Money proves to be real pill for industry.

• Position: LIFE SCIENCES

Executives at life-sciences companies in North Carolina have at least one thing to be thankful for: Their industry's popularity with venture capitalists isn't fading as fast as it has for some others. Through three quarters of 2004, they had grabbed 29% of the venture capital received by North Carolina companies, compared with 14.4% during the first nine months of 2000. Still, they got less money in 2004, about $64 million, compared with $226 million in 2000. That's because the amount of venture capital declined sharply, from about $1.6 billion in the first three quarters of 2000 to about $220 million in 2004.

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That isn't the only problem. The U.S. Food and Drug Administration has faced increased scrutiny since September when Merck pulled its FDA-approved Vioxx pain reliever because of studies showing it can increase the risk of heart attacks. That makes life tougher for all drug companies. "They can't get drugs through," says Monica Doss, president of the Research Triangle Park-based Council for Entrepreneurial Development. "They can't get things looked at. They can't get things done quickly."

Even before the news about Vioxx, Durham-based Inspire Pharmaceuticals had trouble leaping regulatory hurdles. It expected FDA approval for diquafosol, a treatment for dry-eye disease, by the end of 2003, but regulators asked for more testing. Additional trials began in June, and the company has said it hopes to resubmit by midyear its application to begin selling the drug.

The drought of initial public offerings in the state continued--there have been none since 2002--despite an increase nationwide that started in late 2003. There were 216 IPOs in the United States in 2004, compared with 221 the three previous years combined, according to Renaissance Capital, a Greenwich, Conn.-based IPO research company.

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A few drug companies have declared their desire to go public but haven't followed through. Winston-Salem-based Targacept, developing drugs to treat nervous-system disorders, and Durham-based Icagen, seeking treatments for diseases such as sickle-cell anemia, both filed IPO plans with the U.S. Securities and Exchange Commission in 2004. Each aimed to raise about $86 million. Neither had issued stock by year-end. Six North Carolina companies went public in 2000, but only one, Cary-based drug researcher Inveresk Research Group, has since then. Wilmington, Mass.-based Charles River Laboratories...