Biotechnology is the commercial use of living organisms. The major field of Biotechnology is medicine, and associated products like vaccines. Biotechnology is used in the fields of agriculture, heavy industry and mining with products such as biopesticides. Many pharmaceutical companies have a distinct division that deals with biotech-based medicines. Certain of these medicines originate from living organisms, whereas others are chemically dependent. This distinction is crucial since the risk profile of these two industries are different.
A biotech company is expensive to operate due to its extensive research and development. A successful drug could generate an impressive return on investment. It could take years before a new product reaches the market. The FDA approval process can be lengthy and complex. It requires preclinical tests as well as clinical trials and quality control. According to Science Daily, only a small fraction of compounds that are tested eventually are approved for commercial use.
Biotech companies have the option to concentrate their efforts on technology partnerships or create their pharmaceutical assets which they then license to big pharma to manufacture and market. Many biotech companies in the early stages choose the latter option due to the fact that it can boost the amount of revenue they earn. However, it’s not without risk, as they have to also pay for the cost of clinical development regulatory approval, insurance reimbursement negotiations and sales promotion. Many biotechs make strategic alliances to limit these risks. These include partnerships with major pharmaceutical companies as well as smaller biotechnology platforms. Massachusetts’ biotech ecosystem, for instance, is comprised of a top universities, teaching hospitals, entrepreneur and venture capital communities.