A Biotech Managers Handbook A Practical Guide.pdf

A biotech manager’s handbook

Published by Woodhead Publishing Limited, 2012
A biotech manager’s
handbook
A practical guide
Edited by
Michael O’Neill
and
Michael M. Hopkins
Woodhead Publishing Series in Biomedicine: Number 9
Oxford Cambridge Philadelphia New Delhi

Woodhead Publishing Limited, 80 High Street, Sawston, Cambridge, CB22 3HJ, UK
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First published in 2012 by Woodhead Publishing Limited
ISBNs: 978-1-907568-14-5 (print) and 978-1-908818-15-7 (online)
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Contents
List of figures and tables xv
About the Editors and Contributors xvii
Woodhead Publishing Series in Biomedicine xxiii
Preface xxvii
Acknowledgements xxxi
1 The bioscience sector: challenges and
opportunities 1
michael o’neill and michael hopkins
1.1 Introduction 2
1.2 What do we mean by biotech? 3
1.3 From humble origins to big biotech 4
1.3.1 The information revolution 5
1.3.2 An investment boom 7
1.3.3 Restructuring of the pharmaceutical industry 7
1.4 The current state of the biotech industry 9
1.5 The world needs more medicines and will pay for them too 17
1.6 Opportunities in biotechnology 19
2 Academic innovation: so you want to be a
bio-entrepreneur? 23
michael o’neill and john scanlan
2.1 Why commercialise? 24
2.1.1 Motivation 24
2.2 Why not? 26
2.3 Define aims and examine assumptions 27
2.4 Learning from previous ventures: business and science cultures 29
2.4.1 Differences between academic and applied research 29
2.4.2 Differences between academic and commercial management 33
2.4.3 How do we bridge the divide? 34

viii A Biotech Manager’s Handbook
2.5 Role of the university 35
2.5.1 Promoting and entrepreneurial culture within the university 36
2.5.2 Promoting links with the business community 37
2.5.3 Incubators – are they worth getting into? 38
2.6 Creating new bioscience companies from academia: how to 40
2.6.1 How to create a successful university bioscience spin-off 41
2.7 Summary 52
3 Leadership and you 55
michael o’neill and emily sun
3.1 Introduction 56
3.2 Case studies 57
3.2.1 (i) The heroic leader 57
3.2.2 (ii) Friends 58
3.2.3 (iii) Goldilocks Ltd 60
3.2.4 Learning points from the three cases 62
3.3 Values? Principles? 63
3.4 Why would someone work for you? Attracting talent 64
3.4.1 Perks are not expensive luxuries 67
3.5 Multiple roles – Leader, Manager and Coach 69
3.5.1 A few words on the art of delegating 74
3.6 Self-awareness: all the problems and solutions are
there in the mirror 76
3.7 Conclusion 77
4 Managing self, situations and stress 79
michael o’neill and emily sun
4.1 Introduction 80
4.2 Self-awareness: more about you 80
4.3 Personal styles at work 84
4.4 Management style: enough about me what about
managing people? 86
4.5 Dealing with problems 87
4.5.1 Conflict resolution 89
4.5.2 The value and cost of conflict 89
4.5.3 Causes of conflict 90
4.5.4 Dealing with conflict 92

4.6 Managing stress 95
4.6.1 Why is stress a problem? 96
4.6.2 Time management 97
4.6.3 Routine: the rhythm of life 99
4.6.4 Time-managing others 101
4.7 Conclusions 102
5 It's all in the plan 105
michael o’neill
5.1 Why plan? 106
5.2 The company vision 108
5.3 The team 110
5.4 The technology 110
5.5 Market strategy: now and in the foreseeable future 114
5.5.1 Outline prevalence and incidence 114
5.5.2 What treatments are available for the illness? What other
technologies are available? 115
5.5.3 Identify future likely competition 116
5.5.4 What can be improved in current treatments 116
5.5.5 Being different is not enough. They have to be (commercially)
useful differences 117
5.6 Goals and objectives 117
5.7 Resource requirement 122
5.7.1 People 122
5.7.2 Equipment and consumables 122
5.7.3 Facilities 123
5.7.4 Help 124
5.8 Financial plan 125
5.9 Intellectual property 127
5.10 Executive summary 127
5.11 Finally 128
6 Exploring funding routes for therapeutics firms 131
michael m. hopkins
6.1 Introduction 132
6.2 A retrospective look at an evolving sector 133
6.3 External funding and the equity funding cycle 134
Contents ix

x A Biotech Manager’s Handbook
6.4 Pre-seed, and seed investment 138
6.5 Early-stage investment 140
6.6 Late-stage investment 148
6.7 The exit 151
6.8 Conclusions 153
7 Raising funds and managing finances 157
darren cunningham, fca
7.2 Preparation for fund-raising 159
7.3 Cash flow forecasting and financial management 164
7.4 Conclusion 178
8 Introduction to intellectual property 179
lisa kiernan
8.1 The basics of intellectual property 180
8.2 Why protect your IP 180
8.3 What can be patented? 181
8.4 What cannot be patented? 182
8.5 Intellectual property strategy 183
8.5.1 Things to consider when developing your patent strategy 184
8.6 Special aspects: patent protection 185
8.6.1 Approximate costs 185
8.6.2 Criteria for patentability 186
8.6.3 Contents of a patent application 189
8.6.4 Priority 191
8.6.5 Publication 191
8.6.6 Patent ownership 191
8.6.7 Patent filing strategy 193
8.6.8 Infringement 195
8.6.9 Patent Term Extension 197
8.7 Case studies 199
8.7.1 Patentability of human genes 199
8.7.2 Patentability of human embryonic stem cells 200
8.7.3 Patentability of enantiomers 201

9 Managing projects and portfolios in R&D:
why and how 209
michael o'neill
9.1 The cost of innovation 210
9.1.1 Why are timelines so important? 211
9.1.2 How do we know where we are going? 212
9.2 Limitations of planning 213
9.3 Do you own company audit 216
9.3.1 Processes 217
9.3.2 People 218
9.3.3 Portfolio 219
9.3.4 Science 221
9.3.5 Technology 222
9.3.6 Budget and finances 223
9.4 Target Product Profile as a basis for drug development plans 223
9.4.1 What are we aiming for? 224
9.4.2 What is current and future likely Standard of Care? 224
9.4.3 How can we produce something that is better than what
already exists? 225
9.4.4 What is essential and what is desirable? 225
9.5 Putting it all together in a plan 227
9.5.1 Why do drugs fail? 227
9.5.2 Building a project plan for R&D 228
9.5.3 Example of a drug discovery flow chart 230
9.6 Parallel vs. sequential activities 238
9.7 Back to the TPP 240
9.8 Summary 240
10 Successful registration of new therapies 245
gerard mcgettigan and michael o'neill
10.2 Regulatory institutions and processes in the EU 249
10.2.1 The European Medicines Evaluation Agency 250
10.2.2 Mutual recognition procedure (MRP) 252
10.2.3 Decentralised procedure (DCP) 252
10.2.4 First contact with EU regulatory agencies 254
10.2.5 Scientific advice from regulatory agencies 254
10.2.6 Clinical trial applications 255
Contents xi

xii A Biotech Manager’s Handbook
10.3 Regulation in the USA: the FDA 256
10.3.1 Investigational new drug (IND) 256
10.3.2 New Drug Application (NDA) 257
10.4 The three pillars of drug development and registration 260
10.4.1 Quality 260
10.4.2 Safety 261
10.4.3 Efficacy 262
10.5 How regulatory requirements guide drug discovery
and development 263
10.5.1 Regulatory affairs and non-clinical development, including
key CMC matters 264
10.5.2 Regulatory affairs and clinical development 266
10.5.3 Benefit versus risk – the final regulatory decision? 268
10.6 Post-marketing requirements and activities 269
10.6.1 Pharmacovigilance 270
10.7 Your drug is on the market, what can possibly go wrong? 271
10.7.1 Safety issues 271
10.7.2 Dependence/withdrawal 272
10.7.3 Inadequate health economic benefit 272
10.8 Specific strategies and targets for biotech companies:
orphan drugs and rare diseases 273
10.8.1 Why orphan drug designation and development? 274
10.8.2 Potential difficulties with orphan drug strategies 277
10.8.3 Advantages of orphan designation 278
10.9 And finally … the regulatory affairs expert 279
11 Clinical trials: design and practice 283
russ neal
11.2 Overview of clinical phases 285
11.2.1 Phase I clinical trials 286
11.2.2 Phase II clinical trials 293
11.2.3 Phase III & IV clinical trials 299
11.2.4 Post-marketing surveillance studies 301
11.3 The importance of good clinical practice 302

12 Business development: starting out 309
michael murray
12.1 Introduction – what is business development? 310
12.2 Careers in business development 312
12.3 Components of business development – Part 1 314
12.3.1 The offering 316
12.3.2 Positioning 317
12.3.3 Intellectual property 321
12.3.4 Competitive intelligence 322
12.3.5 Market analysis 323
12.3.6 Financial analysis 325
12.3.7 Brand 327
12.3.8 Marketing 329
12.3.9 Networking 331
12.3.10 Record keeping 332
12.3.11 Collaterals 333
12.3.12 Presenting 335
12.4 Summary 337
13 Business development: to the deal and beyond 341
michael murray
13.1 Components of business development – Part 2 342
13.2 Due diligence 342
13.3 Negotiation 346
13.4 Valuation and deal structuring 349
13.5 Instructing legal teams 354
13.6 Alliance management 356
14 Conclusions and final thoughts 359
michael o'neill and michael hopkins
14.1 Your plan 360
14.2 You as a leader 362
14.3 Your networks 365
14.4 And finally ... 367
Subject Index 369
Contents xiii

