بیوگرافی دارویی : یک مدل کسب و کار مالیه ای
|کد مقاله||سال انتشار||مقاله انگلیسی||ترجمه فارسی||تعداد کلمات|
|7696||2010||11 صفحه PDF||سفارش دهید||5775 کلمه|
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Publisher : Elsevier - Science Direct (الزویر - ساینس دایرکت)
Journal : Critical Perspectives on Accounting, Volume 21, Issue 7, October 2010, Pages 631–641
In this paper, we construct a complementary financialized business model of SME bio-pharma that reveals how the product innovation and development process conjoins with speculative forces in capital markets. To conceptualise this descriptive business model we employ three organising elements: narratives about pipeline progress that may (or may not) lead to additional funding from equity investors or other investing partners, capital market conditions that impact on the supply of funding and market valuations and the variable motivations of equity investors who are not in a development marathon but a relay race anxious to pass on ownership and extract higher returns on invested capital through realised market value. Bio-pharmas are, in effect, constituted as investment portfolios of innovations where products in pipeline and firms trade for shareholder value. In this speculative innovation, capital market liquidity business model complementary narratives and favourable capital market conditions are required to keep it all going.
Investment in the creation of knowledge based assets through innovation and a high level of R&D spending is generally viewed as the key to maintaining relative corporate and national competitiveness, often summarised as closing the ‘innovation gap’. The critical literature on financialization is concerned with how the demands of the capital market modify strategic priorities and corporate governance in an era of shareholder value creation where management and shareholder interests align (Andersson et al., 2007, Froud et al., 2003 and Lazonick, 2008). This literature exposes tensions and contradictions between the ‘expectation’ that innovation can transform corporate, industry and national economic performance, and ‘outcomes’ that tend to be more disappointing. Lazonick (2008) argues that in a financialized economy the short-run priorities of the capital market hold sway over productive and financial transformation because firms are encouraged to maximize their short-run returns to shareholders rather than re-invest in innovative new product development for future competitiveness. Froud et al. (2006) are concerned with how, in a financialized economy, the role of management becomes that of structuring narratives that flatter the outcomes of R&D spending to maintain the confidence of analysts and investors, and thus improve market valuations of firms’ equity on the stock market in the absence of financial transformation. Lazonick and Tulum (2008) develop their general financialized account of ‘downsize and distribute’ more specifically in their paper on the US Bio-pharma (BP) industry. Since the 1980s the US business community, the BP industry included, has embraced the ideology that the performance of their companies and the economy are best served by the ‘maximization of shareholder value…’ It is an ideology that, among other things, says that any attempt by the government to interfere in the allocation of resources can only undermine economic performance. In practice, what shareholder ideology has meant for corporate resource allocation is that when companies reap more profits they spend a substantial proportion of them on stock repurchases in an effort to boost their stock prices, thus enriching first and foremost the corporate executives who make these allocative decisions (p.4). Froud et al. (2006), in their case study of GlaxoSmithKline (GSK) observe that the pharma business model has less to do with R&D and product innovation and more to do with defensive mergers, corporate restructuring and narratives promising research productivity that ‘has not yet come through in the numbers’ (p.11). Gleadle and Haslam (2010) note that narratives, in an R&D intensive medical diagnostics firm, are concerned with how R&D ‘must pay for itself’ and generate a return on investment to support analyst opinions about the share price. The objective of this paper is to construct a complementary financialized account of the bio-pharma business model. Our approach departs from a ‘downsize and distribute’ argument developed by Lazonick and Tulum (2008) and extends the perspective on financialization taken by Froud et al. (2006). Specifically, we argue that bio-pharma is an industry dependent on the capital market for funding because it is cash hungry until, and if, products in pipeline1 become commercially viable and generate positive cash flow from revenues. The productive phases of drug development run from conception, laboratory stage, clinical development, patient testing (phases I–III) towards final regulatory approval. In this business model, R&D spending (expensed or capitalized) is deployed to meet agreed milestones, for example, completing development, obtaining results from patient clinical testing and submitting a product for regulatory approval and possible commercialisation. Favourable milestone