Small Biotech’s Blues

error-102075_1920Biotechnological and pharmaceutical companies are usually very different entities. Biotech exists primarily for the innovation and discovery. Pharma companies mainly aim to develop, commercialize and sell their own or acquired products. Therefore, those two types of companies usually take on a very different business model.

For instance, biotech may not intend to ever grow their commercial capacities for the new product planning, launch and brand development. They may be relying on partnering with larger pharma when it comes to commercialization & sale. However, for both pharma and biotech companies, the long-term objective is to generate the revenue in some way, either by out-licensing, selling out the drug candidate (or the whole business) or generating the commercial sale of the approved product. Pharmaceutical companies seem to be more prepared to achieve their commercial business goals. Pharma capacities, coming with years and years of retained expertise, allow them to discover, develop, commercialize and sell ultimately. Biotechnology companies may lack the true intellectual and general capacities to do same efficiently. Below analysis lists some of the key factors contributing to that difference.

  1. Existing commercial capacity:

Biotech, as stated above, is primarily focused on discovery and research.

Since this is their primary business intent and function, they usually have no existing commercial capacities. This seems to be true especially for the companies that are on the market for +10 years without a marketed product and with past development failures.

If there is no relevant expertise within the company, it may be impossible to anticipate and plan in the particular knowledge area. This knowledge/capacities gap can cause a lot of hiccups when the product is already in the late development phase, and there is no clear plan on what to do next. If the commercial team was not involved when development plans were put in place, very often they are not optimized and may lead (intentionally or not) to the unattractive product without clear differentiation strategy and value for the payers. The same lack of the commercial capacities may be responsible for the wrong assumptions on the launch planning without considering its complexity. Many companies realize too late in the process that commercial/early product planning should be implemented with start of FIH studies at latest.

  1. C-suits executives and senior management relevant expertise:

Much can be judged on the prospect of the company by looking at the top executives. If they are with the organization for too long, it can indicate a strategic stagnation. One can ask who they are professionally, if they come outside of pharmaceutical business, from academia or if they are veterans of pharma/biotech industry. If they are researchers, developers or have the commercial background?

There are many excellent and well-founded biotech companies led by very experienced C-suit level former pharma executives (both on research and business side).

I think such management may give investors/shareholders and employees a lot of confidence in their outlook.

Another category is biotech companies ran by research and academic experts. The biggest problem may appear to be a disconnect between theoretical knowledge and practical aspects of the drug development and commercialization. As much as academia experts are very often outstanding in drug research and discovery, they are not capable (due to lack of relevant experience) plan on the optimal development and commercialization of the product(s). I have seen both large companies and small ones bringing academic experts to manage the strategic parts of on organization.  Those attempts of integration of the two worlds: industry and academia are very often futile. Funny fact, companies seem not to learn from that experiences and similar solutions are implemented over and over again with same outcomes (is not that a definition of insanity?). Taking above into account, the savvy practitioners and industry veterans are actually the safest choices to lead any start-up biotech, in my opinion.

I still believe however that any company may be successful with a right balance of industry and academic experts. The key is the timely filing of the expertise gaps to avoid potential negative consequences, which will follow if the gap is missed.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s