Biotechnology Industry: Market, Investment and Alliance Formation

This essay provides an overview of the biotechnology industry, its market, investment opportunities, and alliance formation with external partners. It also highlights the growth of the industry in the UK and the key players in the healthcare sector.

Running head: BIOTECHNOLOGY
Biotechnology
Name of the Student
Name of the University
Author Note

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Contents
Answer 1 2
Answer 2 3
Answer 3 5
Answer 4 6

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The term biotechnology refers to that technology that uses the biological systems, parts of
the living organism or the complete living organism in order to create and develop different
products. For example it can be said that the baking of the bread is an example of biotechnology
as the organism yeast is used to create the product. In recent years, the biotechnology industry
has become more technically sound with the advancement and modification of the biological
system. Since 1970, the industry has faced an immense growth as the new genetic engineering
system has changed a lot and scientists have identified various routes of modification of several
organism’s genetic material that is the DNA (Diehl 2019). In recent times, the biotechnology
domain has various disciplines like biochemistry, molecular biology, and genetics. It is quite
common that, every year various products are developed by the scientists. In this essay, a brief
idea about the biotechnology industry is given. In addition, the external resources of the
biotechnology industry, collaboration with other industry with the biotechnology industry are
highlighted in this essay.
Answer 1
The biotechnology industry refers to the use of modern science understanding to the
industry for producing industrial goods. The biotechnology industry is completely dependent on
the genetic engineering technology and modification of the designed biological molecules. In
this industry mainly genetically designed microorganisms, cells, various transgenic animal and
plants can be produced. These industry revolves around the technology of DNA sequencing and
gene cloning, biomolecule labeling, nucleic acid amplification, directed mutagenesis. The
biotechnology market can be largely divided in to sectors broadly. One is the medical
biotechnology industry that is the bio pharmacy and another one is agricultural biotechnology
industry. The biotechnology industry operates in a wide area from biofuel production to medical

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device production. From the global market research it is seen that the human health technology
sector of the biotechnology industry has the largest share of the global market of in terms of
industrial products. It is observed that, almost 69% of total market share is covered by the
biotechnology industry in recent years (IBIS 2018). The health care sector are the major
segment of the biotechnology industry. It is assumed that, by the end of 2018, the health care
product of the biotechnology industry would face a growth of CAGR of 3.8% and will reach
$895 in the end of 2018. The expected market growth was almost 25% and the amount is almost
$224bn (ABPI 2019). In UK, the biotech companies earns almost $76 million and more number
of investor are investing in the market and contribute to the growth of the market. The key
players in the market of health care biotechnology industry in UK are Summit therapeutics plc,
Prokarium, TopiVert, Macrophage, Auspherix, Blueberry Therapeutics, Chronos Therapeutics
(UK biotech 2019). In addition to this, in recent times there are a few companies which has come
into play by inventing various new technologies. Among those new companies, Nightstar,
Orchad therapeutics, Autolas, Heptares, Silence Therapeutics are on the top of the list of the
biotech companies of London (Labiotech.eu 2017).
Answer 2
With the growth of the biotechnology industry, the companies are more investing in the
technological development of the industry. However, initially , the it is a tough job to get enough
funding for the biotechnology startups. Although, there was a few private investors and fund
managers who were seeking to invest in some good biotechnology projects. The private investors
generally invests 5-15% of their total investment in to the risky startups ( IBIS 2018). All the
investors generally keep the fact of spreading the risk in their mind and invests smaller amounts
in the industry. It is very tough to find an investor who agrees to invest a huge amount at a time,

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rather it is quite easy to find a small investor. Along with this, various other business angels also
effect the process of investment. The investors spread the risk factors of investing in order to get
the benefit along with minimum risks. Moreover, a huge source of financing the biotech industry
is the corporate venture capital or CVC. The CVC refers to the investment of the corporate
companies that is the pharmaceutical companies for the improvement of the therapeutic industry.
In UK, the corporate venture capital that is the investment of the corporate pharmaceutical
companies invest their funds in the emerging biotech startups of UK. In addition, it is seen that,
UK has become an interesting field of investment in recent years and the life science industry of
the country has a positive reputation in a worldwide manner and that also promote the CVCs to
invest in that country (Whitehead 2003). In a recent past, the CVC investment in UK is almost
increased 6 times than that of the investment of 2010. In addition to this, it has been that, there is
a large increase in the Academic Capital investment and almost 55% of UK biotech companies
are funded by this Academic Capital (IBIS 2018). The enhancement of patient capital has also
been increase in UK and companies like Invesco, Syncona, Woodford are investing in that
industry as well. Not only this, recently it is observed that, the number of the local investors ,
investment through Enterprise Investment Scheme ( EIS), Equity funding, Seeding Enterprise
Investment Scheme (SEIS) have also increased and CVC is one of the component of the funding
system of the biotechnology industry in UK. The Imperial Innovations group plc has a leading
role in the investment of the biotech in UK. This company has collected fund of almost 44o
million euro in a form of equity investment. In 2016, the CVC has invested almost 60% of total
investment in the market that is $567 million out of $965 million (IBIS 2018).

