The financial ecosystem available to early-stage biotechnology firms and its misalignment with interests of these firms, of the biotechnology industry and with global disease burden

2013 ◽  
Vol 19 (2) ◽  
Author(s):  
Gergely Toth
Keyword(s):  
Pharmaceutical Industry ◽  
Disease Burden ◽  
Early Stage ◽  
Biotechnology Industry ◽  
Market System ◽  
Biotechnology Firms ◽  
Early State ◽  
Innovative Therapies ◽  
Biotechnology Companies ◽  
Global Disease Burden

The development and commercialization of new therapeutics have had immense impact on the quality and length of human life.  Nevertheless, the biotechnology and the pharmaceutical industry have evolved to be driven mostly by a profit oriented market system, in which distinct stakeholders interact with different motivations to make the development and commercialization of therapeutics a reality.  This study discusses the funding ecosystem available for early-stage biotechnology companies and its influence on the their strategic business objectives and on the biotechnology industry.  On the basis of this, distinct paradoxes in the funding ecosystem are uncovered, which suggest that the present ecosystem is not well aligned with the interests of these biotechnology firms, the biotechnology industry, and it neglects strategic disease burden needs. It is recommended that even partial resolution of these paradoxes will enable further growth in the industry and lead to more innovative therapies for untreatable diseases with large social and economic burdens.  In light of this, the study proposes improvements of financing approaches and an increase of available capital in the funding ecosystem of early-state biotechnology companies.

BIOPHARMACEUTICAL ALLIANCES AND COMPETITION: A REAL OPTIONS GAMES APPROACH

2013 ◽  
Vol 17 (06) ◽  
pp. 1340023 ◽  
Author(s):  
GIOVANNA LO NIGRO ◽  
AZZURRA MORREALE ◽  
SERENA ROBBA ◽  
PAOLO ROMA
Keyword(s):  
Pharmaceutical Industry ◽  
Molecular Biology ◽  
Real Options ◽  
Pharmaceutical Company ◽  
Technological Progress ◽  
Biotechnology Industry ◽  
Optimal Timing ◽  
Biotechnology Companies ◽  
Timing Decisions ◽  
First Mover

The competitive landscape where pharmaceutical and biotechnology companies operate has changed radically due to a scientific/technological progress that has revolutionised the process by which drugs are developed. In fact, pharmaceutical industry more and more relies on advances in biochemistry and molecular biology. As a consequence, the number of partnerships between pharmaceutical and biotech firms has grown significantly. Research contributions addressing the biopharmaceutical alliances design have also focused on the optimal timing to sign a partnership. In this paper, we introduce and analyse the effect of competition in biotechnology industry by modelling the decisions of whether and when ally with a pharmaceutical company through a real options game. We find that the timing decisions depend on the level of the competition, synergies obtained through the alliance and contract terms offered by the pharmaceutical company as well. Also, we show that the first mover might not always pre-empt the follower in partnering with the pharmaceutical company.

Commercial biotechnology in Germany: An overview

10.5912/jcb50 ◽  
1969 ◽  
Vol 10 (1) ◽  
Author(s):  
Siegfried Bialojan ◽  
Julia Schüler
Keyword(s):  
Pharmaceutical Industry ◽  
Critical Mass ◽  
Present Situation ◽  
Biotechnology Industry ◽  
External Factors ◽  
Economic Downturn ◽  
Maturation Process ◽  
Current Development ◽  
The Past ◽  
Biotechnology Companies

The title of Ernst & Young's 2003 Biotechnology Report, 'At the Crossroad', describes the present situation of the German biotechnology industry. This paper discusses and analyses the major findings of the Report. Major drivers in the current development include external factors such as the general economic downturn, the closed capital markets and the resulting consequences with respect to the financing situation. In addition, the pharmaceutical industry – the major client for the emerging biotechnology companies – erects higher hurdles by refocusing on later stage products with blockbuster potential. These factors are mostly identical in all regions of the globe. However, they hit the biotechnology industry in Germany relatively harder as it is still relatively young and therefore more vulnerable.In fact, the maturation process of the German biotechnology industry has been abruptly stopped. Unfortunately, this takes place at a time when the dynamic development during the past five years has not yet created a substantial number of stable and mature companies. Critical mass has become a major issue.