List of figures and tables
Figures
1.1 Pharmaceutical investment in R&D 10
1.2 Cost of drug development by phase per compound 11
1.3 R&D spending by pharmaceutical companies versus new
product approvals 12
1.4 Novel drug development timelines are lengthening 15
3.1 Situational approach to leadership 73
4.1 The Johari window 85
4.2 Hidden management: most of the really important stuff
in management is invisible and intangible 94
5.1 Planning hierarchy from vision to action 119
6.1 Funding sources used by UK therapeutics firms 137
6.2 Cumulative investment versus expected returns in a
hypothetical VC-backed firm 144
7.1 Raising funds – cash flow forecasting and financial
management activities 165
8.1 An outline of patent procedures for the EU and UK 194
9.1 Discovery pipeline as an iterative process 212
9.2 Process mapping flow-scheme 229
9.3 Flow-scheme for in vitro assay development: basic assay
development flowchart for receptor binding/functional assays
using recombinant receptors in transfected cell lines 229
9.4 High-level overview of drug discovery process 230
9.5 Simplified generic screening plan for novel drug
compounds 230
9.6 Comparison of sequential and parallel project planning 239

xvi A Biotech Manager’s Handbook
10.1 Diagrammatic representation of the ICH Common
Technical Document 258
11.1 Overview of clinical development milestones 286
11.2 Summary of phase I process 287
11.3 Summary of phase II process 295
11.4 Summary of phase III process 300
11.5 Summary of phase IV process 302
12.1 Development of a deal, showing the key parameters and
the roles of key personnel 315
13.1 Viable deal range: factors which determine the scope of
a viable deal for a small biotechnology company 351
13.2 How deals relate to positioning: the dynamics of small
company impact relative to overall deal value 352
Tables
1.1 Various causes of death worldwide (WHO, 2008) 17
5.1 Five steps towards establishing a market analysis 114
7.1 Company A: monthly cash flow forecast 174
7.2 Company A: Scenario 1 forecast 176
7.3 Company A: Scenario 2 forecast 177
8.1 Intellectual property rights 180
8.2 Approximate costs for patent from years 1 to 20 186
9.1 Sample target product profile (TPP) for Parkinson’s disease 226
9.2 Construct a Process Map: seven questions for process mapping 227
9.3 Basic principals for in vivo efficacy testing (Due Diligence) 236
9.4 Target product profile: labelling concepts 239
10.1 Marketing Authorisation Application (MAA – EU) and
New Drug Application (NDA – USA): contents checklist 259
10.2 Regulatory and clinical objectives of phase I studies 265
10.3 Types of phase IV studies 270
10.4 Orphan treatments approved in the EU in 2009–2010 274

About the Editors and
Contributors
Michael O’Neill is an innovation advisor who founded his own
company, Eolas Biosciences Ltd, in 2006 to help companies by
providing strategic advice and detailed practical know-how across a
range of disciplines and therapeutic areas. His work includes writing
business and commercialisation plans, project management, product
development to marketing strategy and regulatory advice on drug
development. He worked in a number of research and managerial
roles in Merck, Laboratorios Almirall and Eli Lilly. He is now on the
advisory board of a number of companies. He conducts due diligence
for investment or mergers, acquisitions and licensing. Michael’s
work has also extended to helping a number of contract research
and service organisations review operations and develop marketing
strategies. He has a BA and PhD in Psychology. He is a Chartered
Psychologist and has a diploma in Organisational Development. He
has authored over 80 research papers, book chapters and patents as
well as articles on regulatory affairs and a range of issues relating to
the biotechnology industry.
Darren Cunningham is founder and Managing Director of Life
Science Ventures (LSV), a professional services company. He has
over 10 years’ senior management experience in life science
companies. Prior to establishing LSV, Darren was with publicly
quoted drug development company Amarin Corporation plc where
he spent eight years in a range of senior positions with responsibility
covering business and corporate development: in-licensing, out-
licensing, mergers and acquisitions, divestitures, and deal negotiation;
plus strategic planning, global intellectual property management,

xviii A Biotech Manager’s Handbook
investor relations, fundraising, financial reporting and operations
management. Prior to Amarin, Darren was an Associate Director of
Strategic Planning at publicly quoted drug company Elan Corporation
plc. Darren holds a Bachelor of Commerce Degree from the National
University of Ireland Galway, and a Masters in Accountancy from
the Michael Smurfit Business School, University College Dublin. He
trained at PricewaterhouseCoopers and is a Fellow of the Institute of
Chartered Accountants in Ireland.
Michael Hopkins is a Senior Lecturer at SPRU – Science and
Technology Policy Research, at the University of Sussex. He has
spent more than 15 years studying and researching how biotechnology
innovation works in practice. Michael initially trained as a biologist,
before taking an MSc in Technology and Innovation Management
and a D.Phil in Science and Technology Policy Studies (both from
Sussex). Michael’s research interests span diagnostic and therapeutic
innovation, as well as organisational strategies in areas including the
adoption of new technologies, corporate alliances, intellectual
property and financing. His research has been funded by the UK’s
Economic and Social Research Council, the Medical Research
Council, National Endowment for Science Technology and the Arts,
and the European Commission. Michael has published in the top
management and scientific journals in his field, including Nature,
Nature Biotechnology and Research Policy and has consulted for the
UK’s Department of Trade and Industry, Human Genetics
Commission, OECD and European Commission, as well as providing
executive training for biotech and pharmaceutical firms in the UK
and beyond.
Lisa Kiernan is a Patent Attorney with Murgitroyd & Company. She
is based in their Dublin office and is involved with the drafting and
prosecution of patent applications at the Irish, UK and European
Patent Offices for spin-out companies, University departments and
larger international companies. She began her career in the patent
profession with the Cambridge-based Patent and Trademark firm
Stratagem IPM. During this time she became familiar with aspects
such as determining the optimum patent strategy, budget forecasting,

freedom to operate and infringement analysis. She previously held
the position of Technology Transfer Officer in both the Institute of
Neuroscience and the Northern Institute for Cancer Research at
Newcastle University. Here she gained valuable experience of
commercialising intellectual property within an Academic
environment. Lisa has competed a PG Certificate in Intellectual
Property Law from The University of London, an MSc (Dist) Drug
Design & Biomedical Science from Napier University, Edinburgh,
and a BSc (H) Biochemistry from the National University of Ireland,
Galway.
Gerry McGettigan originally trained as a molecular biologist, and
has over 20 years in commercial and development roles in the
biopharmaceutical industry, including the sale of his own consultancy
company. He has worked with Almirall (Spain), Glaxo (UK),
Liposome Company (US biotech) and the consultancy firm GMG
BioBusiness that he set up in 1998 and sold in 2005. His roles have
included Business Development, Regulatory Affairs and Clinical
Research. He has also been CEO of the Biotechnology Development
Agency in Barcelona and currently holds Board positions at
Syntropharma and Biopta. He is an active investor in biotech firms
through TRI Capital Ltd.
Mike Murray is a co-founder of IP Asset Ventures, a firm based in
Oxford, UK, that provides specialist services for businesses built on
and growing with intellectual property. Before that Mike was
Managing Director and served on the board of Sosei R&D Limited,
headquartered and listed in Tokyo. He led the company during a
period of considerable change, creating and raising funds for a spin-
off social enterprise company, Vostrum™. Mike joined Sosei from
Wood Mackenzie where he was Senior Vice President Life Sciences,
responsible for winning clients and leading delivery teams of
consultants on projects including commercial assessment, due
diligence, deal strategy and execution. Prior to joining Wood
Mackenzie, Mike served on the board of Amura Therapeutics
Limited as Commercial Director & Senior Vice President of Business
Development. He has also held commercial posts at BTG International
About the Editors and Contributors xix

xx A Biotech Manager’s Handbook
plc, Axis Genetics plc and at the UK’s Medical Research Council. In
all these roles Mike has successfully deployed a strong working
knowledge of intellectual property to deliver business objectives. He
has led and executed about 25 deals. His industrial experience spans:
intellectual property strategy and management, business planning,
budgeting, project management, commercial strategy, due diligence
and technical assessment. He holds a first degree with Honours in
Microbiology (University of Edinburgh) and a PhD in molecular
genetics (University of Leicester).
Russell Neal is Chief Operating Officer of CNS Pty, an Australian
clinical research organisation. Russell has been a consultant to
clients on clinical trial management for over 19 years. Initially as a
CRA/PM, he moved with Quintiles to Sydney before moving to
Singapore in 1999 as Regional Training Manager. In 2003, Russell
returned to Australia to assist in establishing CNS and remains
currently responsible for the day-to-day running of CNS business.
Russell, a BSc graduate in Neurophysiology from Nottingham, UK,
is an active speaker at international forums and a regular contributor
to various print media.
John Scanlan is the Director of Commercialisation at National
University of Ireland at Maynooth (NUIM), leading a team which
focuses on exploiting university-developed technologies via spin-out
company formation and licensing to existing companies, building
partnerships with industry and developing a culture of market-
informed research. Since founding the office, John has overseen its
growth to top performer in Ireland over 4 years with metrics far
exceeding international standards. In that time he has executed
approximately 30 collaboration agreements and approximately 20
licence agreements and has set up nine spin-off companies. He
founded NUIM Connect, a biennial business networking forum
linking companies to NUIM. He has played a key leadership role in
the establishment of the Irish national technology transfer system via
the Innovation Taskforce and as founder and chair of the Irish
Technology Transfer and Innovation Group. John is a director of
several private companies including Blue Box Sensors Ltd, Beemune

