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  5. Study Group for Encouraging Dialogue between Biotech Venture Businesses and Investors Compiles Guidebook on Information Disclosure

Study Group for Encouraging Dialogue between Biotech Venture Businesses and Investors Compiles Guidebook on Information Disclosure

March 4, 2021

The Ministry of Economy, Trade and Industry (METI) compiled a “Guidebook on Information Disclosure for Encouraging Dialogues between Biotech Venture Businesses and Investors.” The aim is to present a guide that helps biotech venture businesses advance the disclosure of information, mainly their non-financial information, a standpoint considered necessary by investors.

1. Background and purpose

As development of medical products has been taking longer in time and becoming larger in scale, the presence of biotech venture businesses is growing worldwide. Against this backdrop, it is necessary for Japanese biotech venture businesses to play a leading role in dramatically enhancing the development of new medical products both in quality and quantity.

Meanwhile, many biotech venture businesses in the drug development industry, in particular, are struggling to raise funds as they need large amounts of investment in research and development prior to commercialization of products leading to negative profits. Moreover, as their businesses are of a highly specialized nature, investors have difficulty in adequately assessing business feasibility. For these reasons, it is often difficult for them to raise sufficient funds to advance their businesses.

It is critical for drug development venture businesses to proactively and comprehensibly convey information that is considered necessary for investors to understand venture businesses’ ability and growth potential in order to receive appropriate assessment in markets and secure continuous funds. This main purpose of this guidebook is to organize purposes for and key points of disclosure of non-financial information that is important for investors in ascertaining the future corporate value of drug development venture businesses, including potential for technological development and outlooks of related markets.

2. Overview

The guidebook provides comparisons of Japanese drug development businesses with those in the United States, which are advancing proactive disclosure of non-financial information, and based on this, presents, using simplified diagrams, organized information on: details of information disclosure considered particularly insufficient for Japanese drug development venture businesses, purposes for information disclosure from the standpoint of investors, and key points in preparing necessary documents.

METI expects drug development venture businesses to use the guidebook and thereby to strategically consider information disclosure in order to effectively convey to investors their attractiveness, “proactively disclose their information” and encourage dialogues with investors and related stakeholders.

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Division in Charge

Bio-Industry Division, Commerce and Service Industry Policy Group