Despite its success, as measured by financial growth, innovative outcomes, and number of firms entering the industry, biotechnology remains a capital-intensive and risky manufacturing partly because of market uncertainties and complex regulatory regimes. Given its knowledge intensive character, biotechnology is also a fertile ground for entrepreneurial activities including firm creation. In such an environment characterized by high risk and rewards coupled with the potent role of knowledge, established, and newly founded biotechnology firms are in a continuous competition to secure funds mainly from venture capital firms and government agencies while reaping knowledge, know-how and expertise from spatial externalities (Pisano, 2005).
Funding for biotechnology should cover the development of infrastructure, basic-research, contribution of venture capital (for technological developmen...
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... Although biotechnology promises to generate immense wealth, significant investment over long periods will be required to unlock this potential. Funding for these companies present a particular challenge to the capital markets. The industry embraces not only companies developing end-products but also those providing the tools, such as specialized technologies, equipment, and software to support these activities. The financial demands of these different types of business vary but many face high risks and long timeframes before achieving profitability. High technology companies concluded that biotechnology firms face severe financing constraints that electronics or software (Pisano, 2005). Funding is not only a key strategic issue for the companies themselves, but is critical in realizing the benefits arising from the scientific breakthroughs of the last few decades.
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