Biotechnology foundations and applications

Targeted Investors

The choice of 'B' reflects the superiority of choosing a multi-pronged approach of government financing, venture capital, and 'angel' investors. This choice reflects the reality of the fact that creating a new drug is a financially demanding process for a company, as well as time-consuming. The drug must be both safe and effective. After the product is developed, it will require considerable testing on animals and a series of clinical trials. Even then, there is a finite limit on profitability when its patent runs out or a competitor organization develops a similar product, as occurred with the competition between Eli Lilly's Prozac and its SSRI (selective serotonin reuptake inhibitors) imitators, like Pfizer's Zoloft.

The federal government might be willing to provide funding and even valuable guidance to a pharmaceutical company, if the proposed drug can reduce the spread of a dangerous disease, particularly a public health threat like swine flu. While too much government oversight may be unwelcome at times, the government's support might also facilitate FDA approval. The expense of drug development means that family and friends' contributions will simply not be enough to be meaningful, in financial terms. Paying such individuals back within a reasonable frame of time would be almost impossible. Banks are also likely to want to see their loan paid off relatively soon, and may shy away from making loans, given the long business lifecycle of drug development. Venture capitalists willing to take a risk on a dicey venture like developing a new drug and angel investors with a personal stake in developing a new, potentially life-saving product could provide better financial resources.

Management selection