Well-established companies usually seem like a safer bet when it comes to investments compared to newer ones. Whenever there's a promising new company with a groundbreaking drug, it's common for a bigger company to step in and either team up with them or buy them out completely. This isn't just beneficial for the startup, as it also grants them access to the larger company's distribution channels. Plus, if there are any setbacks like the FDA halting drug development, bigger companies have the resources to keep pushing forward.
That being said, smaller firms that have a track record of collaborating to bring drugs from the lab to the market shouldn't be overlooked. Big companies typically target these smaller firms, valued between $1 billion to $5 billion, especially if their drug candidates are in the later stages of clinical trials. These kinds of deals, often referred to as "bolt-on" transactions, help big companies expand their pipeline.
Some startups opt to go it alone and market their drugs directly to doctors in areas where the disease they're targeting is most prevalent. While this approach can lead to significant success, it's more of an exception rather than a rule. Most investors tend to be wary of backing new biotech companies, especially in their early stages when they're seen as more of a risk.