Drop down menus do not typically effect SEO negatively. In fact a properly optimized drop down menu can be beneficial for letting Google know what your site and pages are for. Just a few things to check for:

1. Avoid Java script drop down menus - Use standard HTML or CSS driven drop downs instead.

2. Use live linked text and not images.

3. Use descriptive keyword in your drop down - For example a drop down for shirts use: Red shirt, Blue shirt, etc instead of just Red, Blue.....

4. Keep in mind the First Anchored text rule. Give seniority to your first anchored text link.

5. Make sure your links are absolute link. e.g.http://www.yourdomainname.com/services.htm

6. Use title attribute to describe the page the visitor will be taken to.