Real options as sustainable business evaluation method in the biotech and med- tech industry. A qualitative and empirical approach.

Business sustainability can be defined as strictly related to the combination of environmental, societal, ethical and economical concerns in process, goods/products and services development by making the best use of innovation and research and development as drivers to overtake the competition. This is often defined as the capacity in managing the “triple bottom line” (Elkington, 1994): a process by which companies are involved in financial, social and environmental problems and opportunities, with implications in terms of profits, people and planet, since industrial, social, and ecological systems are closely linked (Fiksel, 2006). Business connected to what we can call social concerns creates economic value and contribute to healthy ecosystems and strong communities, feeding the “systemic living vision” (Golinelli, 2009) they work in. Moreover, this social and environmental involvement not only represents a strategic lever to beat the competition, but is a strategic driver to improve the value and the image of a certain territory and, by consequence, to decrease the foreign investors‟ perceived risk in investing capitals. We finally talk about the sum of policies and practices that can buster companies‟ competitive power meanwhile they improve community economic and social conditions (Porter, Kramer, 2011). The aim of this study is to examine which evaluation methods can be utilized to guarantee the sustainability of innovative start ups in the biotech and med-tech industry. In particular our empiric analysis examines the projects‟ evaluation instruments utilized by the Bioindustry Park and the innovative cluster that is “managing” bioPmed (Italy). This biotechnological and med-tech pole expresses the will to concentrate the know-how of the territory in a restricted area with a high concentration of structures and facilities for the development of firms. The projects of the innovative companies and start ups are principally based on products development both in biotech (pharma and diagnostic) and in innovative medical technologies. Long development processes, regulatory requirements, potential patent issues, strong competitive environment, are main elements of such markets. Evaluation plays an important role for these companies, both to raise funds, that can be a key factor in order to develop alliances and partnerships. However, for the same market elements, the evaluation process is difficult and risky. Too many variables have to be considered in a long timeframe. The expected result is the analysis of the real options‟ effectiveness as a method for the evaluation to guarantee the sustainability of innovative companies and start ups in the biotech and med-tech industry. Recourse to the real options‟ method stimulates investment to build sequences of long multi-stage (i.e. continue or abandon the project, reduce or increase the investment). So this method can be particularly useful to identify risks with greater awareness and to select the biotech and med-tech projects that more than others can guarantee the businesses‟ sustainability.