Virtual Biotechnology Start-Up model as exclusive network innovation under uncertainty

Virtual Biotechnology Start-up model has recently been created from venture capital´s reluctance for investment. For example, Quanticel Pharmaceuticals was founded by a VC firm as a matchmaker; Versant Ventures, an established biopharmaceutical company as a would-be licensee; Celgene, and idea generating researchers of Stanford University, in San Francisco and La Jolla in November 2011. As a research question, is it possible to regard this type the same as open-source innovation like Arch2POCM, which seeks speed-up by preventing the overlap of the pre-competitive Research and Development cost? VBS is defined as a portfolio of real options in a process for commercializing life-science ideas until the milestone of Proof-of-Concept by partnerships among university, pharmaceutical company, and VC. Option-Games method is defined as an integrated methodology between real options and game theory, regarding the difference of real options with financial options as the limited exclusiveness. The objective of this paper is to examine, firstly, a theory on investment timing under uncertainty and competition, secondly the deterioration models of growth options at monopoly and perfect competition as both competitive extremes, and thirdly the implication of VBS model as social innovation at oligopolistic structure and sensitivity analysis. It is still necessary to analyze the incentive of non-profit R&D by Public Private Partnership.