The threat of bioterrorism is spurring health industry players to consider how they can leverage their know-how to support national defense--and grow their businesses. Growing awareness of the likelihood of bioterrorism is revealing what some biotech executives consider inescapable opportunities to protect the general public as well as military personnel. The industy could apply its methods to create biodefense drugs, vaccines, diagnostics, environmental detection systems and more. Biodefense could become a hot investment area, if it is formally deemed a national priority worthy of significant federal funding. There's interest on Capitol Hill, but also reticence. Will it take another big incident or two, to open eyes and funding channels? Carrying out effective R&D, experts say, will absolutely require coordination among multiple government agencies that now function mostly as silos or rivals. Companies say they'll need incentives to tackle biodefense work that wasn't on their agendas half a year ago--not just cash, but commitment and other tangible help, such as shorter review times. A few biodefense start-ups are coming into being, facing novel dynamics that some VCs consider turn-offs: reliance on the government as a primary customer, the need for secrecy and other restrictions, the whole notion of march-in rights. Government could obviate VCs, but impose hidden costs. Biotech firms that have already done contract research for the military could have an edge if the Feds commit to biodefense. In the meantime, many firms new to the area have begun filing for research grants. Others that feel they could contribute are holding back, saying there are too many unanswered questions.