New Biotech Firms' Discoveries Need More Protection

Just read an interesting article here.

The article states that...

"According to a new study commissioned by the National Venture Capital Association....Early-stage venture capital-backed biotech companies should be able to hold exclusive rights on their medical discoveries for at least 12 years because their investors expect 20% returns to repay them for the “extraordinary (investment) risk.”

However, the article goes on to say that:

"Legislators now formulating a new FDA approval process are assuming a 10% internal rate of return for venture capital fund investors."

The articles closes by saying:

"A shorter exclusivity period would make it difficult for venture capital backers of biotech companies to earn returns on these companies, according to the study by Joshua Lerner, Jacob H. Schiff Professor of Investment Banking at Harvard Business School; and Iain Cockburn, professor of finance and economics and Everett W. Lord Distinguished Faculty Scholar in Boston University's School of Management."

I think the article is spot on.
The reality is this....no one is going to assume risk without the promise of some reward!!
It is that simple.
However Congress seems to believe that Venture Capitalists are going to fall all over themselves to fund companies involved in risky drug projects and that these same Venture Capitalists will assume all of the financial risk if the drugs fail. Yet Congress assumes these same folks are going to do this without the promise of any real Return on Their Investment.

Sometimes this stuff just boggles the mind....