Abstract
A book on the business of bioscience would not be complete without talking about the dissolution of a company. Like it or not, the vast majority of biotech companies do not make it through to commercialization of their products. According to the Small Business Administration (SBA), the success rates for all small businesses in the US is estimated to be 44% during the first four years, though some estimates say only 20% survive after five years. With the additional challenges to business development facing the biotech entrepreneur, it is hard to imagine that the biotech business success rate would be higher than this statistic. Whatever the real success rate – it is painfully low. There are various reasons for company failure, and some of the reasons include the following: Poor market assessment before licensing the technology, such that there was no real market interest in the future product and the company could not raise enough funds to complete product development. Investor interest in the technology field waned, or was viewed as too early or too challenging for an investment at this time, and the company ran out of money. The management team was not capable in the eyes of investors and could not secure the funding needed to continue product development. Poor execution of the product development plan, such that the costs escalated far above a profitable return-on-investment for investors. The technology failed to produce a viable product during development due to insurmountable technical or scientific challenges. The product did not satisfy the requirements for regulatory approval, or the clinical trial results were disappointing and there was no interest in starting new clinical studies. A downturn in the financial market and the company did not have enough cash to sustain itself until it could secure the next round of funding.
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© 2009 American Association of Pharmaceutical Scientists
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Shimasaki, C.D. (2009). When Do You Call it Quits?. In: The Business of Bioscience. Springer, New York, NY. https://doi.org/10.1007/978-1-4419-0064-7_15
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DOI: https://doi.org/10.1007/978-1-4419-0064-7_15
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