Bio-pharma: A financialized business model

Abstract

In this paper, we construct a complementary financialized business model of SME bio-pharma that reveals how the product innovation and development process conjoins with speculative forces in capital markets. To conceptualise this descriptive business model we employ three organising elements: narratives about pipeline progress that may (or may not) lead to additional funding from equity investors or other investing partners, capital market conditions that impact on the supply of funding and market valuations and the variable motivations of equity investors who are not in a development marathon but a relay race anxious to pass on ownership and extract higher returns on invested capital through realised market value. Bio-pharmas are, in effect, constituted as investment portfolios of innovations where products in pipeline and firms trade for shareholder value. In this speculative innovation, capital market liquidity business model complementary narratives and favourable capital market conditions are required to keep it all going.

SME internationalization modes in the German biotechnology industry: The influence of imitation, network position, and international experience

“…Depending on their business model, they are more likely to be acquired as soon as product development flourishes or to license out M&D rights of auspicious developments to capable incumbent firms (Andersson, Gleadle, Haslam, & Tsitsianis, 2010;Haslam, Tsitsianis, & Gleadle, 2011;Rothaermel & Deeds, 2004). As such, the biotechnology industry is known for its propensity to engage in collaborative agreements (Rothaermel & Deeds, 2004).…”

Financialization and value: why labour and the labour process still matter

“…The move away from value creating investment is increasingly apparent in sectors where product market returns are longer term and less predictable. In 'Big Pharma' the high R&D spend required for exploratory innovation and the difficulty in quantifying future product market returns has seen trends towards outsourcing of R&D activities to bio technology firms (Andersson at al, 2010). Financialized investment also helps to explain trends within certain business models.…”

It is the business model… Reframing the problems of UK retail banking

“…This creates an opportunity for critical accounting researchers who appreciate the interplay between finance and political economy, as illustrated by work on fair value accounting (Müller, 2014). Indeed, there are already notable examples where accounting approaches have made important contributions to developing the application of business model (see, for instance, Andersson, Gleadle, Haslam, & Tsitsianis, 2010;Gleadle, Haslam, & Yin, 2014;Haslam, Andersson, & Tsitsianis, 2012;Haslam, Tsitsianis, Andersson, & Gleadle, 2015). Moreover, critical accounting researchers [ 2 4 5 _ T D $ D I F F ] have also sought to link different risk profiles of business models and [ 2 4 6 _ T D $ D I F F ] their relevance for accountants' ability to measure risk (Wright, 2016) [ 2 4 7 _ T D $ D I F F ] with how a broader use of strategic performance measures may result in improved stock market performance (Ittner, Larcker, & Randall, 2003[ 2 4 8 _ T D $ D I F F ] ), which mirrors the focus on shareholder value explored in this paper.…”