¶ … Big Thing
I disagree with the argument, in large because of the wording in which it is presented. The argument put forth is as follows: "Some industry analysts now believe that much of the future market growth in drug development will come from small biotech start-up companies." The problem with that statement is that it ties drug development to market growth. Start-up companies may well lead the way in development, but they are ill-equipped to lead in market growth. They simply do not have the reach, and there are a variety of business models that highlight the mutually beneficial role that start-ups and large pharmaceutical companies play in bringing drugs to market.
A start-up company in biotech will typically consist of a small team of researchers, and maybe a few business people. Often, start-ups have no viable products on the market, and limited capital. This is almost by the very definition of a start-up company as one that just started -- no products, not much money, but a good idea. Audretsch (2001) explains the role of biotech start-ups in a paper about clustering in the biotech industry. Industry clusters occur where multiple firms exist in an industry in a small...
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