By Randall Osborne

As the year nears its finish, crystal ball-gazers in the biotechnology industry are more apt to take time out for predicting — or trying to predict — its direction in 1998, and beyond.

The business is volatile, and confidently made forecasts are hard to come by, but Lindsay Rosenwald, founder, chairman and president of Paramount Capital Inc., an investment banking firm in New York, was willing to make a few.

Gene therapy will explode in the next decade, Rosenwald said, with "thousands" of biotech firms competing. Most will farm out their research and development to an unprecedented degree, as they toil to stake profit-making claims in an industry worth $1 trillion to $2 trillion.

"We're at the hockey-stick curve we have been waiting years and years for," Rosenwald said. "The technology's ready."

At age 42, Rosenwald has helped in the founding of "dozens" of public and private biotech companies. He is chairman of Interneuron Pharmaceuticals Inc., of Lexington, Mass., and formerly was chairman of Neose Technologies Inc., of Horsham, Pa.

A graduate of Temple University Medical School, in Philadelphia, Rosenwald trained as an internist, practiced for a couple of years, quit medicine and came to Wall Street, starting up Paramount in 1991.

"You're talking about an unbelievably profitable industry," he said, "but, at the end of the day, it takes a breakthrough invention [to make money]. It's hard to hire a thousand scientists, put them in a lab and force them to make an invention. Ten years from today, very little pharmaceutical research and development will be done in-house."

As biotech companies will turn more and more to universities for research help, Rosenwald said, the number of biotech firms will multiply. "The only thing that prevents [biotech] from being completely dominated by the pharmaceutical industry is the increasing lack of dependence on financing from the pharma companies," he said.

Gene therapy will be the busiest and most lucrative area of biotech, Rosenwald added. "There's no question in my mind," he said, although it's "still 15 years away from the mainstream. It's going to be proteins, peptides and small molecules for the next 12 years."

Determining exactly how the industry will develop — where the breakthroughs will come about — is a tall order. "The human mind has been able to invent things that go beyond what science fiction has been able to predict," he noted.

This makes it a challenge to name specific companies as major success stories of the future, although Rosenwald said he is "in love with companies like Affymetrix [of Santa Clara, Calif.] and Human Genome Sciences [of Rockville, Md.]."

Improved technology is the obvious main driver of the biotech industry. Another important one is demographics, Rosenwald said.

"The industrialized world is expanding rapidly, and the age of people is increasing," he said. "You have a huge elderly population all over the world. The biggest problem, if you can call it that, is that people are going to live well into a second century."

Readers of recent news reports may have confused Paramount with another firm, Paramount Capital Management Inc., that reportedly is under investigation by federal authorities. Rosenwald's firm is not associated with Paramount Capital Management or its affiliates.

Paramount Capital, Rosenwald said, targets investing in biotechnology companies "because I don't see any industry that can grow this fast." *