The biotech industry’s ability to tolerate and manage risk has outweighed the pharmaceutical industry’s advantages of scale, scope, and resourcesDiana Polekhina

Published on Monday (14/2), From Breakthrough to Blockbuster: The Business of Biotechnology, demonstrates how the small, inexperienced entrepreneurial companies that constitute the biotech industry have created more life-changing medicines than all of the major pharmaceutical companies combined.

The book was written by Cambridge Judge Business School Associate Professor Nektarios Oraiopoulos, biotechnology entrepreneur Dr Lisa Drakeman, and Cambridge Judge Fellow Donald Drakeman. Oraiopoulos explains that “the driving force was to bring together the complex reality of running a biotech company with the insights offered by the academic literature.”

Stefan Scholtes, the Dennis Gillings Professor of Health Management Cambridge Judge Business School, has written about the new release, questioning how it is “possible that a few thousand small companies, many of them short-lived, can outcompete the mighty pharma majors at their own game.”

Despite the high costs required to develop drugs and the complex regulatory environment, the book discovers how the biotech industry’s ability to tolerate and manage risk has outweighed the pharmaceutical industry’s advantages of scale, scope, and resources.

It also shows how academic researchers and investors have worked together over the past half-century to create an industry consisting of thousands of small entrepreneurial companies, most with fewer than 50 employees – and it is these small companies that have discovered “40% more of the most important treatments for unmet medical needs,” all while while spending less than the highly experienced pharmaceutical industry.

The reason for this, the authors argue, flows from the structure of the biotech ecosystem: the existence of thousands of small companies, all competing for funding from thousands of different investors, is what generates the high volume of risk-taking required to develop novel products, particularly in an environment where there is no definitive means of predicting the product characteristics needed for success.


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However, biotech companies and pharmaceutical companies are not entirely divorced entities. The book also covers the strategic alliances between the two, where pharmaceutical companies form one of the two main sources of funding for the biotech industry, and provide access to drug development expertise and resources.

The final chapter of the book considers the future of the biotech industry, and whether contemporary approaches to innovative drug discovery will endure. As the prices of new drugs have soared to levels unthinkable at the outset of the industry, the book argues that the future of biotech will be determined by whether costly new medicines provide enough value for governments to fund research – and further, that those decisions will influence whether venture capitalists and other investors will continue to play a role in the biotech industry.

The book has been designed for a variety of audiences, including students, scholars, and policymakers, and the authors have suggested that the book can provide useful insights for any industry seeking to innovate in uncertain and ambiguous conditions.