The International Consortium on Agricultural Biotechnology Research (ICABR)



What Does the Restructuring of Life Science Firms: Mean for Future Investment in Biotechnology?


Michael A. Boland, Kansas State University





In the mid 1990s, so-called life science companies were the ‘darlings of Wall Street" investors. The business strategy of linking intellectual property rights with agricultural inputs promised a steady stream of income which could be used to finance future growth in biotechnological research. Restructuring of agricultural chemical and seed companies into life science companies also was supposed to achieve economies of scale and avoid duplication of research. The objective of this paper is to measure the recent restructuring of life science firms to determine what effect it may have on future investment in research. We will compare corporate balance sheets and income statements in the early to mid 1990s with current balance sheets and income statements. In addition, corporate assets in laboratories and human capital will be quantified to determine what the net effect on assets is for the 21st century. Finally, corporate strategies and vision statements will be analyzed to determine how successful these life science firms have been.

We believe that the somewhat optimistic pronouncements ("proposed merger will eliminate $500 million in research duplication" etc.) were too inflated and that current firms have too much debt which will hamper their ability to carry out as much research and development as had been planned in the mid 1990s. Implications for future research in biotechnology will be discussed.



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