humani nil a me alienum puto

random rants about news, the law, healthcare law, economics and anything I find amusing

Attack Of The Zombie Biotechs –

Interesting commentary in Forbes.  Obviously alluding to the downturn’s fears of “zombie” banks and automakers, propped up by government bailout, they, instead, discuss small biotech firms, a small number of whom are sitting on R&D for the next generation of breakthrough drugs and biotech therapies.   The start-ups, however, are starved of cash due to the recession and credit crunch’s impact.

Without a major change in the investment environment, most of these companies will either go out of business, be gobbled up by large pharmaceutical firms where their technology will languish or exist only as Zombie Biotechs, a term used by insiders to describe companies with enough cash to exist on paper but not enough to conduct meaningful research and development. These zombie companies tie up capital, hold on to technology that could be developed elsewhere and discourage investors.

via Attack Of The Zombie Biotechs –

The authors call for:

[A] meaningful tax incentive would be beneficial to the biotech industry, would eventually benefit the larger pharmaceutical industry, would yield more breakthrough drugs for sick people and would foster continued U.S. leadership in pharmaceutical R&D. This small investment through preferential tax treatment would yield tremendous return for individuals, investors and the economy as a whole.

In addition to the Forbes article, New York Time’s Deal Book had a similar article entitled Small Medical Companies Feel Recession’s Pinch on

In relatively recent op-ed peices, Thomas Friedman of the New York Times has been calling for similar stimulus focus.   Here’s what he said on 2/21/2009:

You want to spend $20 billion of taxpayer money creating jobs? Fine. Call up the top 20 venture capital firms in America, which are short of cash today because their partners — university endowments and pension funds — are tapped out, and make them this offer: The U.S. Treasury will give you each up to $1 billion to fund the best venture capital ideas that have come your way. If they go bust, we all lose. If any of them turns out to be the next Microsoft or Intel, taxpayers will give you 20 percent of the investors’ upside and keep 80 percent for themselves.

via Op-Ed Columnist – Start Up the Risk-Takers –

Filed under: Biotech, Health Law, Reform, , , , ,


August 2020

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