Why Biotech Startup Companies And University Research Facilities Have Become The Primary Sources Of Innovation In The Drug And Device Development Process

Why Biotech startup companies and university research facilities have become the primary sources of innovation in the drug and device development process

Hall and Bagchi-Sen (2002) defines the biotechnology as a sector comprising of research institutions, biotechnology institutions and related industrial companies that commercialize, develop and discover biotechnological processes, products and services. According to Thompson’s (1965), innovation is the generation acceptance and implementation of processes, new ideas, services or products.

According to Atkinson (1994), innovation on drug and device development is increasingly becoming dependent on interdisciplinary research. The increasing numbers of individuals with relevant but diverse professional base are required for the successful development of a particular technology. For example, in case of biological and pharmaceuticals, the development of a drug may require cooperation among immunologists, organic chemists,material scientists, molecular biologists, chemical engineers, toxicologists, clinicians etc.

Moreover, the interdisciplinary nature of innovation appears even more obvious in case the case medical devices. The devices’ development generally depends on transfer of technological and scientific advances outside of medicine (e.g. in engineering, physics, and their related subfields, such as optics, micro-electronics, material science, etc.). Blumenthal (1994) argues that innovation not only requires the crossing of disciplinary boundaries, but it also involves the crossing of boundaries of institutions. Interactions among universities are a prerequisite for medical innovation, particularly industrial firms and academic medical centers and these interactions have greatly increased over the past decade.Biotech startups companies strategically develop products to be marketed by their partners with an objective of finding and developing alliances. This strategic research partnership enables the startup company to move from basic research to commercialization through technological innovation.

Why does the funding of studies by biotech startups differ from that of large pharmaceutical companies?

As a result of their substantial difference in the costs of operation, more so the cost of research and development; biotechnology startup companies have much higher costs vis-a-vis large pharmaceutical companies. Big pharmaceutical companies are increasingly reliant on the knowledge base of biotech startups companies. On the other hand, for biotech startups firms, forming partnerships is of paramount importance for their survival.

In the research stages, studies might qualify for grants from government for equipment and staff salaries, for academic collaborations to facilitate invention collaboration.Greis et al. (1995), notes that small firms are forced into partnerships by a lack of external funding opportunities, capital or stock market volatility.


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