The biotechs with which I am familiar are the early-stage research arm of the development chain. Kind of like acqui-hire startups for google. They live off of investments from vc and/or license deals for final product. My impression was vc was the bulk.
But my view might be myoptic, so I was double-checking.
You are correct. Biotech start-ups live off of VC funding and maybe some NIH funding if they are lucky. Most of them never bring a product to market, instead they are acquired by a big pharma/biotech who has the capital to bring the molecule through FDA approval.
The last number I saw was $6B invested in 2014.[1]
Ahh, okay. What ends up happening with the drug companies which aren't acquired by larger firms (in your example Google) is they begin reinvesting profits in R&D and acquiring other companies.
This is actually a lot like what Intel, Nvidia, and Google do. Basically your revenue takes over where the VCs left off. If the VCs are doing their jobs correctly, reinvested profit R&D is in aggregate much higher than VC dollars... Intel spent $3 billion last year on R&D for example... https://ycharts.com/companies/INTC/r_and_d_expense
I feel like we are defining biotech differently. Pfizer I would classify as pharma- they bought the biotech Coley a few years back after Coley did some research into bladder stuff IIRC.
Perhaps I am simply stating a tautology b/c of the narrow definition, but I'm on the same page with refurb.
I think the point is actually general enough to include every industry: VCs give you enough money to pay people to do R&D / product design until you've got a good enough product that your profits pay for the R&D / product design. In some product industries, this happens by switching to creating a new product (so 3M, GE, etc), and in some this is an endless stream of updates to the existing product (Google, Apple, Intel, etc).
This process can be short circuited by an acquisition, but of course the acquisition is ultimately paid for by past customer profits too.
In the context of https://news.ycombinator.com/item?id=10251676 's assertion that "Drug creation needs to be nationalized, 100% tax funded all the way from researcher to trials to manufacture, and the drugs sold at cost thereafter" which was followed by brixton's reply that "The drugs might end up being cheaper, but there will be much less research for drugs" this remains a very important point: drug R&D folk aren't in it for the VC funding... they're in it for the profit margin. If you remove that light at the end of the tunnel, there are no startups, and the smartest of us go work for the Googles of this world.
(Though FWIW I do think you, refurb, and I are all roughly on the same page if we limit our scope to startups.)