A. will no longer examine each lot of a drug before it is sold, significantly decreasing the time it takes a drug to get to market. The agency will respond within thirty days to new information submitted after it stops a clinical trial for safety questions, meaning that testing of new drugs could be speeded up by several months. The twenty-one application forms that companies must wade through will be consolidated into one. "It is a significant step forward," said Carl Feldbaum, president of the Biotechnology Industry Organization. The plan comes as Congress prepares to overhaul the F.D.A., prompted by criticisms that the agency takes too long to approve new therapies. A report this week by the General Accounting Office, the investigative arm of Congress, showed that the agency was taking half as long to approve drugs as it did six years ago. Carl Hathaway was sitting on the geyser when it erupted. Hathaway & Associates, the Rowayton, Connecticut, money management company he runs, was one of the largest institutional holders in Entremed Inc., a small biotechnology company, when its stock rocketed on the reports that it was developing a possible cure for cancer. ''I've been in this business since 1959, and I have never seen a one-day experience like that in any security,'' said Mr. Hathaway, who conceded that he sold more than half his 325,000 shares for a tidy profit. The hubbub many analysts would say unwarranted hype over Entremed's work also lifted the stocks of many other obscure biotechnology companies that are pursuing cancer therapies, and it raised hopes that the long-languishing biotechnology sector might rally. ''All of a sudden, people are interested in biotech,'' said James McCamant, editor of the Medical Technology Stock Letter in Berkeley, California.

''Isn't it amazing?'' But those willing to invest in biotechnology could be in for a rough ride. Many fortunes have been made, but over all, there are more collapsing sinkholes than erupting geysers. ''You want to invest in biotech when you've got your life insurance and children's college fund squared away,'' said Michael G. King Jr., vice president of Vector Securities International, a Deerfield, Ill., and investment bank specializing in health care. ''This is for your mad money.''

And analysts advise that looking for an instant jackpot like Entremed is a rapshoot best left for the casino. Entremed's climb proved a short-lived bonanza, dropping soon after investors realized that the company was still far from having drugs that work in people. It might seem surprising that investors have spurned biotechnology stocks in recent years, because few doubt that medical advances will come from this field. But many indexes of biotechnology stocks have yet to recover to their peaks of 1991 and 1992, when the investments had the cachet that Internet stocks have now.

The huge number of companies and their low valuations -- the 350 add up to less total market capitalization than that of Merck or Pfizer -- means that most of the companies are barely followed by Wall Street analysts. Traditional analytical guidelines like price-to-earnings ratios are meaningless for laboratory-stage companies, many with no sales or earnings, that go public to raise some of the one hundred million dollars or more needed to develop products. With their fates generally tied to one or two drugs, these companies can find that any new hint of laboratory or regulatory success or failure can send their thinly traded stocks flying up or down. Bruising failures are more plentiful than successes: Few of the new drugs make it to clinical trials in humans, and of those that do, only one in five make it to market. Entremed's drugs are still a year or more away from even starting human trials. A big drug company can withstand such failures in fact, they are sometimes barely noticed thanks to a broader development pipeline and plenty of revenue from existing products. Not so a small start-up. ''The pharmaceutical industry buries its dead at midnight,'' said Mark Simon, biotechnology analyst at BankAmerica Robertson Stephens. ''The biotechnology industry buries its dead on the fifty-yard line of the Super Bowl at halftime.'' Though many analysts expect the sector to continue to lag, some say it is undervalued and see long-term promise in the stocks. Given that the two have similar total

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