Life-Science Biotech Growth Strategies: Cultivation and Regulation In Today's Global Marketplace

In 1919, Karl Ereky, a Hungarian engineer, coined the word biotechnology, and nearly a century later, the industry has come of age. Burrill & Company report that $350 billion has been invested in biotechnology so far. Global revenues have risen from $23 billion in 2000 to more than $50 billion in 2005 (1). The company estimates that in 2007, the pharmaceutical and biotechnology industries in the United States will spend more than $55 billion in research and development alone. Of that figure, biotechnology research and development will total approximately $12 billion. These amounts reveal the rapid rate of expansion in the biotechnology industry. A financial investment, however, is only part of the development of a well-designed plan on the path to innovation.

RJ Palermo

Life-science biotechnology industry professionals in particular have very interesting challenges to address when plotting a course of development. As the development of cutting-edge products and technologies by life-science biotechnology companies continue to revolutionize the healthcare industry on a global scale, this rapidly expanding environment and marketplace demands special considerations with regard to the development of growth strategies.

To avoid common mistakes, a commitment to establishing growth initiatives that emphasize efficiency and safety has become critical in the life-science biotechnology sector. Simply pouring money into research and development does not mean a successful new drug product will result.

Effective growth strategy consists of many moving parts, from funding to design trials, each of which must be carefully mapped out from start to finish in a multiphase plan that focuses heavily on regulation and efficiency.

According to Michele Washko, vice-president of strategic services for the Life Sciences Greenhouse of Central Pennsylvania (LSGPA), a company dedicated to the investment and development of life-science biotechnology companies, a common development mistake is the failure of scientists and investors to maintain a synergistic relationship with each other. Doing so may ensure that discovery in the lab later translates into something suitable for commercialization and that the time to do so is within projected expectation and as efficient as possible.

To foster successful strategic growth plans, life-science biotechnology companies should design with the following considerations in mind: how to secure investment and financing, efficient process development and scale-up, the creation of effective partnerships, and how to implement the overall strategic plan within regulatory guidelines.

Financing. Because it takes approximately 8–10 years for biotechnology companies to mature, the best financing or funding situation is one in which investors will invest what is commonly referred to as "patient capital." In contrast to other industries, an investor must understand the length of time to market and the regulatory approval hurdles a life science biotechnology company must overcome before a return is generated. According to Washko, a typical funding cycle at the LSGPA develops in this fashion: the technology will begin with a researcher in a lab who has received federal funding such as an National Institutes of Health grant. This sort of capital is very desirable because it doesn't dilute the stake of the inventor or the lead investors.

Next, an inventor might access "friends-and-family money" such as taking out a second mortgage or personal loans. Also, inventors may have the opportunity to take advantage of the Small Business Technology Transfer Program (STTR) or the Small Business Innovation Research (SBIR) programs. These small-business programs expand funding opportunities in the federal innovation research and development arena. The programs encourage a transition to commercialization and create joint venture opportunities for small businesses and the nation's premier nonprofit research institutions. After these funds begin to dwindle, biotechnology companies must look for outside investment, which often comes in the form of debt or from dilutive funding sources. The LSGPA provides and assists companies in this area with their multistage funding process through their own investment platforms in addition to creating funding relationships with venture capital firms and angel investors.

Process development. One of the most important issues a scientist must consider throughout the stages of the company growth process is how to create continued value. A strong scientific advisory board is crucial, as it often has a deep understanding of the invention or new technology and acts as a liaison between patient advocacy groups and other organizations that can help extend the life of the original discovery.

Scale-up. Learning how to effectively scale up is a crucial aspect of life-science biotechnology company development. Due to high demand projections in this area, industry professionals must be prepared to adapt. Scale-up acceleration depends largely on the ability to define and control processes that produce similar products as those obtained at small scale. For a smooth transition to occur, industrial engineers assist in the implementation of creating high-tech production processes, while scientists take care of late-stage development, ensuring smooth implementation of final phase (III and IV) clinical trials as well as compliance with regulatory demands.

Partnerships. Along the biotechnology company cultivation path, industry professionals must form partnerships that help them attain their development goals. Companies such as Burrill & Company and LSGPA assist life science companies in the development of these strategic partnerships that provide access to resources, marketing tools, funding, intellectual property licensing, and technologies or other alliances necessary for realizing their business plans.

Regulation. Life-science biotechnology companies must consider strategies for streamlining FDA approval, reimbursement, clinical trial design, product liability, and insurance concerns throughout the entire growth process. This will not only encourage efficiency in terms of commercialization, but it will also help with safety issues and decrease overall liabilities.

Conclusion

The future of life-sciences biotechnology companies in the 21st century is promising. Modern science and medicine in Karl Ereky's "biotechnology age" continue to flourish and revolutionize the manner in which the global community thinks about the healthcare industry. Over the next 10 years, we will undoubtedly continue to see product growth in this area as well as advancements in how these technologies develop from start to finish. INTERPHEX will continue to be a resource and reflect as well as represent cutting-edge thought leaders and technology for the pharmaceutical and biotech markets.

RJ Palermo is the event director for INTERPHEX, tel. 203.840.5924, rpalermo@reedexpo.com

Reference

1. Biotechnology.Reference.com. Wikipedia, the free encyclopedia. http://www.reference.com/browse/wiki/Biotechnology (accessed: Jan. 2007).