Sunday, November 18, 2007

Crisis Management –Technology competent, product license terminated Biotech Company

There are many examples to quote for the major challenge faced by the world’s most successful as well as start-up biotech companies: how to overcome the crisis of technologically competent, product license terminated situation of biotech companies. The question is with little or no money situation, how to generate the sufficient clinical data for the re-evaluation of the drug by the regulatory bodies and how to stay alive until the supporting clinical data is generated! Here, the three best possible options are addressed to overcome this situation and you are welcome to add more to it!

The ‘Tripod’ business model offers a solution:

1. Seek government funding for the better development of the drug and the technology.

If the public health is a major concern, government would most likely to take initiative to support funding a clinical programme and the associated technology development with the industry in collaboration. This way the company can pursue the government agency as a licensing partner in the similar areas of clinical development and generate revenue.

2. Develop the next-stage technology platform and license it for multiple techno-based applications.

The main interest of this strategic management would be to progress the marketing of products based on the technology platform. It would build future values in the form of royalties and potential royalty payments could generate future profits for the company in question. This would ultimately build the company’s own manufacturing capacity.

3. Drive the revenues by selling the drug-associated research reagents and increase recognition of the company.

The technology-related research reagents could be added to the company’s portfolio. This would generate revenues and create awareness and acceptance of the next-stage technology. In addition to building a strong customer base, it would lead to licensing and partnership opportunities.

All the above strategies could go hand-in-hand by partnering with other biotech companies for a secure and manageable future of the company.

Please drop me a line to have your say on this issue.

Saturday, November 3, 2007

Risk-reduced cost management practices (No. 5)

5. Drug-Device hybrid model

The biotech investments are volatile in nature considering the probability that the drug would fail during clinical trials phase II or III, after much of the time and money has been spent. It is characterized by high risk, in terms of capital commitment and probability of success, and high reward, in terms of profit potential and exit scenarios.

For example, in India, the diabetic drug insulin is manufactured by Torrent Pharmaceuticals, under licence from Novo Nordisk India, and distributed by Abbott India verses the blood glucose measuring device called ‘AccuCheck’ is manufactured and marketed by Roche diagnostics alone. In this scenario, although the cost or risk is reduced the profit is also shared.

The best way to describe the drug-device hybrid is to look at one of the most successful examples set forth by Johnson & Johnson, who created the market opportunity for the drug coated stents used in the coronary artery diseases. As a result, start-up device companies have been formed to develop drug coated stents, or are adapting their strategies to do so. The prospective for the biotech market indicates that the drug-device combination products will experience a promising future and this drug-device hybrid companies would impact the investment allocations by decreasing the cost and lowering the risk.