San Diego — Food supplies are shrinking. Diseases are mutating. Global warming and high gas and oil prices are making alternative energy a must.

Critics still have plenty of problems with genetically engineered foods and bio-based medicines and fuels, but worldwide woes are giving the biotech business an unexpectedly big boost.

"It's a great time to be in this space," said Patrick Kelly, a vice president of the Biotechnology Industry Organization trade group.

In a sign of the industry's strength, more than 2,200 companies and 20,000 attendees from around the globe are expected to attend the association's annual BIO International conference in San Diego this week. Next year, the conference will be held in Atlanta.

Look just about anywhere in the country, though, and you'll find that biotech is booming.

Georgia, for example, has named biotech and life sciences as the No. 1 industry it wants to recruit to the state. Along with hosting next year's BIO conference to raise its profile, Georgia has set aside millions to help fund startup biotech companies. Several universities have recently opened or are planning to open major biotech research centers, including a new center for biomedical and health sciences at the University of Georgia and biotech and nanotechnology centers at Georgia Tech.

"This industry is growing so fast and is so critical to really every economy around the world," said Ken Stewart, commissioner of the Georgia Department of Economic Development. "Every state and every community tends to want to compete for this industry."

Biotech industry revenues hit an all-time high last year, according to consulting firm Ernst & Young, as did venture capital investments in biotech companies.

The value of mergers and acquisitions in the business hit a new high too — nearly $60 billion in the United States — as big pharmaceutical companies faced with a record number of expiring patents on their medicines bought up lots of little biotech companies.

But is the recent rise in biotech just a precursor to a fall?

Even though it is bringing in record revenues, the biotech industry overall has yet to make a profit.

Last year, the global biotech business lost $2.7 billion, according to Ernst & Young. In the United States, biotech companies lost nearly $300 million — their best year yet.

Wall Street may be growing tired of the losses. While stocks of large biotech companies have generally held their value, small and midsize biotech stock indexes have dropped as much as 16 percent so far this year, according to Burrill & Co., a biotech venture capital firm. Pricings for initial public offerings are down 70 percent from a year ago, prompting many biotech companies to shelve their plans to go public.

"This is a tough, tough business," said Brian Adams, director of business development for Atlanta-based drug maker Sciele Pharma Inc.

"It costs a lot of money, time, effort and luck to come up with that blockbuster ... and you can't just keep cranking them out all the time," he said.

Meanwhile, some recent high-profile failures — most notably of anti-inflammatory drug Vioxx, which had to be pulled from the market — are resulting in tougher regulations and scrutiny of biotech drugs.

They're also helping fuel critics' claims that bio-based products need more study before they're released. Among the most controversial right now: genetically altered foods designed to produce stronger crops and bigger yields that could help address food shortages worldwide.

"We don't know the health effects, we don't know the environmental effects, and we don't know if some farmer is going to get sued in the future because [a biotech company] has a patent on the corn," said Kathy Jo Wetter, a researcher at ETC Group in Carr-boro, N.C., which monitors the biotech industry.

ETC is lobbying world organizations and governments for more study into biofoods and biofuels. But industry officials say there's already plenty of regulation and scrutiny of the biotech business.

It typically takes seven to 12 years and $1 billion to develop a new bio-based drug, according to BIO. Still, only about 20 percent of all drugs get FDA approval and make it to the market.

Because of the time, money and effort needed to get bio-based drugs to market, many biotech companies are focusing on biofuels and agriculture-related products.

"The regulatory hurdles ... are nowhere near what they are for health-based applications," Kelly said.

One of the most high-profile biofuel projects is Craig Venter's. The scientist who in 2000 led the effort to decode the human genome, Venter today is working on creating a new type of bacteria that would eat carbon dioxide — the main gas contributing to global warming — and turn it into a new type of fuel.

Venter, a keynote speaker at this year's BIO conference, has said his "trillion-dollar bug" could be ready to start eating within a few years.

Other companies are working on ways to turn algae and other plants into fuel, as well as animal and even human waste.

Critics, of course, point out the problems with ethanol from corn, which some say uses more energy to produce than it generates, and which is contributing to high food prices and shortages.

They also say that just because biotech companies are just now raising money to work on such solutions, it will likely be years — if not decades — before they ever get to market. Even then, we still may not fully understand all the potential harmful effects of using them.

"We're talking about creating new organisms that have never before been seen in nature," said Gillian Madill of the activist group Friends of the Earth. "Why would we take the risk ... when we have alternatives that already work, like wind power?"

Some bioethics questions such as those — as well as the ongoing debate over stem cell research — will undoubtedly come up at this week's BIO conference.

But mainly, discussions will center on how to keep the biotech industry growing, and where and how to grow it.

"It's essentially a huge investment shopping bazaar," BIO's Kelly said of the conference. "Investors are looking for companies, and companies are looking for investors."

THE BIOTECH INDUSTRY

The biotech industry got its start in the 1970s when California researchers developed new recombinant DNA techniques to develop drugs. Since then, the industry has expanded to encompass genetically modified foods, alternative fuels, DNA-based sciences and all sorts of consumer goods.

— Sources: Ernst & Young, Biotech Industry Organization