The bio-technology boom started in earnest around 2002 (think the anthrax scare just after 9/11) and lasted until about 2005. The government pour HUGE amounts of money into the area, then asked for the results and found none. The academics and government labs were like, “What? You wanted products? We don’t do products!” After that, the industry imploded.
In my experience, there’s no better way to sabotage a product-development project than to let Ph.D’s run it.
I agree with the general premise of your comment, but would point out that pouring money into big pharma would likely have the same consequences. It is very difficult to develop viable therapeutics, which is why they wind up often being so expensive (until they are off patent). I think one of the big problems is that the people giving out money get suckered by hype too often (this includes venture capitalists as well as government funding agencies). True science doesn't need hype. Science has gone Hollywood to a great degree, and this has hurt it immensely.