Ltd, TekMark Innovations Ltd and CereBeo Ltd. He is an inventor
on eight US patents and is the author of 13 refereed publications and
has two published articles on innovation/economic development. He
has acted as consultant to several private and educational groups on
innovation culture and commercialisation.
Emily Sun is an experienced Human Resources professional who has
worked in the pharmaceutical, retail, fashion and non-profit sectors.
She was with Eli Lilly and Company for nearly 10 years, where she
served as the HR Director for the company’s UK operations as well
as for their R&D operations across Europe. She is now a consultant
and executive coach, helping organisations and their leaders become
as effective as possible. Emily has a Bachelor degree from Cornell
University in Industrial Relations and an MBA from INSEAD.
About the Editors and Contributors xxi

Woodhead Publishing Series
in Biomedicine
1 Practical leadership for biopharmaceutical executives
J. Y. Chin
2 Outsourcing biopharma R&D to India
P. R. Chowdhury
3 Matlab® in bioscience and biotechnology
L. Burstein
4 Allergens and respiratory pollutants
Edited by M. A. Williams
5 Concepts and techniques in genomics and proteomics
N. Saraswathy and P. Ramalingam
6 An introduction to pharmaceutical sciences
J. Roy
7 Patently innovative: How pharmaceutical firms use emerging patent
law to extend monopolies on blockbuster drugs
R. A. Bouchard
8 Therapeutic protein formulation
Edited by B. K. Meyer
9 A biotech manager’s handbook: A practical guide
Edited by M. O’Neill and M. H. Hopkins
10 Clinical research in Asia: Opportunities and challenges
U. Sahoo
11 Therapeutic antibody engineering: Current and future advances
driving the strongest growth area in the pharma industry
W. R. Strohl and L. M. Strohl
12 Commercialising the stem cell sciences
O. Harvey
13 The design and manufacture of medical devices
Edited by J. Paulo Davim

xxiv A Biotech Manager’s Handbook
14 Human papillomavirus infections: From the laboratory to clinical
practice
F. Cobo
15 Annotating new genes: From in silico to validations by experiments
S. Uchida
16 Open-source software in life science research: Practical solutions in
the pharmaceutical industry and beyond
Edited by L. Harland and M. Foster
17 Nanoparticulate drug delivery: A perspective on the transition
from laboratory to market
V. Patravale, P. Dandekar and R. Jain
18 Bacterial cellular metabolic systems: Metabolic regulation of a cell
system with 13C-metabolic flux analysis
K. Shimuzu
19 Contract research and manufacturing services (CRAMS)
M. Antani, G. Gokhale and K. Baxi
20 Bioinformatics for biomedical science and clinical applications
K-H. Liang
21 Deterministic versus stochastic modelling in biochemistry and
systems biology
P. Lecca and I. Laurenzi
22 Protein folding in silico
I. Roterman-Konieczna
23 Computer-aided vaccine design
T. J. Chuan and S. Ranganathan
24 An introduction to biotechnology
W. T. Godbey
25 RNA interference: Therapeutic developments
T. Novobrantseva, P. Ge and G. Hinkle
26 Patent litigation in the pharmaceutical and biotechnology industries
G. Morgan
27 Clinical research in paediatric psychopharmacology: A practical guide
P. Auby
28 The application of SPC in the pharmaceutical and biotechnology
industries
T. Cochrane
29 Ultrafiltration for bioprocessing
H. Lutz
30 Therapeutic risk management of medicines
A. K. Banerjee and S. Mayall

31 21st century quality management and good management practices: Value
added compliance for the pharmaceutical and biotechnology industry
S. Williams
32 Pharmaceutical licences: Valuation and execution
S. Mayhew and I. Walker
33 CAPA in the pharmaceutical and biotech industries
J. Rodriguez
34 Process validation for the production of biopharmaceuticals:
Principles and best practice
A. R. Newcombe and P. Thillaivinayagalingam
35 Clinical trial management: An overview
U. Sahoo and D. Sawant
36 Impact of regulation on drug development
H. Guenter Hennings
37 Lean biomanufacturing
N. J. Smart
38 Marine enzymes for biocatalysis
Edited by A. Trincone
39 Ocular transporters and receptors in the eye: Their role in drug delivery
A. K. Mitra
40 Stem cell bioprocessing: For cellular therapy, diagnostics and drug
development
T. G. Fernandes, M. M. Diogo and J. M. S. Cabral
41 The quality by design handbook: A systems view on pharmaceutical
and biopharmaceutical development and manufacturing
C. Herwig and J. C. Menezes
42 Fed-batch fermentation: A practical guide to scalable recombinant
protein production in Escherichia coli
G. G. Moulton and T. Vedvick
43 The funding of biopharmaceutical research and development
D. R. Williams
44 Formulation tools for pharmaceutical development
Edited by J. E. A. Diaz
45 Drug-biomembrane interaction studies: The application of calorimetric
techniques
R. Pignatello
46 Orphan drugs: Understanding the rare drugs market
E. Hernberg-Ståhl
47 Nanoparticle-based approaches to targeting drugs for severe diseases
J. L. A. Mediano
Woodhead Publishing Series in Biomedicine xxv

xxvi A Biotech Manager’s Handbook
48 Successful biopharmaceutical operations
C. Driscoll
49 Electroporation-based therapies for cancer
Edited by R. Sundarajan
50 Transporters in drug discovery and development
Y. Lai
51 The life-cycle of pharmaceuticals in the environment
R. Braund and B. Peake
52 Computer-aided applications in pharmaceutical technology
Edited by J. Petrović
53 From plant genomics to plant biotechnology
Edited by P. Poltronieri, N. Burbulis and C. Fogher
54 Bioprocess engineering: An introductory engineering and life science
approach
K. G. Clarke
55 Quality assurance problem solving and training strategies for
success in the pharmaceutical and life science industries
G. Welty
56 Nanomedicine: Prognostic and curative approaches to cancer
K. Scarberry
57 Gene therapy: Potential applications of nanotechnology
S. Nimesh
58 Controlled drug delivery: The role of self-assembling multi-task
excipients
M. Mateescu
59 In silico protein design
C. M. Frenz
60 Bioinformatics for computer science: Foundations in modern biology
K. Revett
61 Gene expression analysis in the RNA world
J. Q. Clement
62 Computational methods for finding inferential bases in molecular
genetics
Q-N. Tran
63 NMR metabolomics in cancer research
M. Cuperlovic-Culf
64 Virtual worlds for medical education, training and care delivery
K. Kahol

Preface
The life sciences industry is a huge global venture. It is huge not only
in terms of the money and number of people involved but also in its
aims, namely to deliver longer and better lives for people worldwide.
This is a hugely complex task, full of amazing prospects and serious
challenges. It is a world where unbounded creativity is required to
work within limits set by all-pervasive constraints. It is a business
where uncertain science has to be harnessed to deliver on promises
that only the wildest optimist could hope to keep. It can demand
huge investment but seems to run mainly on the enthusiasm, drive
and idealism of its participants. It can make huge profits yet most of
those involved make, at best, a modest living, and would probably
be far better rewarded finding other uses for their skills and
knowledge. Yet people put their time and effort unstintingly into
endeavours that in reality have only limited chances for success. It is
a complex industry driven by what are clearly many and varied
motivations.
There are many excellent books on management that any
prospective manager or entrepreneur could read, but there are few
books that deal with the specific issues, challenges and problems that
confront the men and women who take on roles of responsibility in
the biosciences industry today. More books are becoming available
and we would urge you to read several. No one book is going to
contain all of the information that a person needs to deal with every
situation that can arise in the long and involved processes of
developing a new healthcare product or service. Some books are
excellent at adapting the general principles of management such as
those taught on MBA courses and applying them to the bioscience

xxviii A Biotech Manager’s Handbook
industry but few are written by insiders who know the industry and
its issues from personal experience.
As such this book is taking a slightly different approach, borrowing
slightly from the social sciences auto-ethnography school. Ellis and
Bochner (2000) advocate auto-ethnography, an approach that
‘make[s] the researcher’s own experience a topic of investigation in
its own right’ (p. 733) rather than seeming ‘as if they’re written from
nowhere by nobody’. As consultants we are very much participant
observers, real people interacting with other real people, with
thoughts, feelings and lots more besides. It seemed impossible and
perhaps even foolish to try to ignore all of this while trying to
describe an ‘objective’ reality out there. As editors we instead
encouraged the contributors to be first person ‘I’ actors. There are
no average companies, no completely typical leaders, no models that
transfer directly from one place or company to another, and certainly
no one right way to do things. Even where there are external rules
and regulations such as in regulatory or legal intellectual property
issues, there is considerable room for personal interpretation and
influence of environment and circumstance. In the face of this, we
have concentrated on our own experiences. The character of the
book is not intended to be an academic study of biotechnology or
biotechnologists, although we do draw on many sources from
academic journals and texts.
Other people might have chosen or emphasised other topics but
this is biotech as we have found it. These are the lessons we have
learned. This book is a distillation of what we and our co-authors
have learned from working in the industry over many years. Our
aim for this book is that it will be a consultant-in-a-book for
managers and leaders in biotech companies. It will support what you
already know, it will encourage you to keep going through difficult
times, it will challenge you to take a different view on matters, and
it will make you think about how what you are doing will impact on
you, your company and those around you, not just now but in the
future. It is our hope that this book will also annoy you, disturb
some of your cherished views and challenge some of your most
ingrained behaviours – exactly what we would do if we were acting
as consultants, but without us drinking your coffee.

