Biotechnology is the commercial use of living organisms. The major field of Biotechnology is medicine, and the related products such as vaccines. Biotechnology is utilized in the fields of agriculture, heavy industry and mining with products such as biopesticides. Many large pharmaceutical companies have separate divisions dedicated to biotech-based medical treatments. Certain of these medicines are derived from living organisms, while others have a chemical basis. This distinction is crucial because the risk profile of these two industries are distinct.
A biotech company is expensive to run due its extensive research and development. A successful product can bring a substantial financial return. But it can take years before a new drug can get to market. The FDA approval process is complex and time-consuming. It requires preclinical tests as well as clinical trials and quality control. According to Science Daily only a small percent of the compounds tested get approved for market.
Biotech companies may choose to concentrate their efforts on technology partnerships or to develop their pharmaceutical assets which they license to large pharmaceutical companies to manufacture and distribute. Many young biotechs opt for the former option because it could boost revenue growth. However, it is not without risk because they also have to cover the costs of developing clinical products in addition to regulatory approval, insurance reimbursement negotiations, and sales promotion. Many biotechs use strategic alliances to minimize the risks. These include partnerships with major pharmaceutical companies and smaller biotechnology platforms. The biotech ecosystem in Massachusetts, for example comprises top universities, teaching hospitals, entrepreneur communities and venture capitalists.