Signing Up for a High-Maintenance Boyfriend: Growing Pains in a Lean Biotech Startup

by Joyce Chan

My experience in biotech has taught me one thing: this business is complicated!  Believe it or not, figuring out the science behind the function of a molecule or chemical pathway is the “easy” part.  Though it involves countless hours and the dedicate talent of brilliant scientists, the research portion is methodical, rational, organized.   Monetizing a drug or diagnostic involves the buy in of a dizzying number of decision makers (investors, payors, providers, regulators, etc), each with their own assumptions, expectations, and opinions.   Much like a high maintenance boyfriend, a lean biotech startup needs the nurturing care of an understanding and patient partner that is willing to guide and put up with the drama in hopes that one day, he’ll pay off.

Changing Him Is Hard and Takes A Lot of Time

Most lean startups are flexible. We see iterations of the new product within months of customer feedback.   Facebook has continuously iterated on its interface to give the user a more dynamic system that would enhance the online social experience.  In the last 2 years, I can think of dozens of changes that have been made to the website.  Some changes have revolutionized my experience (e.g. the introduction of detailed privacy controls) and others I barely noticed (e.g. slight modifications in color scheme). However, in a similar 2 year period, Predictive Biosciences did not pivot their business once and didn’t seek customer feedback for 3 years.  The key difference here being that the product either works or it doesn’t.  There is little any “user” can tell you that will help you fundamentally change the product.   Like a patient girlfriend, the entrepreneur must be patient and wait for the product to reach those key milestones and sometimes this wait can last for years.

He Is Insecure, Demanding and Needy

Healthcare is filled with stubborn, big egos.  Because everyone is so highly educated, every decision maker naturally assumes that he is right; it can’t be possible that a company no one’s ever heard of could understand more about the intricate dynamic of genomic sequencing than a prestigious M.D. PhD.  It’s hard not to go through a period of doubt if you’re an employee, investor, or partner in such an industry.   The entrepreneur needs to expend vast amounts of energy calming the internal insecurity.  Creating a reality distortion field is particularly helpful to her.  It’s her job to keep moral high internally and win over key opinion leaders who will help her sway the rest of the medical community.   She will have to charm the world into loving her boyfriend just as much as she does.

The demanding nature of the biotech startup isn’t just limited to getting physician buy in. Regulators will either believe in the product’s efficacy or they won’t.  Even if the product is scientifically viable, there little an entrepreneur can do once FDA has made a decision.  If the FDA thinks that it is right… there’s no changing its mind.  Like a demanding boyfriend, the FDA requires that you prove your product to them in what seems like an endless approval process before you can take your product to market.

Developing a new drug is extremely expensive and can cost tens of millions of dollars.   The biopharmaceutical industry spent $65.2 billion in 2008 on R&D. Amplifying cost is the complex value chain.  Educating each key player that this new product adds value is pricey and doing this step poorly could cost you the success you’ve been striving for.   It is estimated to cost $1.7 billion dollars to bring a new drug to market in the U.S.  The on-going cost of capital is high.  Like a needy boyfriend, biotech startups need a lot of resources to be successful; make sure you put those resources to work in the most efficient way possible.

Prognosis:  Make Sure He’s Worth the Effort Before You Commit

Starting a biotech company requires a lot of commitment than the standard lean startup.  It makes more time, cost more money, and has a slower feedback loop.  Stiff regulatory requirements and a complex value chain make the investment significantly riskier.  

However, like a high maintenance boyfriend, sometimes it’s worth the risk.   Payoffs on successful drugs are astounding. Socially, you have brought a new product on to the market that will save/improve the lives of people around the world.  Financially, you have a steady and undisputed (depending on patent law) income stream for years.  Rituxan has been on the market since 1997 and continues to bring in $2.6 billion in revenue for Genentech annually.  Furthermore, the patent is not set to expire until 2015.   If you commit yourself to the right drug and properly nurture it through the start development and go to market process, you will reap incredible benefits.

Biotech lean startups are a different animal.  Though some lean principles apply, biotech startups are a lot more drama that most have the stomach for.  The upside is great, but be ready to be completely heartbroken if your relationship doesn’t work out.


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