Economic Value Creation in Transition Phases: Access to Equity Capital

Abstract

Large enterprises such as the drug division of Hoechst in Germany or Merck in the United States incorporate all capabilities required to discover, develop, and market therapeutic products. Small biotechnology firms, in contrast, only perform specific research activities and turn over their discovery results to R&D pipelines of collaborative partners. In the context of this investigation, the biotechnology firm passes on its disease targets to the discovery units of collaborators, where they screen their compound library against the targets. Compound libraries encompass hundreds of thousands of different chemical structures and, during repeated screening tests, the structure pool gradually narrows down to a few drug candidates.¹

Article Footnote

¹Section 1.1 describes activities in drug discovery. Refer particularly to Figure 4 in that section