Archive by category | – Janette Dixon

Strategic Issues Facing Biotech Start-ups

My last post talked about broad classes of technological innovation – novel research methods and tools, novel mechanisms of action or targets, novel compound types and novel treatment modalities – and the common business models associated with them. The type of technology a company has influences the choice of business model, since the technology bears on the need for specialised assets, such as manufacturing and distribution that may or may not be readily available, and on the ease of transferring knowledge about the technology to collaborators, licensees or acquirers. Some technologies are readily written down in standard operating procedures or lab reports, whilst others may be more art than science and their implementation may require extensive personal expertise. However, technology type is not the only factor driving a firm’s choices.  Read more

Business models and technological innovation

In an earlier post I discussed how biotech companies can earn a return on a technology either in the product market or the market for ideas. Although this appears to be a dyadic decision, it is more helpful to think of a continuum of choices, between plugging into the value chain early and full vertical integration, with many different ways in which a firm can interact with its value chain. The best strategy will depend on how well the market for ideas works. Important factors include the degree of information asymmetry between the seller and the buyer, the need for investments in specialized assets, how easily knowledge can be transferred between parties, and how strong the intellectual property protection is.  Read more

The market for ideas vs. the market for products

The market for ideas vs. the market for products

Financial returns on an innovation may be earned through the “product market” or the “market for ideas.” The product market we are all familiar with – it describes the way in which we buy and sell physical products (medicines or diagnostic kits, for example) or services (laboratory tests or surgery). The market for ideas, on the other hand, is a notional market in which innovations are sold or licensed before they are a final product (or service). In essence the innovation is still an idea, or intellectual property – it is a collection of intangibles. Choosing between these two options  … Read more