Although we hope that you will read all of the chapters in this
book at some stage, we know that most people will pay more
attention to some parts than others. With this in mind we have tried
to make the chapters as self-contained as possible. If you do read the
whole book we hope that you forgive moments of repetition that
inevitably follow from this approach. Ideally we hope that everyone
would read the whole book paying special attention to the areas
outside their own expertise or experience. Managing and leading in
the biotechnology industry involves an enormous range of disciplines.
Learning about other key areas can be immensely valuable. Managers
in biotech companies have to know more about a broader range of
disciplines, scientific and business-related, than any academic or any
person working in a large pharma company. This book is aimed at
introducing leaders and managers in biotechnology companies to
some of the more salient issues that we have found as experts
working in the area over a number of years.
One of the key themes that emerged on reading these contributions
as they came in was the importance of keeping the bigger picture in
mind. A little planning early on can save a huge amount of work
later in every step of the process. Planning even early-stage preclinical
work can benefit from consideration of clinical and regulatory issues
and it would be foolish to even begin thinking about starting in the
world of biotechnology without serious consideration of business
development. Thus we recommend reading a few chapters beyond
the topics of immediate concern if only to let you know what is
coming your way. Above all else we hope that this book will help
and encourage you in your work to bring innovative medicines,
products or services to market.
Reference
EllisC,BochnerAP.(2000).Autoethnography,personalnarrative,reflexivity.
In Denzin NK, Lincoln YS (eds) Handbook of Qualitative Research, 2nd
edn. Thousand Oaks, CA: Sage, pp. 733–68.
Preface xxix

Acknowledgements
One of the great pleasures in writing a book is to be able to thank
those who have helped and commented along the way. Many people
have discussed these topics with us, read and reviewed some of the
chapters, encouraged us and helped us all along the way.
KimGannon,nowatNeurophageandformerlyofEolasBiosciences
(Boston, Mass.), did much to help get this book off the ground. We
are grateful also to Kieran Rooney from Halo BioConsulting (UK)
and Ineke Rijnhout from Kenko Consulting (Netherlands) for many
useful and entertaining discussions both before and during this
book. Thanks as well to Margaret Beer (Merck), Annette Domeney
(Novartis), Nick Moore (AMRI), Andrew Tingey (Fusion IP),
Andrew Wood (Eli Lilly), Padraig Wright (GSK) and Sophie Zettl
(MedImmune) for encouragement and insightful discussion. We
would especially like to thank Ruth McMahon and Sheila O’Loughlin
from Enterprise Ireland and Shahid Raza (Healthcare Dimensions,
UK, India and Pakistan) for their help and thoughtful comments.
Special thanks also go to Charles Baden-Fuller (Cass Business
School, London), John Pool (chairman extraordinaire) and many
anonymous interviewees from the EPSRC-sponsored grant EP/
E037208/1. ESRC-TSB-NESTA-BIS funding on Innovation Research
Centre Distributed Project grant RES-598-25-0054 greatly informed
our thoughts on strategy for biotechs. Finally we would like to thank
Paul Nightingale at SPRU – Science and Technology Policy Research
(University of Sussex, UK).

1
The bioscience sector:
challenges and opportunities
Michael O’Neill and Michael Hopkins
Abstract. Initially a term used to describe an emerging set of
technologies, ‘biotech’ has become shorthand for a large part of the
life science industry, a distinct sub-sector of smaller companies with
their own culture and dynamics. Managing smaller companies
requires a different skill set from that needed to succeed in academia
or in larger pharmaceutical companies and the needs of this first group
that our book aims to address. Knowledge of the greater landscape is
essential to locate one’s own company successfully in this ecosystem.
This opening chapter to A Biotech Manager’s Handbook provides an
accessible, informal, but well-informed overview of the main themes
and drivers for change in the ‘biotech sector’ and the challenges and
opportunities for those working in it. We identify three major trends
that have profoundly shaped the sector over recent decades: the
information revolution, which has reduced the cost of producing and
sharing biological data, but has opened up a host of new challenges
associated with the interpretation of emerging science; a revolution in
industrial organisation, where larger pharmaceutical companies are
merging and shedding capacity while an entire ecosystem of smaller
companies has sprung up providing services and products to larger
established companies comprising everything from screening
technologies, testing services and specialist knowledge all the way
through to drug candidates. Investors have shown cycles of interest in

2 A Biotech Manager’s Handbook
these companies, looking for ways to derive value from an enormous
boom in scientific knowledge. The final trend is an investment boom,
as governments and private investors have sought to exploit biotech
for social and economic gains. At the same time, challenges abound
as R&D costs spiral due to the interaction of factors associated with
new science, technology, markets and uncertainty. For the prepared,
opportunities also arise as nimble new industry players bring better,
faster or cheaper solutions to a growing number of potential partners
in a global industry aimed at bringing improvements in health whilst
also generating a return on increasingly high-risk investments.
Keywords: biotechnology, cost of R&D, Human Genome Project,
investment, unmet medical need, venture capital.
1.1 Introduction
The day-to-day work of a biotech manager is focused on running
projects, managing people, worrying about costs, raising funds,
producing data and much else besides. It is not always easy to stand
back and look at the broader strategic picture. Keeping oriented
with a sense of where you and your company are in the greater
scheme is, however, a vital skill for a leader, particularly in a sector
as fast paced as biotechnology. This book provides a broad overview
of the issues we feel you should be concerning yourself with, and
some ideas on how to identify and address key challenges, or even
navigate successfully around them. The focus of the book assumes
the reader is engaged in the development of therapeutics, given that
this is often the largest component of the biotech sector in the
Western countries we have experience of. However, much of the
book is relevant to managers in other companies too, from financial
planning, fundraising, intellectual property (IP) and deal-making to
people management.
We have observed the biotech sector from the perspective of a
range of organisations (working in very large pharma and with small
start-ups) and noted that today few in the sector can feel secure or
confident that their organisation has what it takes to succeed in an
increasingly turbulent environment. Yet the advance of new

The bioscience sector 3
treatments depends, increasingly, on the commercial success of
organisations developing innovative approaches to tackling diseases.
Managers undoubtedly face a tough task, but we have written this
handbook to help anticipate problems and suggest solutions.
This first chapter provides context for the following chapters by
outlining the main themes and trends in the industry at the global,
organisational and technological levels. This is a complex arena, so
we make no apologies for starting with a ground-up basic introduction
to the sector followed by an assessment of the challenges and
opportunities currently facing companies.
1.2 What do we mean by biotech?
Biotechnology has been defined as ‘any technique that uses living
organisms (or parts of organisms) to make or modify products, to
improve plants or animals, or to develop micro-organisms for
specific uses’ (OTA, 1991: 29). This broad definition encompasses
activities such as dairy processing and brewing that go back
thousands of years. The application of microorganisms to
pharmaceutical production began with fermentation processes more
akin to brewing than to synthetic organic chemistry-based
pharmaceutical production. In the 1970s, the advent of techniques
for the genetic modification of organisms and cells that could be
engineered to produce specific molecules such as therapeutic proteins
heralded a new age of biotechnology, often termed ‘modern
biotechnology’ to distinguish it from prior developments.
More generally the term ‘biotech’ is used as shorthand to refer to
a whole host of small-scale companies dedicated to developing novel
therapeutics, diagnostics, devices and research services. Indeed, as the
techniques for biotechnology have spread to industries and companies
established prior to the 1970s, the distinction between ‘biotech firms’
and new or incumbent pharmaceutical firms has become more
difficulttomake.Theterm‘biotech’hasthereforebecomesynonymous
with small (often loss-making) companies focusing on life-science-
based products and services. For the purposes of this book we will
use the term ‘biotech’ in this more inclusive manner. Many early-
stage companies are dealing with proto-technologies that have yet to

fully define their field of application. They may be considering the
potential of their technology to be a diagnostic, a therapeutic, or
something they can offer as a research tool or service. Sometimes it
can even be a combination of some of these (e.g. the discovery of an
over-expressed protein on the surface of a tumour cell, such as Her-2,
can be utilised as a research tool to differentiate cancer types, the
target for an anti-cancer therapy, or a diagnostic/prognostic test that
aids clinical decision-making).
1.3 From humble origins to big biotech
Modern biotechnology initially grew up in clusters centred around
Boston in Massachusetts, and San Francisco and San Diego in
California. These areas benefited from the proximity of an investment
community that was able to see the potential of this nascent industry
and was willing to invest in it. In the 1980s and 1990s a range of
policy initiatives in countries across the globe were launched in an
attempt to replicate this US phenomenon, in the name of economic
competitiveness. The industry now comprises thousands of companies
worldwide attracting billions of dollars in investment annually.
Hundreds of companies have achieved stock market listings and the
sector’s leading companies have market capitalisations in the tens of
billions of dollars. The substantial growth of the industry can be
attributed to three recent trends:
An information revolution: genomics, and IT (information
technology) accompanied by an expandingscopeofIP(intellectual
property) protection.
An investment boom: government (grants, incentives) and private
[business angel, venture capital (VC), stock market investors and
corporate investors].
A revolution in industrial organisation: the restructuring of the
biomedical industry.
1.
2.
3.