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Answer 3
The alliance formation with the external partners in technology industry is an important
part of the industry. For maintaining the flow of the innovation of different medicines, there is an
actual need of alliance with the external partners in the market. The biotech companies are
working together with the external partners in order tom create better and bigger therapies.
Although, the companies have several benefits of those joint ventures with the external partners.
The biotech pharmaceutical industries are running under strict regulatory rules and long-term
partnerships. Often it is seen that, the joint venture is less costly and less complicated than
operating alone the in the industry. During a joint venture program, both the partners can
experiment in a new way and the new concept and new technology can be tested before ‘going
external’ (Sytch, and Bubenzer 2008). In addition to this, both the partners can share their
knowledge and expertise with each other. Moreover, a joint collaboration of Biotech Company
and external partners can reduce the risk factors and it will be applicable for both the companies.
In addition to this, the biotechnology firms also tries to find strategic alliances with their rival
companies so that they can easily reduce their competitor in the market. In order to gain access in
the wide pool of knowledge of the biotech industry, the biotech firms generally collaborate with
the external partner of the market and the reason behind such collaboration is mainly that, many
biotech firms have not adequate resources for completing cycle of the full development of a
particular product. By collaborating with the external partners, the biotech firms mainly try to
achieve the facilities like distribution process, production facilities and approval of government
for a new product (Sytch, and Bubenzer 2008).
Answer 4

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It is observed that, the biotechnology firms are going for alliance making in order to
access new technology, gain more knowledge, complementary resources. So it is quite evident
that a biotechnology firm would prefer a partner who can give those facilities in a better manner
other than any other partners. In addition to this, the biotech firms also favor homophily firms
that is the organization which has very much similarities with the biotech firm and this will
provide the enhanced likelihood among themselves, mutual trust and co-identification to both of
the organization. In addition to this, the organizations try to build partnerships with the firm of
that person who is graduated from the similar educational institute (Sytch, and Bubenzer 2008).
Not only that, the biotech firms also collaborate with those companies which have similarities
with the previous partner company. Homophily is another factor that influence the biotech
company during choosing their partner of collaboration. While choosing the partner, the biotech
firm also try to reduce the market competition and as a result they try to form alliance with the
company that can give them competition in the market (Sytch, and Bubenzer 2008).
Lastly, it can be concluded that, the biotechnology industry is a blooming industry in
recent years and the market of UK is a good choice for the investor. The pharmaceutical industry
is the largest segment of the biotech industry in world and as well as in UK. CVC is the key
investor for the biotech industry in UK. It is observed that, most of the companies are forming
alliance for surviving in the biotech industry of the market. During the alliance formation the
biotech firms use various factors for choosing the alliance partner.

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References
ABPI., 2019. The rise of Corporate Venture Capital investment in UK biotech. Abpi.org.uk.
Available at: https://www.abpi.org.uk/media/4573/the-rise-of-corporate-venture-capital-
investment-in-uk-biotech.pdf [Accessed 10 Jan. 2019]. (ABPI, 2019)
Diehl, P., 2019. Get an Overview of What Biotechnology Is and the Biotech Industry. The
Balance. Available at: https://www.thebalance.com/what-is-biotechnology-375612 [Accessed 10
Jan. 2019].
IBIS., 2018. Biotechnology (UK) - Industry Research Reports | IBISWorld. Ibisworld.co.uk.
Available at: https://www.ibisworld.co.uk/industry-trends/market-research-reports/professional-
scientific-technical-activities/biotechnology.html [Accessed 10 Jan. 2019].
Labiotech.eu., 2017. The 10 Biotech Companies in London to Keep an Eye on in 2018. Available
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Sytch, M. and Bubenzer, P., 2008. Research on strategic alliances in biotechnology: An
assessment and review. In Handbook of bioentrepreneurship (pp. 105-131). Springer, New York,
NY.
UK biotech., 2019. UK Biotech Database. Ukbiotech.com. Available at:
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Whitehead, G., 2003. Early stage and seed financing for biotechnology start-ups: A UK
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