Biotechnology

Today, biotechnology is used in four major industrial areas: crop production and agriculture, environmental uses, non-food use of plants (such as biofuels) and healthcare. The industry within the last 5 years has seen a significant influx of capital into their firms due to their cutting edge technologies, the mapping of the human genome and a wave of new biologic drug product approvals by the FDA.

For the young biotech just starting up, capital is acquired through seed money from venture capitalists and private investors. Once a firm has a promising new product candidate, it may team up with a major pharmaceutical or biotechnology company.  The large company will provide capital in the form of up front fees, R&E funding, milestone payments after each phase of clinical trial, and royalties in return for receiving the marketing rights to the product once it is commercialized.  The larger partner often provides needed production facilities and sales organizations as well for new product launches in return for the marketing rights under various licensing agreements.  Many of the approved biotech products in the marketplace today have been developed through this process.

The industry uses standard U.S. accounting GAAP.  Foreign Controlled Companies may use Organization of Economic Community Development guidelines for their transfer pricing policies.  They may also follow International Accounting Standards (IAS), which has been gaining more recognition lately.