Why follow Little Pharma?

Why pay so much attention to small drug companies that never seem to get a drug approved?

The question came up last week as

Adolor Corp.

went before an advisory panel of the Food and Drug Administration seeking approval of its first drug. Implicit in the question is that small drug companies are just one form of small business.

What makes drug companies worth following in this region is how much capital they attract. It's expensive to develop drugs, and it takes years to win approval.

For one thing, the Philadelphia area is filled with them. Silicon Valley may have

Apple Inc.

,

Intel Corp.

,

Google Inc.

and dozens of their progeny. Here, we have

Merck & Co. Inc

.,

GlaxoSmithKline P.L.C.

,

Wyeth

and dozens of life-science start-ups.

The drug industry is the closest thing the Philadelphia area has to a corporate rain forest: Life-sciences enterprises grow here like few other places in the U.S. So like a

Nature

documentary, it's educational to learn about the behavior of lumbering behemoths (Big Pharma) as well as the struggles of delicate hatchlings (biotech firms).

Adolor's drug, called Entereg, won the FDA panel's backing, which has been a rarity in recent years. But the market for which the drug would be used is estimated at anywhere from $50 million to $200 million a year, so it's not exactly going to transform the Exton company overnight. After all, this is a firm that has piled up a $414.8 million deficit since 1993 just getting to this point.

On Tuesday,

Neose Technologies Inc.

shelved development of its primary drug candidate. Neose chief executive officer George J. Vergis said the company had encountered a "lack of partnering interest" for the anemia treatment from a big drug company - crucial for a small firm. Yesterday, its shares were punished, falling 19 percent, or 18 cents, to 75 cents.

Neose had to cut staff for the second time in a year. The Horsham company has gone from 78 workers at the end of 2006 to 30 now. But doing so gives Neose another year of cash to pursue four other compounds for which it has corporate partners who are fully funding their development. That's good, because Neose has accumulated a deficit of $291.6 million since it began in 1990.

Fine, start-ups struggle everywhere. Where's Philadelphia's Google of the life-sciences world, you ask? Good question.

Centocor Inc.

, the region's biggest biotechnology firm, might get some votes. But the Horsham company, which developed the multibillion-dollar drug Remicade, is owned by Johnson & Johnson.

Then, there's

Cephalon Inc.

, of Frazer. Independent, but with estimated 2007 sales of $1.7 billion not bigger than

Amgen Inc.

or

Genentech Inc.

, the two largest biotech firms.

Maybe it's unrealistic to hope for our Google. After all, the last time something was dubbed the "Microsoft of the East," the dot-com bubble burst. That Malvern company -

Verticalnet Inc.

with little more than $12 million in revenue - was sold last week to BravoSolution S.p.A.

Quotable

"Some folks are out

there saying we're in a recession. We're not. We have frustratingly slow economic growth. But it's not a recession."

- Mark Vitner,

senior economist at Wachovia Corp.