scholarly journals Multiyear patterns regarding the relative availability of venture capital for the US biotechnology industry

1969 ◽  
Vol 15 (4) ◽  
Author(s):  
J Leslie Glick
Keyword(s):  
Venture Capital ◽  
Early Stage ◽  
Coming Of Age ◽  
Personalised Medicine ◽  
Biotechnology Industry ◽  
Long Run ◽  
Start Up ◽  
The Us ◽  
Biotechnology Companies ◽  
Long Term Trends

Venture capital (VC) funding of US biotechnology companies was analysed relative to total VC investments placed in US companies from 1995 to 2007. During those years, except for a spike because of the dot-com bubble from 1999 to 2001, VC funding of US biotechnology companies grew at a faster rate percentagewise than total VC funding of US companies, with respect to annual dollars invested, number of deals closed and the mean dollar investment. Start-up and early-stage VC funding of US biotechnology companies also grew at a faster rate percentagewise, with respect to all three parameters, than total start-up and early-stage VC funding of US companies. It was further observed that long-term trends in the availability of VC for biotechnology do not appear to be affected by perturbations in the financial markets and short-term fluctuations in the availability of VC. It was concluded that the biotechnology industry should continue to attract VC over the long run particularly because of the emerging impact of personalised medicine and the coming of age of bioenergy.

scholarly journals External Financing, R&D Intensity, and Firm Value in Biotechnology Companies

2019 ◽  
Vol 11 (15) ◽  
pp. 4141 ◽  
Author(s):  
Namryoung Lee ◽  
Jaehong Lee
Keyword(s):  
Firm Value ◽  
Biotechnology Industry ◽  
Debt Financing ◽  
External Financing ◽  
Commercial Success ◽  
Financing Decisions ◽  
Biotechnology Firms ◽  
Debt Market ◽  
Biotechnology Companies ◽  
The Relationship

Focusing on biotechnology firms, this study analyzes the relationship between the level of intensity of the research and development (R&D) conducted by a firm, the debt financing decisions the firm makes, and the overall value of the firm. The data presented shows that, although most firms are unlikely to acquire financing from the debt market, the opposite is true for firms in the biotechnology industry. One reason for this divergence may be the belief among biotechnology firms that their future commercial success depends on their ability to develop new products, resulting in a strategy of intense R&D. Furthermore, an examination of firm values reveals that while most firm values are negatively correlated with leverage and R&D intensity, biotechnology firm values show no such correlation, implying that biotechnology firms prioritize sustainable commercial success no matter the source of financing.

scholarly journals Government R&D Subsidy and Additionality of Biotechnology Firms: The Case of the South Korean Biotechnology Industry

2019 ◽  
Vol 11 (6) ◽  
pp. 1583 ◽  
Author(s):  
Kwangsoo Shin ◽  
Minkyung Choy ◽  
Chul Lee ◽  
Gunno Park
Keyword(s):  
Financial Performance ◽  
Technological Innovation ◽  
Strategic Alliances ◽  
Biotechnology Industry ◽  
External Financing ◽  
Biotechnology Firms ◽  
South Korean ◽  
Biotechnology Companies ◽  
Start Ups ◽  
D Investment

Government research and development (R&D) subsidies are more important in countries that are latecomers to the biotechnology industry, where venture capital has not been developed, and the ratio of start-ups is high. Previous studies have mostly focused on the additionality of the input and output through government R&D subsidies, such as private R&D investment, technological innovation, and financial performance. In addition, some studies have focused on the behavioral additionality (the change in a firm’s behavior) of firms through government R&D subsidies. However, each study is fragmented and does not provide integrated results and implications. Therefore, this study comprehensively investigated the effects of government R&D subsidies on the multifaceted aspects of input, output, and behavioral additionality based on data from South Korean biotechnology companies. This study used the propensity score matching (PSM) method to prevent selection bias. The results showed that firms benefiting from government R&D subsidies had a markedly higher R&D investment in terms of input additionality, and they produced more technological innovation within a shorter period in terms of output additionality, though financial performance was not determined. Moreover, government R&D subsidies have accelerated strategic alliances and suppressed external financing (debt financing) in terms of behavioral additionality.

