What does the phrase "high-risk business model" refer to in biotech companies?

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Prepare for the HOSA Biotechnology Test with focused study materials. Use flashcards and multiple choice questions to reinforce your knowledge. Each question comes with hints and detailed explanations. Ace your upcoming exam!

The phrase "high-risk business model" in the context of biotech companies refers to the uncertain success rates for new products. Biotechnology involves extensive research and development processes, which can require significant time and investment before reaching a marketable product. The high failure rate of new drug development, due to complexities in human biology, regulatory challenges, and varying market acceptance, contributes to the inherent risks associated with biotech ventures. Because these companies often rely on breakthrough innovations that may or may not succeed, their business model is classified as high-risk, making potential investors wary but also potentially rewarding if a product does succeed.

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