Going Alone: The “Entrepreneurial-Growth Model” in the Life Science Industry in Italy

Abstract

This article investigates different models of financing firms and firm expansion in the Italian life science sector. Building on a broad secondary data base (“Zephyr”), the authors present a descriptive analysis of 438 financial transactions in which Italian life science firms were involved between 1997 and 2006. The results of this analysis demonstrate that forms of risk capital, such as private equity and venture capital play only a marginal role in financing Italian life science firms. In contrast, an “entrepreneurial growth model” based on traditional models of financing firm expansion—such as, e.g. mergers and acquisitions—dominates in quantitative terms. In an additional in-depth analysis of the Zephyr-database, the authors further identify six “emerging business strategies” of Italian life science firms, namely: horizontal expansion, cross-border expansion, forward vertical integration, specialization, technological upgrading and diversification. These strategies are illustrated in more detail using seven representative cases of individual firms.