The 5 best strategies to boost your Biotech company.
Biotech founders, it doen´t matter if it is their first company or the 20th, face a several of challenges in order to build a successful company and bring value to society. Just to name a few, they need to not only develop best in class or first in class products but also mature a strategy that better fit the market and thus has a compelling business model. They also need to look forward in their future and understand who they need to partner and why (maybe the most difficul task).
The days of dreaming about becoming a fully integrated pharmaceutical company like Biogen, Genentech, etc are almost forgotten due mainly to a change in investors expectations when they invest in a company. During this difficult times, many investors expect for companies to do more with less and save cash due to the current bear market (Graph 1). The bright side of it is that many development task can be outsourced to decrease the cost in the balance sheets. The business model for biotechnology companies that want to be successful in the future needs to be adapted to these new realities.
Graph 1: S&P fluctuations and crashes (Quaterly)
5 Key strategies to thrive as a Biotech company:
Descentralized operations
The new descentralized world is also bringing new tools for young biotech companies to thrive and evolve. A shift to partner-driven models, in which biotechs rely on a complex network of advisors, suppliers, service firms, academic centers, shared promotion, marketing, and distribution relationships, is increasing.
Find the best partner:
We should think of the best partner as part of our team, money is not enough to deliver new treatments or diagnostics to market. You need other assests, some are tangible and other intangible. Biotech startups have limited resources and experience. Find the righ pharmaceutical company could be the best strategy to speed up clinical development process, market access and commercial excellence, features that big pharma companies have matured over the years.
How can a biotech partner with pharmaceutical companies? There´s no single answer to this question and the possibilities are quite a few, depending on the needs of both parties. One of many possibilities is a Joint venture collaboration with option for licencing the approved asset or an equity investment. On this line, biopharma companies make an upfront investment on R&D and clinical trials that can soar into the tens of millions dollars even before initiation of large population human efficacy trials, just as a quick example from 2022:
Agreements with Biopharma can also include milestone payment, in some casos operation capital and royalties (Every biotech startup dream). The milestone payment usually comes with accomplishing clinical, regulatory and commercial milestone and royalties (% of product sales) usually depends on how mature is the company on clinical development, exclusivity status and the potential sales projected. Tiered royalty rates typically range from low-single to low-double digits but it is part of the negotiation process.
Big Pharma companies are always looking for new assets to strenght and de-risk their pipeline. Product candidates should be evaluated and prioritized based on merits relative to other pipeline opportunities technical and market criteria for identifying projects with the highest strategic value could focus on:
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Take advantage of global oportunities:
Biotechs will also need to look beyond their own borders for financing and market opportunities to maximize the potential of certain technologies and products. Emerging markets may place a much greater value on them. They need to think strategically about the value that their product could have in different locations and if they need to have a local partner.
Be open to new ways to finance operations:
Successful companies will find new ways to finance. The venture capital mechanism for raising money has weakened amid the high cost and long timeline for drug development and the current bear market. Venture investors don’t have the ability to provide round after round of financing and then wait 10 to 15 years for a return.
Fortunately, with the evolution of a more virtual business model where companies can piece together the resources they need as they go, venture investors are now looking for alternative structures with which to build value. There will be a movement to finance individual projects rather than companies.
Whenever possible, demonstrate cost effectiveness:
In the past, all companies needed to do as they developed their products from the lab to the marketplace was to demonstrate to regulators that they were safe and effective. In the near future, they will need to add more features to their products like cost-effectiveness due to the high costs applied to the healthcare systems, new therapies like gene therapy will need to show payers that they are cost-effective. Companies will not only have to show their products are better able to treat a disease than what is already available, but comparative effectiveness and pharmaco-economic efficiency will emerge as de facto regulatory standards.
Have you tried any of these strategies? Have one of your own? Please share in the comments.
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