Original Article

Global Journal of Flexible Systems Management

, Volume 13, Issue 3, pp 129-139

First online:

On Growth Option for R&D Continuity of Biotech Start-ups Under Uncertainty

  • Takao FujiwaraAffiliated withToyohashi University of Technology Email author 

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For biotech drug-discovery start-ups, even though the constraint on managerial resources is very severe, it takes more than 10 years for them to transfer a project from laboratory study to products on the market. In order to increase robustness against financial crisis for continuing R&D, we examine the flexibility value of real options, and especially pay attention to the function of growth options for business entry and exit. Through a case study of a Japanese pioneering start-up in the field of regenerative medicine, J-TEC, we consider a survival strategy during the valley of deficit from the perspective of the growth option. Finally, we apply stochastic optimization to select the pipeline candidates from alternative projects.


Biotech start-ups Real options Growth options Valley of deficit Path dependent continuity