Drug Discovery Firms and Business Alliances for Sustainable Innovation

Yoshimi Harada,Kota Kodama,Huayi Wang,Shintaro Sengoku

doi:10.3390/su13073599

Yoshimi Harada, Kota Kodama + Show 2 more

Open Access

https://doi.org/10.3390/su13073599

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Abstract

Biotech startup firms developing pharmaceutical seeds from scientific and technological innovation are burdened by significant Research & Development (R&D) expenses, long-term R&D operations, and low probability of R&D success. To address these challenges while sustainably creating innovations and new drugs, business alliances with existing pharmaceutical companies are one of the most important issues on the management agenda. The present study explores the necessity and significance of business alliances with pharmaceutical companies for the development of drug-discovery by Japanese biotech startup firms under high uncertainty. This study investigates the types of alliances to understand the origins of sustainability of these creative activities. First, we investigate and analyze the details of the partnership and its impact on the products under development based on the publicly available information of 16 drug discovery biotech startup firms in Japan that had become public since 2010. As a result, all firms continued their operations with the funds obtained from the business alliances with pharmaceutical firms at the time of their initial public offering (IPO). In addition, 56% of these firms’ alliance projects (n = 73) were seeded-out, and 32% seeded-in, indicating that they had adopted flexible alliance strategies not limited to seed-out ones. For sustainable going concern of the biotech startup business, it is valuable to consider multiple strategic options: “in-licensing and value up”, “best-in-class”, “platform leadership” and “first-in-class” depending on the characteristics of seeds and environmental restrictions.

Highlights

Innovations in the field of science and technology improve products and services providing social and economic value and contribute to the maintenance and development of human health
All other capital alliances were for less than 10%. The results of these analyses suggest that the amount of investment by major pharmaceutical companies in drug discovery biotech startup firms is often small compared to the costs required for pharmaceutical Research & Development (R&D)
We examine the implications of drug discovery biotech startup firms for the pharmaceutical companies with which they are partnering

Summary

Introduction

Innovations in the field of science and technology improve products and services providing social and economic value and contribute to the maintenance and development of human health. The use of drugs is often necessary to maintain good health, sustainable innovations for diseases without existing treatments or affordable drugs will contribute to SDG 3 as well as other SDGs as it enhances the ability of a community to develop human capital, undertake productive economic activities, and attract investment. Biotech startup firms, representing a major change in the technology base of a mature pharmaceutical industry, have appeared to be the solution to a lack of pharmaceutical innovation [2,3]. Biotech startup firms have become the major product innovators in the pharmaceutical industry, and increasing their number is key to stimulating the industry as a whole and contributing to a healthier world

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