Thirty years ago, when the world faced the terrifying prospect of an untreatable disease known as AIDS, big drugmakers scented an opportunity and raced to develop new medicines.

Today, as the world confronts another crisis, this time one of antibiotic resistance, the industry is doing the opposite. It is cutting research in a field that offers little scope for making money.

Antibiotics have become victims of their own success. Seen as cheap, routine treatments, they are overprescribed and taken haphazardly, creating "superbugs" they can no longer fight.

These "superbugs" are growing, but are not yet widespread, so the costly research needed to combat them is not worthwhile. Medical experts say this dilemma could return medicine to an era before Alexander Fleming discovered penicillin in 1928.

Fixing the problem will need both faster approval of last-resort drugs and new ways to guarantee rewards for companies, according to both industry leaders and public health officials who have been sounding the alarm.

Paul Stoffels, pharmaceuticals head at Johnson & Johnson, is better placed than many to understand the problems.

His company offered a rare glimmer of hope in December when it won regulatory approval for a new treatment for drug-resistant tuberculosis - a growing issue in many countries.

Unfortunately for the world, it was a one-off and J&J is not currently developing any more antibiotics.

"The market for a new antibiotic is very small, the rewards are not there and so the capital is not flowing," he said in an interview in London.

"It's about the sheer amount of money people are prepared to pay for a drug. In cancer, people pay $30,000, $50,000 or $80,000 (per patient) for a drug, but for an antibiotic it is likely to be only a few hundred dollars."

On Monday, AstraZeneca, facing tough decisions about where to invest, said it would put less money in developing anti-infectives. "We have to make choices and we have to focus our investments where we think we can make a substantial difference," CEO Pascal Soriot told Reuters.

The regulatory bar for drug approval is a key consideration for any company weighing R&D investment.

For antibiotics is very high, partly due to a scandal over the approval of Sanofi's drug Ketek in 2004, which U.S. officials said later should be reserved for serious diseases due to the risk of side effects.

The head U.S. Food and Drug Administration's (FDA) drugs wing, Janet Woodcock, last year pledged a complete "reboot" of the approval process, aware of the stifling effect recent official caution has had on the development of new drugs.

The rapid approval of J&J's tuberculosis drug in December, based only on mid-stage Phase II data, may be a sign of a new flexibility at the FDA, which matters because the United States is the world's biggest drugs market.

The Generating Antibiotic Incentives Now (GAIN) Act, which came into effect in the U.S. last October, will also help by offering an extra five years of market exclusivity.

Still, the Infectious Diseases Society of America (IDSA)believes more legislation is needed to set out a clear path by which new antibiotics can be approved for a limited population after much smaller and faster clinical trials.

Just as in the early years of HIV, it argues, the world must accept riskier new drugs for incurable infections when there are no alternatives and patients' lives are on the line.

The European Medicines Agency is also working on new rules to encourage antibiotic development, while the European Union last year launched a novel public-private partnership to get governments and companies to share information and funding.

Fee instead of price?

Such public-private alliances across countries could start to change the conventional market model, according to Andrew Witty, CEO of GlaxoSmithKline, another of the few Big Pharma companies still actively researching antibiotics.

He favours greater sharing of research and has made an offer to England's chief medical officer Sally Davies to create new laboratories for developing research ideas brought in by others.

"I'm pretty sure that a classic model isn't going to solve this question and we need to be much more creative," Witty said.

New market approaches could include doing away with a price and instead having the healthcare system paying the inventor a fee per year as a reward for delivering a medicine, he said.

In some years, society would end up paying more in fees than it would in drug bills; in other years less. But at least companies would have an assured revenue stream.

Healthcare officials on both sides of the Atlantic are showing a willingness to do things differently after drawing attention to the antibiotic crisis this month.

Davies said the steady rise in resistance in the last five years represented a "ticking time bomb" that ranks alongside terrorism as a threat to the nation. Tom Frieden, director of the U.S. Centers for Disease Control and Prevention, called for an urgent fight-back against "nightmare bacteria".

Rush for exit

The rush for the exit on antibiotic research has been dramatic.

Pfizer, once the leader in the field, closed its antibiotic R&D centre in Connecticut in 2011, to the dismay of many scientists. It now focuses anti-bacterial work on vaccines.

Others to have quit include Roche, Bristol-Myers Squibb and Eli Lilly, leaving only a handful of firms like GlaxoSmithKline, AstraZeneca and Merck & Co in the game. With basic research providing few new leads for drug targets, they are finding it tough.

Some smaller companies like Cubist Pharmaceuticals, Forest Laboratories, The Medicines Company and Optimer Pharmaceuticals are also active, hoping to capitalise on a niche left vacant by Big Pharma.

But Robert Guidos, public policy expert at the IDSA, fears minnows will struggle.

"Small companies rely on larger companies to help them get through Phase II and Phase III clinical development because it is so expensive," he said.

"The fewer large companies you have, the less help the smaller ones get and, as a result, few of the antibiotics now in early development are likely to make it across the finish line."

Since the 1980s, the number of new systemic antibiotics approved by the FDA has plunged from 16 in 1983-87 to just two in the last five years, according to the IDSA.

In the meantime, the "superbugs" are on the increase.

One of the best known is methicillin-resistant Staphylococcus aureus, or MRSA, which alone is estimated to kill some 20,000 people every year in the United States - far more than AIDS - and a similar number in Europe.

Others are spreading. Cases of totally drug resistant tuberculosis have appeared in recent years, as have untreatable strains of gonorrhoea, and a new wave of "super superbugs" with a mutation called New Delhi metallo-beta-lactamase (NDM 1), first seen in India, has now turned up across the globe.

As head of the company that developed AZT, the first HIV drug, GSK's Witty thinks the antibiotic problem can be cracked, given sufficient political will - but it won't happen overnight.

"This is a long cycle time business. Even if we get this absolutely brilliantly tuned up it is going to be a five to 10 year journey," he said.