Biotechnology industry observers adopted a "wait and see"attitude Thursday following the unveiling of President Clinton'seconomic plan in his first major address Wednesday night.

"I personally know several companies that have either pulledtheir secondary offering, have decided not to file for asecondary, or are having second thoughts about going on a roadshow for an initial public offering," Craig Jones, senior vicepresident and general partner of Dillon Read Venture Capital,which manages $180 million, one-third in biopharmaceuticals,told BioWorld.

"We didn't get the good news," he added, about capital gains taxreduction for investment in small businesses and emerginggrowth companies.

"It's our hope that the president's targeted capital gains tax cutis designed in a way that encourages investment inbiotechnology and other emerging companies that are drivingeconomic growth in our country," said Carl Feldbaum, presidentof the Biotechnology Industry Organization, in a writtenstatement.

"We hope that President Clinton's plan to cut the deficit doesnot include sacrificing regulatory and R&D resources," he said.

Feldbaum added that regulating pharmaceutical prices wouldslow investment in biotechnology.

Jones is waiting to hear what the commission headed by FirstLady Hillary Rodham Clinton will propose in 90 days withregard to health care reform.

With the president's push for universal coverage, universalvaccination of children and prenatal care, Jones anticipates apotential expansion in the total number of dollars flowingthrough the biotechnology sector, but perhaps more pressurefor profits in the short term.

He predicted pharmaceutical companies will turn fromestablished products to novel ones from biotechnology in thepursuit of higher operating margins.

Although he thinks the White House rhetoric has clamped shutthe public offerings window, Jones added that pressure on drugpricing was already inevitable through the development oforganized buying groups.

The Pharmaceutical Manufacturers Association is still hoping toinfluence health care reform issues, a PMA spokesman toldBioWorld. The association will be tracking upcoming hearings,including the Feb. 22 hearing before the House Subcommitteeon Health and the Environment concerning mechanisms used inother countries to control prescription prices, a Feb. 24 hearingon taxpayer money used to support federal research anddevelopment of prescription drugs, and a March 4 hearing onprescription drug price research costs and profits.

Given the attention this aspect of health care is receiving, Jonesanticipated that pharmaceutical profits will be muted throughthe coming decade, but that biotechnology may still prosperafter this initial chill in the trading price of biotechnologystocks.

-- Nancy Garcia Associate Editor

(c) 1997 American Health Consultants. All rights reserved.