LONDON - European investors and biotechnology executives agree that improvements are ahead for the sector, and that the industry has nowhere to go but up from the current environment of product setbacks, closed financial markets and anemic stock prices.

Biotechnology has been through downturns before, each time followed by a resurgence of new money and clinical successes.

"With all the gloom and doom, we shouldn't lose sight of the steady development of a strong biotechnology industry here in Europe," Paul Drayson, chairman of the UK BioIndustry Association, said in opening remarks Monday at the 3rd annual BIA European CEO and Investor Conference. "Better times will come around again. How soon, we can't be sure, and so we all need to make plans to conserve our energy."

Drayson said companies need to show they can deliver by moving more products through the clinic and onto the market and by consolidating to create stronger, profitable companies.

Those developments, and several others suggested during a session titled "The Future Shape of Biotechnology," would happen over the longer term. The most likely nearer-term driver for the industry in Europe would be a resurgence of U.S. biotechnology, panelists said.

But success at U.S. companies alone won't sustain biotechnology companies in Europe, where companies face regulatory and financial hurdles not present in the United States.

Drayson, who's also the CEO of PowderJect Pharmaceuticals plc, of Oxford, pointed out that U.S. companies have a single regulatory regime in the FDA, while "Europe is slowly moving toward harmonization. These barriers are holding back European biotech. More harmonization is needed across stock markets, regulation, health policy and patent law."

Perhaps another element that could help would be the emergence of an "organic success story" in Europe in which a company moved its own product through the clinic and onto the market, leading to profitability, something achieved by U.S. companies Amgen Inc. and Genentech Inc., said Sam Fazeli, a biotechnology analyst with Nomura International plc in the UK.

The current environment, Fazeli said, is one in which risk aversion has increased as investors have lost confidence in equities, the sector's bad news went from a trickle to a flood, and investors' portfolios have been shredded.

Solutions for the UK, he said, are as follows (with the expected time frame): equity markets stabilize (12 months), investors' appetite for risk returns (18 months to 24 months), biotech companies show they are delivering (48 months), and a company gets to organic profitability. The government could help by providing seed funding and incentives for venture capital and institutional investors, he added.

Sam Williams, a biotech analyst with Lehman Brothers in London, said some of the problems here were self-inflicted. The sector suffers from poor management, poor use of the equity markets, poor choice of development programs and too heavy a reliance on platform technologies. Williams expressed amazement at the inability of some CEOs, unlike their American counterparts, to clearly tell their companies' stories, and at their immaturity in dealing with analysts and investment banks. He said they failed to aggressively try to raise money when the window was open a few years ago and, sounding like a reporter, he expressed exasperation at his inability to get someone on the phone at a critical time.

One of the best boosts a stock can get is an upgrade from an analyst who previously issued a downgrade, Williams said. But instead of being able to get someone on the phone to clear up details when news is released, he is told officials are in a three-hour meeting, and afterward management would be expected to return calls in the order they came in, rather than assigning some priority. Meanwhile, he said, he will instead get an unsolicited call on another day from an official of the same company pushing less-material news.

Williams' suggestion is that companies step up merger activity, but then not be afraid to make cuts at the combined firm. They also should look for deals on early stage products, hire good people such as those with chemistry and development experience, then be patient as they build the business.

Still, Williams said, "The overall trends are good. Macro themes play to biotech's strengths."

David Oxlade, CEO of Xenova Group plc, of Slough, also sounded optimistic.

"We can deliver and we will deliver," he said. "Values have been driven to below any reasonable level. We are in a time of extra-negative market sentiment. [But] the fundamentals remain strong."

Mike Rance, representing big pharma on the panel as vice president of corporate affairs at AstraZeneca plc, of London, told biotechnology executives of the increased pressure his industry faces on pricing, margins, patents and access to medicines.

"Pharma sells products, not technologies," he pointed out. "Our pockets are not as deep as they were years ago. You have to add value. Help us find those products and I think we both can be successful."