reports about product in pipeline will help increase the chances of securing additional funding which may be crucial not only for continued survival but also positively influencing analysts’ opinions about stock market valuation for equity investors and incidentally helping to boost executive bonuses tied to the value of stock options. These options are more likely to be ‘in the money’ if a drug's development does progress from one phase to the next and towards final regulatory approval for the market. Positive milestone reports move products along the pipeline towards regulatory approval reducing the risk of failure and mitigating investor losses on their equity investments. Milestone reports are also (but not always) opportunities for a firm's existing investors to exit and new investors to enter because market values tend to adjust favourably after milestone announcements creating better conditions for buy and sell side transactions to be executed. As a result, individual investors tend to focus on different pipeline phases for their portfolio investments. Venture capital investors, for example, can exit via an initial placement offer (IPO), which results in a public listing on the stock market or they may sell on to a partner, such as a Big-Pharma2 or a private equity partnership seeking a potential return on investment. In this financialized business model, the investor is not participating in a marathon but instead, competing in a relay where handing the baton on to the next investor secures a (possible) realised gain on invested equity funds. Bio-pharma investment is a speculative bet on scientific discoveries and is similar, in this respect to oil, gas and mineral exploration where Federal Drug Administration (FDA) regulatory approval is like striking oil or finding the seam. In this paper we employ an innovation, capital market liquidity conceptual framework to organize our understanding of the Financialized bio-pharma business model. This conceptual framework emphasises how complementary narratives about pipeline progress conjoin with capital market conditions and demands. Favourable milestone reports coupled with capital market liquidity help to inflate analyst's expectations about market valuations and promote entry and exit opportunities for equity investors looking to extract a positive return on speculative investment. We explore the operation of this financialized business model in three UK small, medium enterprise (SME) bio-pharmas.
نتیجه گیری انگلیسی
In this paper, we construct a descriptive financialized bio-pharma business model and utilise this to explore how narratives about innovation and the productive outcomes of R&D spend conjoin with capital market conditions and demands of equity investors. Our descriptive financialized bio-pharma business model is structured using three organising elements: narratives about performance, capital market conditions and the variable motivation of equity investors, where entry and exit possibilities matter. Narratives about pipeline progress are important in the absence of sensible financial information (Froud et al., 2006) because this helps secure refinancing and increase the probability of follow-on funding from equity investors and receipts from partnership agreements in the form of milestone payments. Narratives about milestone achievements are also communicated to investment analysts who make recommendations about the firms share price and hence market value. Capital market conditions now take on added significance both in terms of the supply of funding, liquidity and market valuation because this facilitates entry and exit for equity investors. The identity of investors involved along the product pipeline changes from the original academics/university spinout equity holders to venture capitalists, partnership firms, private equity funds or Big-Pharma. The motivations of equity investors are variable, involving investment in the firm or into individual products that are at various stages of development along the pipeline, complicating market valuations because contractual arrangements are fragmented and complex. The financialized bio-pharma business model shares many of the characteristics of other highly speculative sectors and tellingly The Times on 24th January 2009 observed that the biotech sector is that corner of the stock market that most closely resembles a casino. The chances of success of an early-stage drug are unpredictable and financial loss is the most likely outcome. Pisano (2006b, p.119) observes that this is due in no small part to the ‘profound and persistent uncertainty rooted in a limited knowledge of human biological systems and processes, mak(ing) drug R&D (a) highly risky’ process. The biotech business model that we describe in this article is a speculative innovation, capital market liquidity business model that depends on complementary narratives, capital market liquidity, risk appetite and appreciation of market values to facilitate entry and exit possibilities for equity investors to keep it all going. In contrast to more traditional productionist perspectives, we argue that this is not simply a business model capable of delivering productive transformation for the competitive economy.