For success in biotechnology, look beyond biotechnology

1969 ◽  
Vol 16 (4) ◽  
Author(s):  
Yali Friedman
Keyword(s):  
Late Stage ◽  
Stock Price ◽  
Patent Protection ◽  
Early Stage ◽  
Corporate Sustainability ◽  
Biotechnology Industry ◽  
Biotechnology Companies ◽  
Near Term ◽  
The Impact

The fates of biotechnology companies can be fairly described as volatile. Clinical trial progress, patent grants and invalidations, and funding announcements can yield great swings in stock price. Building any company is a challenging endeavor, and these dramatic responses only compound the problem and complicate the management of biotechnology companies. Companies have employed a diversity of tactics to buffer the impact of individual setbacks – having multiple products in development, using a hybrid product/service strategy, and in-licensing externally partially developed leads are just a few.One consequence of these buffering strategies is reduced investor interest. The duration of biotechnology product development, combined with the long gap between funding and (potential) revenues, and the uncertainty of profitability encourage investors to favor either late-stage companies or those likely to ‘fail fast’. Late-stage companies often present more measurable investments than early-stage companies – and a shorter timeline to returns – and companies that can fail fast allow investors to conserve time and financial resources. The problem with these investment preferences is that for a company to mature to late-stage, it must find early- and mid-stage funding somewhere, and an excessive focus on failing fast is at odds with the long-term patient support needed for many projects.Therefore, how can biotechnology executives bridge the gap between biotechnology funding preferences, chaotic development progress and the sustained support needed for research projects? One answer is to seek opportunities in compatible industries. Seeking funding and revenue opportunities outside the biotechnology industry can effectively dissociate biotechnology companies from the negative constraints of the biotechnology industry, enabling them to mature in more supportive environments while still keeping a long-term focus on lucrative opportunities in biotechnology.Consider the example of Mission Motors. The company, which recently produced the world's fastest motorcycle, is not a motorcycle company; they used the motorcycle (which they are selling for nearly US$70 000 each) to help attract interest in their primary interest, which is software.1 BBK Technologies is an example from the biotechnology industry. BBK has applied fragment-matching algorithms from DNA sequence analysis to matching video sequences.2 With applications in stemming piracy and enabling image or video-based search, the technology clearly has robust applications beyond biotechnology. The extra biotechnology applications also serve as robust evidence of the utility of BBK's technology.What is not to like about these indirect paths? They can be slower than maintaining a strict focus on biotechnology-related goals. An oft-heard plea in biotechnology is the need for speed in development. Although it is true that patients may be suffering while treatments are in development, and that delays in development may result in a shorter duration of patent protection, a balance must still be maintained between speed of development and corporate sustainability. After all, an excess focus on near-term positive outcomes may lead to corporate collapse, likewise depriving patients of treatments. Leveraging opportunities outside of biotechnology to establish proof of principle or to build revenue streams can increase resilience, and can thereby provide a stronger foundation for corporate sustainability.References Dumaine, B. (2010) A motorcycle on a mission. Fortune, 14 June, p. 30.The physics arXiv blog. (2010) Sequencing the video genome. 31 March, http://arxiv.org/abs/1003.5320.

scholarly journals Therapeutic Potential of Hericium erinaceus for Depressive Disorder

2019 ◽  
Vol 21 (1) ◽  
pp. 163 ◽  
Author(s):  
Pit Shan Chong ◽  
Man-Lung Fung ◽  
Kah Hui Wong ◽  
Lee Wei Lim
Keyword(s):  
Depressive Disorder ◽  
Disease Burden ◽  
Therapeutic Potential ◽  
Fruiting Bodies ◽  
Hericium Erinaceus ◽  
Treatment Of Depression ◽  
Antidepressant Effects ◽  
Potential Benefits ◽  
Potential Alternative ◽  
Global Disease Burden

