Are early stage products too remote for incentives to be effective?
The prospect of a market is effective in stimulating R&D for products for affluent markets. The existence of long-term incentives is translated by the market into appropriate short-term incentives, such as an increased willingness of pharmaceutical companies to licence IP from biotech companies, enter joint ventures with them, or buy them. This in turn creates shorter-term incentives for biotech companies to invest, and for investors to invest in biotech companies.
