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Buying big into biotech: scale, financing, and the industrial dynamics of UK biotech, 1980--2009

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  • Michael M. Hopkins
  • Philippa A. Crane
  • Paul Nightingale
  • Charles Baden-Fuller

Abstract

This article explores how the UK's biotech firms have evolved in response to their financial environment. As investors' expectations about the potential of biotech have changed, funding options have opened up and closed down, leading firms to develop new business models and routes of technology development. After a favorable period, new constraints on stock market funding have forced UK biotech firms to compress their life cycles, constraining their ability to generate the late-stage drug candidates sought by large pharmaceutical firms. These changes are analyzed within a neo-Chandlerian framework in the context of a selection environment where rather than firms of varying inefficiencies being selected by an efficient market, we find entrepreneurs submitting themselves to an inefficient investment-selection process at the intersection of industries attempting to achieve their own scale economies. The article highlights the importance of the scale of investment at the firm and industry level, and suggests that decline in the size of the industry can have adverse consequences for investment and firm performance in this setting. Copyright 2013 The Author 2013. Published by Oxford University Press on behalf of Associazione ICC. All rights reserved., Oxford University Press.

Suggested Citation

  • Michael M. Hopkins & Philippa A. Crane & Paul Nightingale & Charles Baden-Fuller, 2013. "Buying big into biotech: scale, financing, and the industrial dynamics of UK biotech, 1980--2009," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 22(4), pages 903-952, August.
    • Handle: RePEc:oup:indcch:v:22:y:2013:i:4:p:903-952
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    File URL: http://hdl.handle.net/10.1093/icc/dtt022
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    Citations

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    Cited by:

    1. Kapoor, Rahul & Klueter, Thomas, 2020. "Progress and setbacks: The two faces of technology emergence," Research Policy, Elsevier, vol. 49(1).
    2. Bonnín Roca, Jaime & Vaishnav, Parth & Morgan, Granger M. & Fuchs, Erica & Mendonça, Joana, 2021. "Technology Forgiveness: Why emerging technologies differ in their resilience to institutional instability," Technological Forecasting and Social Change, Elsevier, vol. 166(C).
    3. Miozzo, Marcela & DiVito, Lori, 2016. "Growing fast or slow?: Understanding the variety of paths and the speed of early growth of entrepreneurial science-based firms," Research Policy, Elsevier, vol. 45(5), pages 964-986.
    4. Gilding, Michael & Brennecke, Julia & Bunton, Vikki & Lusher, Dean & Molloy, Peter L. & Codoreanu, Alex, 2020. "Network failure: Biotechnology firms, clusters and collaborations far from the world superclusters," Research Policy, Elsevier, vol. 49(2).
    5. Polzin, Friedemann & Sanders, Mark & Stavlöt, Ulrika, 2018. "Do investors and entrepreneurs match? – Evidence from The Netherlands and Sweden," Technological Forecasting and Social Change, Elsevier, vol. 127(C), pages 112-126.
    6. Mark Loon & Roy Chik, 2019. "Efficiency-centered, innovation-enabling business models of high tech SMEs: Evidence from Hong Kong," Asia Pacific Journal of Management, Springer, vol. 36(1), pages 87-111, March.
    7. Hopkins, Michael M. & Crane, Philippa & Nightingale, Paul & Baden-Fuller, Charles, 2019. "Moving from non-interventionism to industrial strategy: The roles of tentative and definitive governance in support of the UK biotech sector," Research Policy, Elsevier, vol. 48(5), pages 1113-1127.
    8. Ohid Yaqub, 2018. "Variation in the dynamics and performance of industrial innovation: what can we learn from vaccines and HIV vaccines?," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 27(1), pages 173-187.
    9. Befort, N., 2020. "Going beyond definitions to understand tensions within the bioeconomy: The contribution of sociotechnical regimes to contested fields," Technological Forecasting and Social Change, Elsevier, vol. 153(C).
    10. Ciaran Driver & Maria João Coelho Guedes, 2017. "R&D and CEO departure date: do financial incentives make CEOs more opportunistic?," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 26(5), pages 801-820.
    11. Øyvind Bjørgum, 2016. "MNCs entering an emerging industry: The choice of governance mode under high uncertainty," Cogent Business & Management, Taylor & Francis Journals, vol. 3(1), pages 1258135-125, December.

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