If you zoom out, though, and consider why patents exist in the first place, the idea that a research institution deserves to profit from the fruits of their research money is not that absurd. I think the question is not whether patents should be issued for biotechnology research, but instead what the best method is to protect investment in biotechnology research while not retarding future work.
Also, on a side note, patents may be infringed upon for research purposes. This is not holding back research, it is only slowing commercialized tests (or maybe just increasing their cost). There is nothing to suggest that the licensing terms offered by the patentee are exorbitant... The patentee is merely trying to recoup some of their investment in the commercialized result of their research.