1. In The Land Of Giants, Lilliputians Rule
No one argues that the future of healthcare is in the hands – and the labs – of today’s
smaller, start-up biotech companies. Whether they’re tackling major diseases that
affect millions around the world, or an orphan disease that affects a few thousand, this
is where the pipeline of potentially wonderful new drugs and treatments begins.
Unless a company’s product is fairly simple, the core of its organization, and possibly its
entire staff, is comprised of investigators and scientists working around the clock to
deliver on the promise that seems so close.
However, even if the therapy represents a scientific breakthrough, it won’t break
through in the marketplace unless someone working in, or with, the organization has
the skills and experience in marketing, market assessment, development, and follow-
through needed to shepherd the company’s product out of the lab and ultimately onto
physicians’ prescription pads and insurance companies’ formularies.
But wait…there’s more
If (let’s be optimistic and say when) the drug is approved, company resources may be
strained by the need to acquire the knowledge and staffing necessary to assure that the
maze of logistics, regulatory, and reimbursement issues are well understood and
managed.
As discussed in previous editions of Prognosis 2.0, because of the lengthy adoption
process, even “revolutionary” therapies can die of old age before they’re even born.
What’s a start-up to do?
There are several steps a small or start-up (Phase II or IIb) operation can take that will
allow it to focus on the science, and still make sure that all these other components are
being well executed. It can:
• Work with a Venture Capital company that will provide both capital and debt
• Use a Private Equity firm to acquire milestone financing, equity and project
financing
• “partner” with an existing large pharma company that hopes to gain in-licensing
and co-development rights in exchange for its investment
One caveat about partnering with a large pharma company: While it may be
advantageous financially, the true “cost” to the start-up can be a loss of autonomy and
the dilution of a innovative entrepreneurial culture.