Biopharmaceutical companies are extremely research-intensive, developing innovations that are more radical than in many other industries. Consequently, there is a vast amount of risk involved in biopharmaceutical development. Resource intensiveness and the long time perspective force biopharmaceutical companies to rely on external finance. This study describes the risks in the industry along the biopharmaceutical development process and evaluates how public investors take these risks into account in their investment decisions. The empirical research focuses on Finnish public investors. The data consists of both interviews and secondary sources.
The results show that the risk the investors are willing to take is reflected in the stage of the product development process they invest in. Finnish public investors tend to avoid taking commercial risks and invest in the early stages of development where there are mainly technical risks involved. They are putting increasing emphasis on risk management, and they are also keener to emphasise the importance of commercialisation. Paradoxically, however, they tend to avoid supporting commercialisation efforts.
Read more from a recent article by researchers from Turku School of Economics: Heinonen, Laura – Sandberg, Birgitta (2008) Money for nothing? Risks in biopharmaceutical companies from the perspective of public financiers. Journal of Commercial Biotechnology, Vol. 14, No.4, 287-298.