Begin With the End in Mind

Begin With the End in Mind

Last year I was asked to make a presentation on how I would approach strategy in my next start up. I’ve founded several life science start-ups in various countries over the years, and I also consult to companies needing assistance with their business development and strategic partnering, but the request gave me pause because there would be many in the room with a lot more experience (and grey hair) than me.  I felt surely everything I have to say is common sense.  But the conference organizer reassured me and we both agreed that strategy is often handled badly in start-ups, proving that there is room for more common sense.  Read more

Key strategic choices – ‘when’ to plug into the value chain

Key strategic choices - 'when' to plug into the value chain

Companies must make many strategic decisions in developing a business model. My last post looked at key strategic choices about ‘what’ a company could develop, and it considered trade-offs and implications of decisions that greatly impact the risks, costs and rewards of drug development. This post looks at another important element of the business model – ‘when’ a company should plan to plug into the value chain and earn a return for its investors.  Read more

Key strategic choices – ‘what’ to develop

Key strategic choices - 'what' to develop

As I discussed in my last post, the key strategic issues facing biotech start-ups are capital constraint, regulatory burden and the need for complementary assets and credibility. Together, with project specific factors such as market opportunity and competition, they shape decisions about what, when, and how a firm plugs into the value chain. These decisions are captured in the firm’s business model. Over my next few posts I am going to explore the implications and trade-offs that surround each of these strategic decisions, beginning with what.  Read more

Strategic Issues Facing Biotech Start-ups

My last post talked about broad classes of technological innovation – novel research methods and tools, novel mechanisms of action or targets, novel compound types and novel treatment modalities – and the common business models associated with them. The type of technology a company has influences the choice of business model, since the technology bears on the need for specialised assets, such as manufacturing and distribution that may or may not be readily available, and on the ease of transferring knowledge about the technology to collaborators, licensees or acquirers. Some technologies are readily written down in standard operating procedures or lab reports, whilst others may be more art than science and their implementation may require extensive personal expertise. However, technology type is not the only factor driving a firm’s choices.  Read more

Business models and technological innovation

In an earlier post I discussed how biotech companies can earn a return on a technology either in the product market or the market for ideas. Although this appears to be a dyadic decision, it is more helpful to think of a continuum of choices, between plugging into the value chain early and full vertical integration, with many different ways in which a firm can interact with its value chain. The best strategy will depend on how well the market for ideas works. Important factors include the degree of information asymmetry between the seller and the buyer, the need for investments in specialized assets, how easily knowledge can be transferred between parties, and how strong the intellectual property protection is.  Read more

RIPCO, FIPCO, NRDO, FIPNET, VIPCO

RIPCO, FIPCO, NRDO, FIPNET, VIPCO

The above image summarizes some of the common business models in the biotech sector – showing which parts of the value chain the firms participate in and discussing very briefly the usual types of transaction mechanisms they use. Using the lingo of my previous posts (here, here and here), we are looking at the “when” and “how” of interacting with the value chain in these typical business models. With limited financial resources, the vast majority of biotech firms start out life as RIPCOs – research intensive (or royalty income) pharmaceutical companies. They focus on the earlier stages in the value  … Read more

The market for ideas vs. the market for products

The market for ideas vs. the market for products

Financial returns on an innovation may be earned through the “product market” or the “market for ideas.” The product market we are all familiar with – it describes the way in which we buy and sell physical products (medicines or diagnostic kits, for example) or services (laboratory tests or surgery). The market for ideas, on the other hand, is a notional market in which innovations are sold or licensed before they are a final product (or service). In essence the innovation is still an idea, or intellectual property – it is a collection of intangibles. Choosing between these two options  … Read more

The basics: defining investment strategy, business model and value chain

The basics: defining investment strategy, business model and value chain

My last post provided an introduction and something of a road map for my upcoming posts. The objective of this post is to make sure we all have a common understanding of the terms “investment strategy”, “business model” and “value chain”, and how these terms are related. This will help us in future discussions about how biotech firms typically approach investment strategy and in discussing how it could be done better. A firm’s investment strategy outlines “what”, “when” and “how” it will interact with its value chain to create value for shareholders. These decisions are embodied in its business model.  Read more

The Strategy of Biotech

The Strategy of Biotech

How do small biotech firms “do” strategy, and how can they “do it better”? In a nutshell this was essentially the topic of my doctoral thesis. I am a scientist-turned-bioentrepreneur and am passionately interested in the process of turning science projects into successful products and businesses. Why? Because I find the science of biotechnology fascinating, and I am excited about the promise it holds for improving the lives of individuals and populations if it can be turned from an idea into a product. And I also believe that those who take the risk and invest in these promises should be  … Read more