How Should Start-Up Biotechnology Companies Manage Learning and Generate the Necessary Knowledge to Achieve an Alliance-Based Stage of Growth

Abstract

Ethical drugs can take hundreds of millions of dollars and over 10 years to bring to market. Start-up biotechnology companies are recognized for their unique exploration and then exploitation in the development of future drugs. However, these potential new drugs are highly unpredictable and require a broad scope of inquiry. Significant and complex knowledge along with openness to learning is required because of the unusually high risk and uncertainty of biotechnology. After initial start-up, biotechnology companies often form a strategic partnership with an established pharmaceutical company to get additional funding and incorporate needed later stage development knowledge.

To conclude an alliance, a company needs to develop learning processes that transition the organization to the next stage of growth. These processes advance the technology sufficiently to conclude a strategic deal. Effective learning enhances exploitation of knowledge needed to generate unique insights and understandings related to the development of a new drug.

This paper examines seven biotechnology companies and identifies key processes that should optimize “effective learning” to enhance the probability of creating the necessary new knowledge needed for a start-up to achieve an alliance stage of growth. Despite a majority of the companies successfully reaching the scaling-up stage of growth, some ultimately fail due to a lack of one or more the explored factors.