Edited by Marian V Jones, Colin Wheeler and Pavlos Dimitratos
Chapter 13: Firm Growth and Performance in Biotechnology: Financial Facts or Wishful Thinking?
Malin Brännback, Alan L. Carsrud and Niklas Kiviluoto INTRODUCTION It is commonly acknowledged that the modern biotechnology business emerged three decades ago, with the creation of Genentech in 1978. Genentech was the commercial consequence of the scientific breakthrough some five years earlier when Stanley Cohen and Herbert Boyer published their ground-breaking article on recombinant DNA in November 1973. On 14 October 1980 Genetech went public and listed their stock on the US stock exchange. Within 24 hours the market capitalization of the firm doubled, and yet the firm did not anticipate having a product on the market before 1984. In 1981 Amgen began its operations with a private equity placement of $18.9 million. Amgen also listed on the US stock exchange and raised $400 million before it sold anything at all. On 1 June 1989 their first product, Epogen, received FDA approval. At the end of 1989 $96 million worth of Epogen had been sold and in 1998 it was the leading pharmaceutical product in the world with sales that year alone of $1.4 billion. Amgen’s average annual return to investors between 1986 and 1996 was 67.8 per cent with two products on the market, much higher than the second-place Oracle’s 53.5 per cent with a myriad of products on the market (Robbins-Roth, 2000; Oliver, 2000; Carsrud, Brännback & Renko, 2008; Brännback, Carsrud & Katz, 2011). These are remarkable encounters with tremendous growth. It is easy to see why every venture capitalist wants to find the next Genentech or...
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