Biotech firms require large amounts of cash if their drugs succeed in gaining regulatory approval.Therefore,these firms often have substantial cash holdings to fund their possible investment needs.

Question

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Biotech firms typically require significant investment to fund research and development, clinical trials, and regulatory approval processes. If their drugs are successful, the firms may require additional funds for production, marketing, and distribution. Holding substantial cash reserves can help these firms fund their investment needs and pursue future growth opportunities.

Biotech Firms Require Large Amounts of Cash If Their Drugs