1.3.1 The information revolution
The decoding of the human genome has been described in detail in
many books. For example, you can read The Sequence (Davies,
2000) for an entertaining account of not just the scientific but the
political and financial battles that surrounded the project. The whole
multi-billion dollar undertaking was made possible by advancing
instrumentation technology that allowed rapid and parallel decoding
of vast chunks of human genetic code and corresponding advances
in IT, particularly in bioinformatics, but also changes in IP rights
that allowed, respectively, for the improved processing and potential
commercial exploitation of this information (and therefore attracted
investment in it). Over the last two decades the cost of generating
and analysing biological data has plummeted. It is almost a cliché
that technologies or methods that seemed almost science fiction,
such as the $1000 genome, a few short years ago are now moving
into sight. The ability to manipulate genetic material in vitro or in
vivo is now a standard technique in molecular biology laboratories
across the world. Lists of cutting-edge technologies appear out of
date almost as they are written.
New data are being published by an increasing number of scientific
disciplines in an ever increasing number of scientific journals. The
impact of electronic publishing, data handling and ‘knowledge
management’ means that these data are being made available at a
rate that is difficult for even the most expert investigators in any one
field to absorb. It might be more correct to talk about a ‘Data
Revolution’ as we have yet really to find a means of integrating all
of these data into information or real knowledge. The growth of
bioinformatics data is, according to those leading data handling in
large pharma, outstripping even Moore’s law of exponential growth
in computer processing power. In practical terms, this has yielded a
very real and immediate benefit for drug discovery. It is now possible
to work on a much broader front than ever before as the human
genome and the genomes of our myriad pathogens have suddenly
provided a huge range of potential leads. Available ‘druggable’
targets now are counted in the thousands rather than in the hundreds.
These new molecular targets for drugs are of course just the start of

a long journey, but there are unprecedented numbers of opportunities
to exploit.
As knowledge expands, the boundaries between academic
disciplines blur rapidly and the traditional knowledge silos are
breaking down. Whereas before we had biochemistry and that was
about it, you can now put ‘Bio’ in front of an ever-expanding list of
words as new fields emerge in bio-engineering, bio-materials and
nano-biotechnology, or attach -omics to the end to get genomics,
proteomics, toxicogenomics and so on, to describe high-throughput
applications of biotechnologies.
Tissue and organ engineering are promised to develop artificial
implants that will one day render organ transplantation obsolete and
change life-threatening disorders into manageable chronic conditions.
The inclusion of, or expansion to, other areas does not only include
biological disciplines. Mobile communications technology is
heralding a gradual revolution in remote diagnostics, healthcare and
health monitoring that may transform the delivery of healthcare in
countries with access to the technologies.
Great, but when is this going to happen? Few people will argue
with the general sense of technological optimism but very little has
emerged so far, for all the resources being poured into biomedical
research. In fact public debate in Western economies seems to dwell
on the negative consequences of the industry. Sceptics point to the
lack of attention to the practical problems yet to be solved in
delivering these technologies to the mass of people in the world, or
to alternatives to thinking of the technology as the sole determinant
of change. Others see the changes as part of a larger and more
gradual progression in scientific and technical knowledge that
unfolds in slow, cumulative and accretive rather than revolutionary
ways (Hopkins et al., 2007). The application of genomic information
to the development of therapeutics might be much more incremental
than people have hitherto imagined. The length of time involved in
developing new therapies based on this knowledge might turn out to
be very similar to those for older more traditional forms of medicine,
especially as regulatory systems and medical practice must evolve in
parallel with novel therapies and entirely new forms of delivery.

1.3.2 An investment boom
Since Nixon’s ‘war on cancer’ in the 1970s , and up to the present day,
there is a strong sense that investments in the life sciences have a high
rate of return. Enthusiastic reports,1,2 suggest the dollars spent on the
National Institutes of Health and Human Genome Project have been
amongst the best money spent by US taxpayers. Such sentiment has led
to sustained real-term increases in public-sector R&D. For the private
sector the allure is simply the insatiable demands for better medicines
and care that sees OECD member states spending an average of nearly
9% of GDP on healthcare and the USA spending nearly 16% in 2007.
In the 1980s and 1990s the pharmaceutical industry was a key
beneficiary of such spending, enjoying high rates of revenue growth
and often topping the tables of the world’s most profitable firms. Small
wonder then that new market entrants enjoyed much support in the
context of high expectations of promise from new technologies.
Successive waves of investment in biotech companies produced
swarms of potential competitors and partners to the existing and still
highly profitable drug developers. Ernst and Young, a leading provider
of professional services to the sector and producers of the industry’s
much discussed annual Beyond Borders report, suggests that there are
over 4000 biotech companies worldwide, although in the industry’s
heartlands of the US and Europe the absolute numbers of companies
may now be beginning to fall (for reasons we explore below).
1.3.3 Restructuring of the pharmaceutical industry
The largest pharmaceutical companies spend several billions of
dollars per year to develop, at most, a handful of successful products.
A single major company such as Eli Lilly spent $4.3 billion in 2009
on R&D, AstraZeneca $4.4 billion. This is a bigger spend on medical
research than most governments in the world currently manage or
even dream of, including advanced nations such as the UK. In the
case of Lilly, this sum spent on R&D almost matches the sales of the
company’s biggest selling drug, Zyprexa, which sold $4.9 billion

worldwide in the same year, representing almost 20% of the
company’s total revenues that year (Eli Lilly Annual Report, 2009).
Yet the carriers of new technology are often new companies, free
from the thought constraints and technological traditions of the
market incumbents. The high-risk strategies these new biotech entrants
take mean that many will fail, but those that succeed offer radical
advances of tremendous interest to their more established pharma
counterparts. Established pharma companies, with better resources
and expertise, place bets via portfolios of collaborations with new
entrants. Originally a hedge against missing out on exciting new
developments, these alliances are now claimed by some to be a more
cost-effective way of conducting R&D than the highly bureaucratic
large companies that dominate the sector. As a result an increasing
slice of big pharma’s R&D spending is being promised to external
collaborations (Huggett et al., 2010).
Even with this strategy the level of R&D spending in established
pharma companies has become unsustainable. Pharmaceutical
companies are now beginning to cut their R&D expenditures,
notwithstanding the explosion of new technologies illuminating new
horizons. Indeed it is in part because of the huge cost of accessing
many of these exciting new opportunities that R&D has become so
expensive, and yet remained high risk.
To reduce costs companies have started to undertake enormous
efficiency drives and to consolidate. In recent years the pharmaceutical
industry has been undergoing a restructuring process that has seen
massive reductions in R&D staffing levels driven often but not
exclusively through company mergers and ‘rationalisation’, meaning
an enormous wave of redundancies have hit the sector. This has been
accompanied by large increases in market concentration by the
largest companies that has helped companies to maintain a continuous
supply of high-quality products for launch. As finding beneficial,
safe and cost-effective treatments becomes harder, companies need
to draw on ever broader pipelines of products to cope with high
rates of project attrition. In 2009 Merck bought its rival Schering
Plough in one of the largest corporate takeovers in US history with
a deal totalling $41 billion. This deal was subsequently topped by
Pfizer’s takeover of Wyeth, which cost $68 billion.

Smaller companies are also bought up by larger ones as the large
companies need to feed their development pipelines. According to
Deloitte’s Database, in each of the years 2008, 2009 and 2010 around
250 companies in the sector have been acquired. A cycle has thus
been established as employees of large companies become available to
join new start-ups to explore new R&D strategies, while the large
companies select the most successful to buy. However, this cycle is
becoming increasingly problematic for reasons we now explore.
1.4 The current state of the bioscience industry
The cost of drug discovery and development has risen steadily over
recent decades. The pre-tax cost of developing a drug introduced in
1990 was estimated at $500m; in 2003 the estimated cost was
$880m (Di Masi et al., 2003). The Tufts centre for the study of the
pharmaceutical industry now estimates that it costs over a billion
dollars to bring a drug to market. When one includes further costs
such as the opportunity cost of these large long-term investments
that figure goes up to $1.3 billion (PhRMA, 2009). This level of
investment is beyond the reach of all but the largest of companies.
These figures are much disputed, with some claiming individual
drugs cost far less to develop than the billions quoted. This is true
for the individual successful product, but as no-one knows at the
outset which are going to be the successful products, many hundreds
of costly unsuccessful candidates are investigated along the way.
It is estimated that up to 90% of projects entering phase I clinical
trials fail to go on to make it to registration, 50% of phase II, and
somewhere between 10 and 20% of phase III projects (CMR, 2010).
In the years 2007–2009 more than 35 projects were terminated in
phase III (CMR, 2010). Given that the average phase III trial can
cost hundreds of millions of dollars, this means that these failures
come with an enormous cost. This very high attrition rate means
that every successful drug has to carry the cost not just of its own
development, but also the costs of all of the numerous failures. (We
will deal with the issue of attrition and why drugs fail in the chapter
on Project and Portfolio management, Chapter 9.)

However, for the successful company the rewards are high. In
2009 the global sales of pharmaceuticals amounted to $808 billion
while total spending on research and development was $70 billion
(CMR, 2010). Yet R&D cost seems enormous when measured
against the number of drugs that are emerging onto the market.
Only 26 new chemical entities (NCEs) were launched in 2009.
The proportion of revenue that is spent on pharmaceutical
research is now calculated to be 10–20% (Figure 1.1), vastly more
than in any other high-tech industry, such as aeronautical, energy or
information and telecommunications. According to the European
Federation of Pharmaceutical Industry Associations, the industry
contributed 15% of total EU private R&D expenditure in 2009. In
the same year, of the 645,000 people employed by the pharmaceutical
industry in Europe, 107,000 worked in R&D.
The project costs for each development phase for drugs rise almost
exponentially (Figure 1.2). The vast majority of the cost of developing
a new drug lies in the clinical development programmes to establish
the safety and efficacy of compounds in humans. Clinical trials can
involve hundreds and even thousands of patients and cost hundreds
of millions of dollars (Figure 1.2).
Figure 1.1 Pharmaceutical investment in R&D.
• Pharma Industry invested $60 billion in R&D in 2003
– US: $36 billion (1990 – $8.4 billion)
– Europe: $20 billion
– Japan: $4 billion
• Percentage of sales allocated to R&D
– 1980: 11.9%
– 1999: 20.8%
– 2003: 21.5%

