The biotech industry is unique from all other industries and as a result starting a biotechnology company can be somewhat daunting.
Biotech gives individuals an opportunity to impact the world by developing medical products that combat some of the most challenging and deadly diseases that plague humanity.
However, not all biotech products can be easily commercialized and besides, it isn’t always easy to work out whether research could be turned into a successful business.
But all in all, starting a biotechnology company is exciting, stimulating, frightening, and worthwhile – all at the same time especially when you consider the statistics that are out there.
- Global health care spend is projected to reach $8.7 trillion by 2020 with sales estimated to reach $293.5 billion in the biotech sector.
- % of GDP spent on health care will also rise slightly, from an estimated 10.4% in 2015 to 10.5% in 2020.
- As of 2015, about 670 public companies and over 200 thousand employees in the U.S. and Europe generate some $133 billion of biotech revenue. The United States is the leading global biotechnology player, with almost $108 billion of revenue and the industry’s total market capitalization of some $890 billion. More than 130 thousand people are employed by U.S. public biotechnology companies.
So starting a biotechbology company is a sound idea and with the right skill sets, you can achieve your goals and be successful.
This piece seeks to highlight some of the steps you will need in starting a biotechnology company.
But First, What Does a Biotechnology Company Do?
A biotechnology company uses biological processes, organisms, or systems to manufacture products intended to improve the quality of human life.
In recent years, biotechnology has expanded in sophistication, scope, and applicability.
This means it is not a distinct sector so much as it’s a collection of disruptive technologies for discovering and developing new medicines, and diagnosing and treating patients more effectively.
Now here’s a look at how to start a biotech company and the steps you need to follow.
Ensure Your Product Has a True Market Need
Entrepreneurs start biotechnology companies for various reasons, but creating revolutionary products and tools that impact the lives of potentially millions of people is one of the fundamental reasons.
Your biotech product is commercially valuable only if you can turn it into one or more applications that people will buy. Ask yourself:
- What problems does this biotech product or service solve?
- How do these potential customers currently solve those problems?
- How is my solution better?
Biolyse, for instance, its main focus has been the development of Paclitaxel for injection, a chemotherapeutic treatment used in the fight against various forms of cancer.
By concentrating on this one cancer medication and thoroughly investigating every aspect of its development, Biolyse can manufacture Paclitaxel efficiently while maintaining a lower cost to its ultimate consumers – the cancer patients who so badly needs it.
This example emphasizes the overwhelming importance of ensuring that there is a real market need for your future product.
Also be sure that the technology of interest is protected by intellectual property (IP) by applying for a patent.
Investors prefer to invest in biotech companies that own patented technology, rather than those that rely on trade secrets to protect their IP.
Assemble the Right Team and Hire a Good Attorney
Even the best ideas can’t be turned into successful biotech companies without having the right people on board.
Bringing in top advisors at the start is just the first step, however, in biotechnology entrepreneurship you must make good hires for each of the required jobs.
Also a good lawyer will become a key advisor in the early stages of your biotech company, so it is critical to seek out quality legal advice.
This will help you navigate through the corporate and business issues during all stages of starting and growing your biotech company.
Raise The Right Amount of Capital and Understand/Manage Risks
You should know how much money you should raise for your biotech start-up.
Across the biotech industry, the typical first round of financing – the Series A- is about $10 million to $20 million (there are outliers, however, like Denali Therapeutics, which raised more than $217 million).
Whatever the amount, a new biotech company needs to get results from its first round of capital.
Thereafter, you can choose a second round of financing or find a partner to develop the biotech product.
The point is that the decision is between equity dilution (selling more of the company) or asset dilution (giving away future value or the rights to the product).
Also understanding risks and how to minimize them, in turn, is a vital step if you want to start a biotechnology company fast.
This is because a biotech company is a melding of business and science, and thus it creates a business of scientific uncertainty.
Biotech entrepreneurs must therefore be prepared for an extraordinary long product development timeframe.
The average time to reach commercialization for biologics, drugs, and other types of therapeutics can take upwards of 15 years to reach the market.
Diagnostics, medical devices, and molecular tests can range from 3 to 7 years.
Make sure you also keep the regulatory risks in perspective as a company cannot just produce a product and sell it as in many other high technology businesses.
Leverage Emerging Technologies and Make Data Actionable
Real-world engagement is the best way to understand the opportunities and challenges of emerging technologies and life sciences and specifically the biotechnology sector can benefit from strategic alliances for technology.
When starting up a biotech company, you can set up pilots for technologies (think AI, VR, etc.) that support collaboration and knowledge sharing throughout the organization and with external partners.
Additionally, a foundation of reliable data and technology can help you when starting a biotechnology company to analyse, predict, and create actionable insights for strategic and operational decision making.
This not only help detect potential compliance and pricing risks, but also provide better forecasting for fast-changing markets, gaining competitive advantage of valuable data insights and guide the company towards new areas of profitability.
The Bottom Line
Biotechnology products arise from successful biotech companies which are built by talented entrepreneurs in possession of a scientific breakthrough that is translated into a product or service idea, which is ultimately brought into commercialization.
Successful biotech entrepreneurs possess a diverse set of characteristics that add significance at various stages of their biotech business.
In addition to the above mentioned points, you must have rapidly adaptive, serial, single-pointed, and focused attention.
You may not initially possess every skill required to lead a talented and diverse team to build a successful biotech company in a fast way, however, as with any skill set, most can be learned as long as you are willing to learn.