Early-Stage Biotech Companies Strategies for Survival and Growth
Successfully developing a business that not only survives but thrives requires dedication, relentless commitment, endless perseverance and flawless execution. All elements must work together towards a common purpose and wrong turns must be preempted wherever possible.
Innovation can rarely be pursued in the absence of funding and when venture capital investment is required to start up or scale up a life sciences organisation, those investors must be fully committed to the vision of the executive team.
Essential foundations for starting a biotech business
Advances in medicine are constantly required. Treatments are still being pursued for many common diseases and curative and palliative treatments with fewer side effects are highly sought after. With many cancer patients suffering from the side effects of traditional treatments, appetite should be high for companies with evidence-based proposals for investigating and developing alternatives.
Staffing the business
In order to start a biotech business, a vision is essential. The business must have a clear purpose for delivering for the greater good, as well as for generating profit. A business professional must head up the team, whose responsibilities will include business planning, liaising with potential investors, creating high-confidence value proposals and building the team to enable the delivery of business aspirations.
An expert scientific team will be required to develop, test and manufacture products that can be licenced and sold into the medical environment. These experts should come from a diverse range of sectors to maximise productivity and output. Quality assurance is essential and a marketing team will need to be fully briefed in order to network and sell the finished product/s.
Finance professionals will be required to manage business finances, make accurate cash flow predictions, engage with investors, securing any grants that are appropriate, for example, bidding for funding under the Innovate UK Smart Grants scheme or partnering with appropriate businesses within the industry to promote growth and resource sharing.
Developing appropriate products
Having a vision for a product is only the first step to seeing it available on the open market and realising its benefits. Many early stage European biotech companies will develop partnership arrangements with major players in the biotech market in order to expand their network and opportunities for promoting their products within their target marketplace.
Where this is not feasible or the desire is strong to keep the product in-house, specific experts will be required throughout the product research and development phases to ensure that the final product will fill a suitable gap in the market, that appetite exists for it, and that testing can be conducted securely, where necessary applying for relevant patents and intellectual property rights ahead of licencing and marketing the product.
It may be necessary to form strategic alliances with other businesses within the life sciences sector in order to promote a new and innovative product without the support of a larger and more established organisation or where investors require additional reassurance as to the security of their investment.
There are many hurdles that must be overcome in bringing a new biotech product to market, including the risk of obsolescence during the R&D phase, technical risks and rapid spikes in expenditure. There is also the need to consider the risk of product attrition once launched and to determine potential mitigations or backup plans that could be implemented should the finished product fail to satisfy the needs of the market. The regulatory approvals process can be arduous and cannot be circumnavigated, so these timescales need to be firmly wired into the product launch plan.
When it comes to selling the finished product, care should be taken to identify and pursue the most appropriate route to market, including finalising any exit strategies that are necessary to end partnerships or alliances that were entered into during the testing, development and marketing phases of product development.
Forge the right business relationships
When operating in a high risk business environment such as biotech, it makes sense to share that risk where appropriate. Striking deals with other businesses within the industry can often make sound financial sense.
There is no need to form a formal partnership arrangement, but legally drafting agreements for co-developing new products or for specific licensing transactions can offer a mutually beneficial outcome for both businesses, supporting growth and securing market share.
Established pharmaceutical companies have the capability and funding to ease the commercialisation of new products established by smaller firms. In sharing product licensing or offering a share of revenue or royalties, it may be possible to bring new products to market in a more efficient and expedient manner, thereby generating a financial return within a shorter time scale.
In considering entering into a business arrangement such as that described above, it is essential that the executive team determines how best to engage and the level of detail that they are prepared to share during negotiations, to safeguard their product and the research that has been conducted to date, balanced against the need for support from a larger firm with greater capacity and experience in the field.
Small early stage European biotech companies with a suitable product idea can build a thriving and profitable business. It is not without challenge and embedding the right team at the outset will be essential to achieve success. There will be significant risks to overcome, both technical and financial, but by establishing appropriate affiliations with others within the industry, resources can be shared, regulatory challenges overcome and product launches accelerated to deliver optimum results.
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