New technologies have not necessarily led to more new drugs
reaching the market, nor stopped expensive late-stage failures
(Hopkins et al., 2007). A significant graphic for those engaged in
biomedical research is the one that shows that new drugs approvals
by the major regulatory bodies are remaining steady (Figure 1.3).
Thus although investment in research has climbed steadily over the
decades this has not been matched by a corresponding increase in
the number of new medicines reaching the clinic (Drews and Ryser,
1996). This means that R&D productivity within the industry has
been declining. In 1996, 51 NCEs were registered by the US Food
and Drug Administration (FDA). This represented an historic high
point influenced by changes in regulatory conditions at the time.
However, in 2001 this number had fallen to 23. From this historic
low, the number of NCE approvals had only reached 26 by 2009 as
noted above. The reasons for this are complex and varied:
We have picked the low hanging fruit: formalised pharmaceutical
research and development is now over 100 years old, and many
medical conditions are addressed with established treatments. Most
of the routine maladies of everyday life such as headache and
Figure 1.2 Cost of drug development by phase per compound.
Hit-to-Lead
0
100
200
300
400
500
600
Lead
Optimisation
Candidate
Selection
Phase I
Phase of Development
USD
Millions
Phase II Phase III

indigestion have readily available treatments, often based on
refinements of natural products (e.g. aspirin). Other former public
health plagues such as infectious diseases are so well addressed as to
have been practically forgotten in many Western markets. Many of
the drugs used to treat many major conditions such as schizophrenia
and depression were discovered serendipitously with little or no
knowledge of how they actually worked at the time. Research since
then has concentrated on revealing the mechanism of action of these
drugs (dopamine receptor blockade and increased monoaminergic
transmission, respectively). Subsequent drug development has largely
involved incremental modifications to these paradigms. Once such
avenues are explored and fully commercially exploited, the remaining
challenges are much harder to address.
New technologies. New technologies such as genomics need time to
be absorbed into the drug discovery and development processes. Many
of the promised new drug targets remain under-characterised and
0
10
20
30
40
50
60
$0
$5
$10
$15
$20
$25
$30
$35
New drugs approved by FDA (left scale)
R&D spending in billions (right scale)
1980 1985 1995 2002
$
Billions
1990
New
Product
Approvals
Figure 1.3 R&D spending by pharmaceutical companies versus new
product approvals.
Source: Food & Drug Administration; PhPharma; Kaiser Family Foundation

poorly understood and few have been addressed with new therapies as
yet. The main initial impact thus far seems to have been felt more in
identifying potential safety and toxicity issues than in delivering new
targets.Wecannowdetectliabilitytoinducecardiovascularcomplications
of drugs by alteration of QTc interval by a simple in vitro hERG assay.
This can now be tested on molecules at the earliest stages of Structure
Activity Relationship (SAR) development. There has not been a
corresponding growth in the knowledge of the basic mechanisms of
disease. In this way, more reasons have been discovered for abandoning
compounds in development than pushing new ones through to later
stage evaluation in the clinic or on to the market.
New science. The science around new drug targets is also less well
understood. In some ways, when we knew less about the biology of
human diseases, making drugs was easier. There were not so many
variables to deal with. Now we are studying very complex cellular
mechanisms that take many years to study and to understand the
consequences of interfering with them. Although on the one hand
this has brought great hope in the number of potential targets, there
is no doubt that it has significantly complicated the drug discovery
process. Once upon a time, scientists looked for ‘a cure for cancer’.
Medications that were discovered such as the platinum-based, anti-
neoplastic drug treated a range of cancers, with a varying degree of
success and with often serious side effects. Now scientists have
learned that the biology of different cancers can vary enormously. To
develop new and more effective treatments that are specific to those
cancers and that have fewer side effects is a major scientific
undertaking. As we have drilled down into the details of disease
processes to look for points of intervention that could lead us to a
cure, we have found that the complexity is fractal, that each level of
detail we step down to opens up a whole new level of complex
interaction, multiple mechanisms and parallel regulatory systems.
Although this has been a boon to academic science it has made the
business of drug discovery much more difficult.
Safety issues. As major safety issues have been identified with
medicines already on the market, regulatory authorities have set
more stringent criteria. Regulatory agencies such as the FDA and the
European Medicines Agency regularly update guidance as to what is

expected from new drugs to treat particular conditions. For every
new safety issue identified, the greater the requirement to demonstrate
that a new treatment does not involve this risk. This means in effect
that there is more to check before they can be tested in the clinic.
More details and examples are given in Chapter 10 (Regulatory
Aspects of New Therapies).
Pharmaceutical company reorganisations. Drug companies the
world over have been undergoing a major period of restructuring
internally and have been consolidating by mergers and acquisitions,
as noted above. But all of this effort, doing what you do better and
faster, has not led to an increase in drug output. It takes a lot of time
for organisations to settle down after major periods of incorporating
or losing large numbers of people, taking on new work practices and
adjusting to new and different management styles. Even the
companies that have progressed furthest along the pathway of
merging and acquiring could be said to still be in the process of
validating this strategy as a viable business model. The conclusion
of a study of pharmaceutical mergers and acqusitions activity was
that it appeared often neither to create nor to destroy value but leave
things pretty much as they were before or that ‘1 + 1 = 1’ as the
report’s author puts it (Munos, 2009).
Spiralling costs. It is a paradox of all of the new technologies that
every stage in the development of drug discovery and development
has become more rather than less expensive. Even getting a candidate
drug to the clinic can cost anywhere in the region of $10–20 million
and possibly more for new biological treatments. This is again due
to the proliferation of possibilities for drug efficacy, safety and
kinetics that could be examined in vitro or in vivo prior to taking a
drug forward for testing in humans. Likewise, as the cost of taking
a drug into the clinic has risen, more confirmatory preclinical data
are sought to ensure that such a decision is justified, contributing to
the next major issue.
Drug development times are not getting shorter. Development
times have increased over the decades due mainly to companies
doing more testing, earlier, to try to reduce the risk of compounds
failing in large and very expensive clinical trials (Figure 1.4). Thus
where preclinical testing can reveal more about a compound’s

ADME profile (absorption, distribution, metabolism, excretion), it
is much more cost efficient to find this out earlier in animal studies
than risk failing in a clinical trial, which could cost more than ten
times the cost of an animal study. It is significantly cheaper to
evaluate a compound extensively in animal studies than risk failure
in a clinical trial with attendant costs and risks to humans.
As the costs of clinical trials increase companies need more
certainty as to which compound to advance into clinical trials. Thus
more testing is conducted at every stage to build confidence as
companies become more risk-averse. Instead of making a decision
that could determine the survival of the project or even the company,
it is easier to ask for more animal data. As stated above, there is a
major cost associated with this.
Once companies start a process of testing a compound in the clinic
they soon run into problems of finding enough of the right patients
in whom they can study their drug effects. Clinical trials quickly use
up available patient populations, meaning that patient recruitment
can be very slow, adding to the time it takes to conduct clinical trials –
and hence companies have taken to looking further afield for clinical
trial sites. Furthermore as we learn more about the underlying
diseases and the effects of drugs on them, clinical trial protocols are
Figure 1.4 Novel drug development timelines are lengthening
Source: Data from Joseph A DiMasi, New Drug Development: Cost, Risk and Complexity.
Drug Information Journal, May 1995
5.9
0
2
4
6
8
10
12
14
16
1960s
Years
Pre-IND phase IND phase NDA
11.6
14.2 14.8
8.1
1970s 1980s 1990s
3.2
2.5
2.4
2.1
4.1
5.1
5.5
2.8
2.6
6.1
6.1

becoming ever more complex with more factors being measured and
a greater number of variables analysed. In an effort to get more out
of each trial, companies are having to run them for longer, thereby
increasing cost.
Each compound has a limited patent life (see Chapter 8). Any
delay in getting a drug onto the market will eat into the viable patent
life of marketed compounds and thus into the market revenues of the
compound. Every day in the development life of a compound that
reaches $1 billion in peak annual sales is worth approximately $3
million. That means that every day’s delay takes $3 million off the
final value of sales of the drug. This calculation is quoted many times
in this book. Some things are worth repeating.
In addition to the research process taking more time and being
more expensive, the regulatory process adds more time to the
development of a drug. The time to approval for an NCE in 2006/7
was 1.1 years, which is an improvement on the average of nearly 2
years some time before that.3 Although this is often cited as an
example of bureaucratic delay, it is also worth pointing out that
regulatory submissions are increasing in size and number, leaving
regulators with an ever-increasing workload.
Post marketing issues. Even when drugs reach the market, their
success is not guaranteed. It is simply not possible to ensure that any
drug is entirely safe through clinical trials. Although many precautions
as set by scientific, medical and legal standards are taken, it is really
only when the drug is used for a prolonged period of time by much
larger and more heterogeneous populations that the overall safety
profile of a drug is known. Safety data are always provisional and in
reality have the tag ‘safe so far’ attached. Regulatory authorities
constantly monitor safety data and if a drug causes concern its use
can be limited or in the worst case withdrawn from the market. In
2009, the FDA issued 85 safety warnings on marketed treatments or
combinations of marketed drugs.4
So many are the risks for marketed compounds that only 30%
achieve revenues that cover their R&D costs (Grabowski et al.,
quoted in Cohen et al., 2005). So why do so many companies and
indeed individuals keep trying? We address this in the next section.