Depression is a common and severe neuropsychiatric disorder that is one of the leading causes of global disease burden. Although various anti-depressants are currently available, their efficacies are barely adequate and many have side effects. Hericium erinaceus, also known as Lion’s mane mushroom, has been shown to have various health benefits, including antioxidative, antidiabetic, anticancer, anti-inflammatory, antimicrobial, antihyperglycemic, and hypolipidemic effects. It has been used to treat cognitive impairment, Parkinson’s disease, and Alzheimer’s disease. Bioactive compounds extracted from the mycelia and fruiting bodies of H. erinaceus have been found to promote the expression of neurotrophic factors that are associated with cell proliferation such as nerve growth factors. Although antidepressant effects of H. erinaceus have not been validated and compared to the conventional antidepressants, based on the neurotrophic and neurogenic pathophysiology of depression, H. erinaceus may be a potential alternative medicine for the treatment of depression. This article critically reviews the current literature on the potential benefits of H. erinaceus as a treatment for depressive disorder as well as its mechanisms underlying the antidepressant-like activities.

Early-stage biotechnology companies, the perspective of an international investor

Biofutur ◽  
1995 ◽  
Vol 1995 (150) ◽  
pp. 30-34
Author(s):  
Edward Wawrzynczak ◽  
Jeremy Curnock Cook
Keyword(s):  
Early Stage ◽  
Biotechnology Companies

scholarly journals Time for a new business model?

1969 ◽  
Vol 16 (1) ◽  
Author(s):  
Yali Friedman
Keyword(s):  
Business Model ◽  
Hybrid Model ◽  
Business Models ◽  
The United States ◽  
Biotechnology Industry ◽  
New Firms ◽  
Technology Platform ◽  
Economic Climate ◽  
New Business ◽  
Biotechnology Companies

In the relatively short history of the biotechnology industry, new business models have emerged every few years. Some have been little more than short-lived marketing or investment-attraction devices, whereas others have had endured as viable options. Given the dramatic changes in the economic climate and potentially the regulations affecting biotechnology, is it time for a new business model?A SHORT HISTORYFirst there was the FILCO, or fully integrated life science company, business model. This model, employed by some of the first biotechnology companies, positioned firms to capture the revolutionary advances of biotechnology and to build large vertically-integrated companies. Companies like Amgen and Genentech were able to fulfill this endpoint, but many other companies were not so fortunate. Another early model was to improve existing products, rather than to build an entire franchise around discovering and commercializing new ones. This model is exemplified by Alza, which was founded to improve medical treatment through controlled drug delivery and focused on improving existing drugs rather than developing new ones. This same model is still employed today, and shares some similarity with the technology platform business model, where companies focus on developing technologies that can be sold to other R&D firms, rather than independently developing consumer applications.Newer business models did not replace the older ones, but rather enabled new firms to focus on the unique environment in which they were founded. Examples include the hybrid model that combined product development with a technology platform, which could be sold or licensed to others, and the no research, development-only model that as a derivative of the specialty pharmaceutical model, saw newly founded companies buying drug leads off of other companies to complete late-stage clinical trials. These models enabled new firms to meet the respective needs of risk-averse and cash-rich investors.WHERE ARE WE NOW?I've previously written that the global economic crisis has been (and still is) transformative for the biotechnology industry. The aforementioned biotechnology business models rose to prominence in conditions that favored them. For example, the hybrid model emerged in a funding drought and was favored as it enabled companies to build internal revenue streams while still maintaining the possibility to realize the upside of product sales.What are the factors influencing biotechnology companies today? In the United States, beyond the general economic climate there are still unresolved questions about the availability of early stage financing, the ability to recruit foreign workers, and – post-commercialization – data exclusivity, generic biologics and the potential for price controls. Internationally, some nations are still undergoing dramatic economic reorganizations, while others are making significant investments in building biotechnology R&D capacity.So, the question remains: Is the biotechnology industry ready for a new business model, and is there a business model that can accommodate the myriad domestic challenges faced by many countries while addressing the increasing globalization of activities?

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