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How venture capitalists decide which new medical technologies come to exist

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  • P. Lehoux
  • F. A. Miller
  • G. Daudelin
  • D. R. Urbach

Abstract

To encourage the commercial translation of biomedical discoveries, public policies increasingly seek to stimulate the venture capital industry. Very little is known, however, about the way venture capitalists assess the likely benefits new technologies may bring to clinical practice and healthcare systems. Drawing on a five-year fieldwork conducted in Quebec (Canada), which included in-depth interviews and document analysis, we explore why capital investors choose to invest in certain health technology-based ventures and how they influence the innovation process. Our findings clarify how capital investors: first, use market-oriented valuations when they pick and ‘coach’ technology entrepreneurs; second, act to transform and protect their investments; and finally, exert their authority along the technology development process. Current innovation policies should be carefully examined because capital investors’ understanding of the world in which they operate largely determines which health technologies make their way into healthcare systems and which may never come into existence.

Suggested Citation

  • P. Lehoux & F. A. Miller & G. Daudelin & D. R. Urbach, 2016. "How venture capitalists decide which new medical technologies come to exist," Science and Public Policy, Oxford University Press, vol. 43(3), pages 375-385.
  • Handle: RePEc:oup:scippl:v:43:y:2016:i:3:p:375-385.
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    File URL: http://hdl.handle.net/10.1093/scipol/scv051
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    References listed on IDEAS

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    1. William Lazonick & Mariana Mazzucato, 2013. "The risk-reward nexus in the innovation-inequality relationship: who takes the risks? Who gets the rewards ?," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 22(4), pages 1093-1128, August.
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    Cited by:

    1. Florence Degavre & Suzanne Kieffer & David Bol & Rémi Dekimpe & Charlotte Desterbecq & Thibault Pirson & Georgiana Sandu & Sandy Tubeuf, 2022. "Searching for Sustainability in Health Systems: Toward a Multidisciplinary Evaluation of Mobile Health Innovations," Sustainability, MDPI, vol. 14(9), pages 1-17, April.
    2. Allers, Sanne & Eijkenaar, Frank & van Raaij, Erik M. & Schut, Frederik T., 2023. "The long and winding road towards payment for healthcare innovation with high societal value but limited commercial value: A comparative case study of devices and health information technologies," Technology in Society, Elsevier, vol. 75(C).
    3. Susan K. Sell, 2021. "21st Century Capitalism and Innovation for Health," Global Policy, London School of Economics and Political Science, vol. 12(S6), pages 12-20, July.

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