1.5 The world needs more medicines and will pay for
them too
The main purpose of biomedical research is to improve human
health. It is dedicated to finding treatments to prevent premature
death and relieve the burden of illness on individuals and societies
that look after them. Although major leaps forward have been made,
particularly in economically developed countries, there is still
enormous scope for new and better treatments. This is why we have
biomedical research in all its forms and why individuals and
enterprises continue to attempt to make new medicines despite the
difficulties outlined above.
A relatively small number of diseases account for a very large
percentage of deaths worldwide. Table 1.1 shows that, worldwide,
cardiovascular and respiratory diseases account for almost 30% of
all deaths. In addition to being major causes of death, other conditions
such as ischaemic heart disease and cerebrovascular disease are also
among the top six causes of burden of disease as sufferers often have
prolonged periods of debilitating illness prior to death. There are
other primarily non-fatal conditions that also contribute a significant
Table 1.1 Various causes of death worldwide (WHO, 2008)
Deaths
(millions)
Percentage
of all deaths
Coronary heart diseases 7.20 12.2
Stroke and other cerebrovascular diseases 5.71 9.7
Lower respiratory infections 4.18 7.1
Chronic obstructive pulmonary disease 3.02 5.1
Diarrhoeal diseases 2.16 3.7
HIV/AIDS 2.04 3.5
Tuberculosis 1.46 2.5
Trachea, bronchus, lung cancers 1.32 2.3
Road traffic accidents 1.27 2.2
Prematurity and low birth weight 1.18 2.0

burden of disease, for example unipolar depressive disorders, adult-
onset hearing loss, refractive errors and alcohol use disorders. This
means that millions of people worldwide are afflicted with conditions
that are poorly or inadequately treated.
The pharmaceutical industry focuses its efforts on diseases that
will generate large revenues to sustain the cost of drug discovery and
development. Thus, although tropical diseases are major health risks
in global terms, they attract little interest from pharmaceutical
companies, although smaller biotech companies may be more able to
focus on catering for smaller markets. On the other hand, diseases
of the prosperous, developed world where patients and governments
are willing and have funds to pay for treatments feature much more
prominently in drug development projects.
It is estimated that there are 2,900 drugs currently at various stages
of development in the US (Plunkett Research Report, 2010).5 Of
these, 750 are anti-cancer drugs, 312 are heart disease drugs, 150 are
diabetes drugs and 109 are HIV/AIDS treatments. Of the remainder,
91 drugs are for Alzheimer’s and senile dementia diseases. Tropical
diseases barely register. A successful drug can be very profitable. If
you do manage to make a safe and effective treatment and get your
drug onto the market, the rewards can be enormous. More than 120
drugs earned more than $1 billion in revenues in 2009. Most
companies in the sector never see anything like this level of revenue,
however, but any company that gets a compound onto the market
and that can sell it can generate a profit, which after all, is what being
in business is about. Smaller companies do not need to find drugs
that sell in excess of a billion dollars to justify their existence and
almost every country in the world has a pharmaceutical industry
catering to some aspect of the local market.
In spite of the difficulties and challenges outlined in the previous
section it will also be noted that the biomedical industry has been
very profitable over many decades. For those companies willing to
take on the enormous risks inherent in an enterprise with as many
risks and possibilities of failure as the development of novel
pharmaceuticals, the benefits can be enormous. The lure is not only
the scientific kudos and benefit to humanity that would come from
finding an effective therapeutic for a major disease such as lung

cancer or a burdensome disease such as senile dementia, but also the
prospect of significant profits that would accompany such a success.
For this reason and in spite of the difficulties alluded to earlier there
are more drugs in the pipelines of drug companies around the world
than ever.
1.6 Opportunities in biotechnology
You might be surprised to read that large companies often complain
of pipeline congestion. This is where early phases of research have
delivered a number of promising candidates that have met all the
criteria for advancement. However, the cost of clinical trials means
that it is simply impossible to take all of these opportunities through
clinical development. It can be very difficult to differentiate between
the likelihood of success of any project or even compound on the
basis of preclinical data alone. This is why companies place such a
high premium on clinical data in partnering activities. Companies
are coping with pipeline congestion by licensing out the project to a
chosen partner who will take the compound through designated
milestones such as phase I or phase II trials, usually on some version
of a shared-risk basis. The originator company will usually have an
option to take the compound back if it navigates those milestones
successfully with a suitable reward for the licensing company (see
Chapters 12 and 13).
The tremendous flux in the industry opens up a huge array of
opportunities for small companies. Any invention, discovery or
insight that helps deal with any one of the myriad of problems that
confronts the industry at any stage of product development has the
potential to earn money for its originator. It is not just the front end
of molecular biology or pharmacology where opportunities lie but in
a whole array of disciplines from business studies, to biomedical
sciences, ethics and statistics. If a discipline can offer a solution to a
real problem that is causing pain to the pharmaceutical industry and
can demonstrate how its invention can do things cheaper, faster or
better than before, it has the potential to earn money. Although this
activity is often associated with big pharma, there is no area of

pharmaceutical activity which now is immune to being outsourced.
Traditionally, companies may have used large contract research
organisations for major clinical trials or drug safety testing in
animals. Now everything from basic medicinal chemistry, in vitro
and in vivo screening, clinical data management all the way through
to manufacturing and packaging the drugs can be done on a contract
basis. So far the only area that seems to have survived outsourcing
is management. And that may only be a matter of time.
Large companies have adopted the ‘open-innovation’ mantra,
offering collaborations with smaller companies, and in some cases
even ‘open-source’ with prizes and rewards for specific problems
(such as Innocentive http://www.innocentive.com/) and various
other schemes to harness the creativity and diversity of research
going on outside the companies. So far much of this approach to
innovation has been to keep it at arm’s length, outside the company.
This is to keep the disruptive costs and effects of such schemes
outside of the heavily process-oriented and conformist cultures of
the large companies (Garnier, 2008). This may change as companies
seek to exercise more control or influence over the more innovative
partners, especially if those innovations begin to realise any
significant economic value.
A whole host of financial arrangements from outright acquisitions,
mergers, co-development deals, licences, buy-back agreements and
many more have been developed to find the best way to exploit these
advances in technology.
Taken together with the kinds of organisational arrangements
outlined previously this means that small innovative companies have
an unprecedented opportunity to deal with larger companies,
whether as partners or perhaps as acquisitions.
Notes
1. http://www.unitedformedicalresearch.com/wp-content/uploads/2011/05/
UMR_An-Economic-Engine.pdf
2. http://www.battelle.org/publications/humangenomeproject.pdf
3. http://www.ama-assn.org/amednews/2009/02/09/hlsb0209.htm

4. http://www.accessdata.fda.gov/scripts/cder/drugsatfda/index.cfm?
fuseaction=Reports.ReportsMenu
5. http://www.plunkettresearch.com/Biotechdrugsgeneticsmarketresearch/
industryandbusinessdata
References and recommended reading
Cohen J, Gangi W, Lineen J, Manard A. (2005). Strategic alternatives in the
pharmaceutical industry. Kellogg School of Management HIMT-453
Managerial Challenges in the Pharmaceutical, Biotech, and Medical
Device Industries.
CMR. (2010). CMR International Factbook 2010 Pharmaceutical R&D.
Thomson Reuters.
Davies K. (2000). The Sequence. London: Phoenix.
DiMasi JA, Grabowski HG. (1995). R&D costs, innovative output, and
firm size in the pharmaceutical industry. International Journal of the
Economics of Business 2(2): 201–21.
DiMasi JA, Hansen RW, Grabowski HG. (2003). The price of innovation:
new estimates of drug development costs. Journal of Health Economics
22: 151–85. [The Tufts University Center for the Study of Drug
Development is one of the major academic institutions that provides
impartial overviews of major trends in the industry and particularly in
the economics of drug development. Watch especially for publications
updating the estimates of costs as these seem to go out of date rapidly.]
Drews J, Ryser ST. (1996). An innovation deficit in the pharmaceutical
industry. Drug Inf. J. 30: 97–108.
Eli Lilly Annual Report. (2009) http://investor.lilly.com/annuals.cfm [An
example of the kind of information available from companies’ own
websites. All publicly quoted companies have to produce an audited
annual report which can give fascinating insights into its philosophy,
activities and expenditures.]
Garnier J-P. (2008). Rebuilding the R&D engine in big pharma. Harvard
Business Review 86: 68–76.
Hopkins MM, Martin PA, Nightingale P, Kraft A, Mahdi S. (2007). The
myth of the biotech revolution: an assessment of technological, clinical
and organisational change. Research Policy 36: 566–89.

Huggett B, Hodgson J, Lähteenmäki R. (2010). Public biotech 2009 – the
numbers. Nature Biotechnology 28: 793–9.
Munos B. (2009). Lessons from 60 years of pharmaceutical innovation.
Nature Reviews: Drug Discovery 6: 959–68.
PhRMA (Pharmaceutical Research and Manufacturers of America). (2009).
Pharmaceutical Industry Profile 2009. Washington, DC: PhRMA. [The
pharmaceutical industry’s association provides lots of useful if somewhat
uncritical information on the industry and its activities.]
WHOFactsheetNo.310/November2008.http://www.who.int/mediacentre/
factsheets/fs310/en/index.html. [The WHO website is an invaluable
trove of information on global health statistics.]

