CHICAGO - The landmark health reform effort passed by Congress this year poses financial challenges for biotech companies, a prominent investor said Tuesday at the BIO International Convention.

"You can't provide more health care to everybody at lower cost," said Steven Burrill, CEO of San Francisco-based Burrill & Co., during his annual state of the industry report.

The industry has been concerned about the new health law because it includes a new excise tax on medical devices.

Thomas Novelli, director of federal affairs for Washington, D.C.-based Medical Device Manufacturers Association, said the excise tax could lead to larger companies buying smaller medical-device companies that cannot afford to pay the tax.

"For smaller companies with a razor-thin profit margin, this is really going to cut into your lifeline," Novelli said at a convention session on Tuesday.

Still, Burrill said he was more optimistic this year about biotech's future than he was in his 2009 report. The industry raised $50 billion in capital in 2009.

Burrill said the biotech industry is becoming more global, adding that his company has invested more internationally. He said he expects more big pharmaceutical companies to consolidate as their patents expire and they look for revenue growth.

He advised companies to pay attention to how cell phones and the Internet are changing the way consumers are getting health care. More people in the world have cell phones than access to electricity, he added.

"We have to be prepared for that," Burrill said.