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Business Models For Biotech Firms


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Business Models for Biotech and Life Science Industry

Business Models For Biotech Firms

  1. 1. CrESIT‐Assobiotec Workshop 2008 Business Model for Biotech Firms Business Models for Life Science Firms Prof. Alberto Onetti Director, CrESIT, Insubria State University Nov 24, 2008
  2. 2. Life Science: an heterogeneous  landscape… Different Business Contexts Health Care (Red Biotech) Industry and Environment (Grey or White Biotech) Agriculture and Veterinary (Green Biotech) Technology (Bio‐Informatics and Platform Biotech) Different Corporate Approaches Born Biotech Diversified Companies Different Entrepreneurial Models Start Ups founded by Scientists‐turned‐Entrepreneurs (DBF, NBF) Corporate Spin‐Offs Government funded Initiatives Subsidiaries of MNC
  3. 3. Life Science: an heterogeneous  landscape…with some homogeny Biotech firms are typically: born global companies high international precocity non self­sustaining companies (for a long‐term timeframe), since they have a high investment‐intensity an extended pre‐revenue phase (and a long way ahead to become cash positive) a structural need for external funding high mortality rates research based companies  dominant technical‐scientific component (techno‐entrepreneur, bio‐ entrepreneur), but the necessity of non‐technical competences (marketing, PM, finance, management, HR, legal, …)  and “combinative” capabilities “project” companies built around a project evolving to multi‐project companies
  4. 4. Business Model makes the difference Strategy is mostly given: Strategy follows knowledge base Strategy follows lead users/customers Internationalisation and Innovation are not strategic options, but a way of being The real “strategic” choices are at Business Model layer
  5. 5. Business Model: looking for a dominant  design  A Business Model depends on the business context, corporate approach and  entrepreneurial model Biotech companies’ business model is typically based on some cornerstones: They are multi­location organizations, hence being part of a “meta‐national” knowledge  network  is not an option They present a strong “focus”: this is a “must” for firms in early stages, but it is a “should  have” for large corporations too (biotech rarely become full‐scale in drug development) They are network­based: partnership is the typical “modus”, also for core activities The network they are part of is “broad” and “multidimensional”: they have to manage plenty of  relationships, not only upstream (scientific community, industry, …) and downstream (lead  users), but also laterally (e.g. finance) They  partner in different ways (licensing‐in and –out, outsourcing, joint venture, strategic  alliances , …) They have highly educated employee base (“brain” intensive)
  6. 6. Business Model for Biotech LOCUS FOCUS MODUS Multiple relationships, Short Activity List, Multi-location, also the Activity A upstream, downstream mostly R&D same activity and lateral (typically single phase) Partners Make Together (instead Activity B of Make or Buy) Multiple organizational schemes (inbound and Activity C outbound relationships, …) Biotech Value Followers … Firm High Brain-Intensity Lead Source: Onetti and Zucchella, 2008 Users