2
Academic innovation: so you
want to be a bio-entrepreneur?
Michael O’Neill and John Scanlan
Abstract. This chapter sets out to guide any academic entrepreneur
through the process of starting out in the bioscience business. There
are many reasons why a scientist would want to commercialise their
research and there may be as many motivations or incentives as there
are people involved. For a company to prosper, however, it helps to
clarify the purpose from the outset. Is this company out to make
money, find a partner for research projects or find employment for
postdocs? All might serve as the basis for founding a company but
each motivation will lead to a different kind of company and needs to
be understood in advance. In addition to examining the motivation to
commercialise, it is useful to look into the potential risks and pitfalls
in commercialisation and understand more fully what one might be
getting in to. The university can play a valuable role in helping the
start-up company by a number of measures, including provision of
infrastructural support and facilities to help the company get on its
feet. In a broader sense universities can promote enterprise by
providing and encouraging an environment in which entrepreneurial
activity is validated and supported along with the traditional aims of
a university in providing research and educational opportunities. In
the second section of this chapter we look at some of the ‘How To’
practicalities of setting up a company. We will look at the essentials

of business planning, market analyses and basic business development.
We discuss case studies of university-based enterprises that show
some of the benefits of paying at least as much attention to the
business as to the science side of things and highlight some of the
consequences of failing to do so. Academia and business can seem like
different worlds at times and it pays to have people involved who
know both worlds well. Setting up any company is a highly
collaborative activity and needs a balanced team of people with
relevant skills and experience across the range of activities involved.
Keywords: business plan, technology transfer, incubators, licensing
agreements, management team, motivation, raising investment
2.1 Why commercialise?
2.1.1 Motivation
There is no correct answer to a question like this. The purpose of
posing this question here is more to encourage anyone thinking
about engaging in commercialisation to think through, very carefully,
why they want to do it. One could ask if it is particularly useful to
fully understand one’s motivation in starting a venture instead of
simply getting on with it. It is true that too much psychologising
around motivation or reasons for doing something can detract from
action. It can smack of anything from self-indulgence to
procrastination. Some examination of motive is helpful, however, to
help ensure that the optimal approach is identified. At this point it
is worth pointing out that there is a difference between the aims and
goals of the project and the aims and goals of the individuals
involved. Here we are dealing with those of the individuals.
Discussion of the aims and goals of the venture are dealt with in the
chapter on business planning (Chapter 5).
As a project evolves, motivations may change. What started out
as simple curiosity can grow into a fierce determination to see
something through to an end. It is useful to be able to step back from
day-to-day activity and remind oneself how and why you got started
on this path. This is especially true when a venture encounters

Academic innovation: so you want to be a bio-entrepreneur? 25
difficulties. At times, it can seem easier to quietly give up rather than
persist when things are going through particularly tough times. A
look back at why one got onto this path in the first place can be a
good motivator. Likewise, if one encounters great success it can be
very useful to remind oneself of the modest beginnings and
aspirations of the venture at the outset. Grounding oneself in times
of success can ensure that you stay in touch with reality and do not
forget things like your core values and real aspirations.
2.1.1.1 Money
It should be clear from everything in this book that any venture has
to be based on some kind of sound commercial footing. The
fundamental aim of any business is to make money. If not, you need
to seriously reconsider starting out in business. However, the means
by which you do this, how much you want to make, what kind of a
company it will be, etc., will be down to you and wider stakeholders
in the enterprise (your employer, investors, potential clients, suppliers,
among others). It is therefore useful to clarify what it is you might
want out of this departure.
For scientists, however, money is often a very poor motivator.
Intrinsic motivation of the science is a greater reward and more
personally fulfilling. Academic salaries, especially at the outset, are
not high, and academic scientists are generally expected to live on
modest means, drawing satisfaction from pursuing an intellectually
rewarding career. Although some biotechnology companies do
eventually end up making money (or are sold for some return on
investment) very few end up making the sorts of high returns that
investors get excited about. Most ideas for companies never receive
the funding to get off the ground in the first place. Even the largest
universities, such as Oxford or Cambridge in the UK or Harvard in
the US, spin out no more than one or two bioscience companies a
year. This means that a lot of proposals within the university never
get funded. If riches are your aim, think again because the evidence
is that most spinouts do not generate a lot of wealth for their
founders when compared with the returns from a stable salary.

2.1.1.2 Recognition
Academic research has traditionally not been expected to have any
immediate commercial application. Large-scale, high-profile science
projects can be funded with little regard to practical applications,
such as the Human Genome Project. Although it is assumed that
benefits will accrue in the future, the research may not be conducted
with a particular or direct application in view. Although perhaps not
typical of the day-to-day work of most academic scientists, these
projects illustrate a view of science as something pursued for its own
sake rather than for any commercial or even practical basis.
Recognition of one’s efforts by one’s peers can be a much more
personally significant motivator for scientists.
2.1.1.3 Making a difference
It might therefore be more helpful if scientists thinking about an
application for their biomedical research were to do so in terms of
its clinical use rather than its commercial exploitation. As scientists
pursue research projects it might be useful to ask, ‘How will this
benefit patients?’ or even, ‘How can we adapt our research to be of
more direct benefit to patients?’. Resources are often not available
within the public sector (or more broadly the not-for-profit sector)
to produce goods and services for use beyond the immediate
surroundings. The capabilities needed include regulatory expertise,
distribution, sales and marketing. This is important because good
products do not make or sell themselves. There is competition for
attention of the client (e.g. physician), and so if you want to make a
difference it is very important to find ways to attract attention.
Incentives structures in the public sector may not allow staff to
spend time perusing such avenues. All or any of these may impel an
academic to think about commercialising his or her research.
2.2 Why not?
‘Commercial’ still has negative connotations for some academics and
we will look at some of the potential conflicts between scientific and

business cultures in more detail below. The pharmaceutical industry
is always keen to associate itself with good science and good scientists
in academia. It is fair to say that interest is not always mutual. The
pharmaceutical industry recognises that it has a poor reputation with
the general public who consistently see it making large profits while
being associated with ethically dubious practices (e.g. Harris
Interactive Poll, 2010).1 Academics can be wary of dealing with
companies due to concerns about conflicts of interest and academic
independence and integrity. As public funding of research is coming
under pressure in governmental budgets, academic scientists are often
looking for other sources of funding. Dealing with pharmaceutical
companies is increasingly seen as a legitimate source of funding. It
should be remembered, however, that an investment either from a
pharmaceutical company or from other investors is not the same as a
grant. An investment will come with conditions and expectations far
in excess of those that accompany any grant funding. The main
difference is that in grant funding there is no expectation of a financial
return on the research to the grant-awarding body. Most other forms
of funding come with the expectation that not only will that money
be returned but that there will be a high return on that investment.
Such ties might often feel unacceptable to some academics.
2.3 Define aims and examine assumptions
Once the basic motivation behind establishing the venture has been
explored, it should be easier to define an overall guiding aim or
purpose for the organisation. An early-stage research project may
have many potential applications. For example, identification of
genes, proteins or novel biologically significant pathways can lead to
new diagnostic or therapeutic strategies based on large biological
molecules such as antibodies or synthetic small molecules. It is
important to explore each of the possibilities that arise to determine
which one is the best option, i.e. most likely to be feasible. It is also
vital to determine if the right skills, materials and people are
available in house. It is also essential to establish assumptions about
the level of interest from other companies, from patients or whoever

the ultimate client or customer might be. For example, is there
enough of a case to warrant founding a dedicated company that can
be commercially successful or would the project be best exploited
through licensing out directly to a more established company with
sufficient capabilities that would bear most of the costs and
responsibilities for exploitation, in return for most of the revenues?
If you pursue the project yourself, your main mission in setting up
a company is to find out what it is that you do not know yourself
and get help in dealing with that as quickly as possible.
If you really want to pursue a therapeutics strategy, to develop a
novel therapeutic antibody for a particular cancer, for example, it is
necessary to realise just how complex a process this is. Outside of the
range of scientific disciplines involving everything from genetics,
microbiology and immunology to any number of chemical sciences
(analytical, computational or medicinal), and on to in vivo sciences,
there are a whole range of other professions such as engineering
(mechanical or chemical), ethics, legal and regulatory frameworks,
and financial and business topics that have to be mastered and
understood. It is an area where previous experience in the area is a
major indicator of future success (although certainly not a sufficient
ingredient for success). Even if one has not done this kind of work
before it is not impossible to do, especially if one seeks professional
advance from those who have done so and use their experience and
guidance. It is also necessary to find such people to help examine the
assumptions around the nature and content of the process. Too often
biotech companies start up with a strong knowledge of the basic
research arena but little experience of onward development. We refer
you to the Project Management, Regulatory Affairs and Clinical
Trials sections of Chapters 9, 10 and 11 to get an idea of what is
involved in the process of developing a therapeutic even after all of
the non-clinical development work is done. All too often assumptions
about what is required in terms of additional testing and validation
are seriously deficient and can cause a project or even a company to
fail. These issues are dealt with in more detail in the chapter relating
to business planning (Chapter 5). For now it is sufficient to remember
that it is all too easy to underestimate the difficulty and complexity of
the process of development beyond basic or even clinical research.

2.4 Learning from previous ventures: business and
science cultures
2.4.1 Differences between academic and applied research
Invention and innovation are distinct processes. While an invention
may be said to occur when the point of principle is described (and
when this is novel, together with evidence of utility, this may be
sufficient for a patent), innovation, the turning of those insights into
a commercially successful product, is generally a far more protracted
activity. Invention in isolation does not lead to innovation, and often
careful integration of streams of insight from users and different
business functions (finance, sales and marketing, manufacturing) is
necessary to ensure an invention is suitable to be exploited and allow
this to occur. In short, the nature of the invention itself may co-
evolve with the market during the innovation process.
This observation throws up a number of differences from the kind
of research normally conducted by academics. We will look at some
of these in turn and suggest possible means for adapting to the
change in culture from academia to commercial environments.
Curiosity versus problem-solving research. Academic science
thrives on being open ended, curiosity- rather than goal-driven and
long term. Innovation on the other hand requires planning that is
more strategic, proactive and of course market-oriented. It is also
highly development-focused to ensure that all of the work done is
directed towards delivering the desired product. In commercial
settings this can often mean that if a project does not work as
planned, it can be dropped in favour of another more promising
project. Pharmaceutical research is often driven on a fail-early/fail-
often model. This is where experimental programmes are designed
specifically to test the viability of a project as a treatment for a
particular disease. If the project does not meet these criteria focus
simply shifts to the next project. This is rare in academic research
where the immediate application of the work is less important than
the methodological or theoretical considerations involved.
Freedom. Academic scientists can find the structures imposed by
innovation to be restrictive, limiting their freedom to follow research

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