Just like any groundbreaking industry, the past of biotechnology has been marred with unrealistic expectations. Although each of the recent biotechnology startups seems to be an improvement from their past counterparts, these companies still appear to lean towards the tendency to overvalue their revenue projections and undervalue the breakeven time. They appear as if their need for capital is more than expected, and that even an experienced management team will not prevent them from running into unexpected challenges.
Although it may be beyond reason to anticipate future startups to be wiser and better at foreseeing challenges than past startups, it is to every entrepreneur’s benefit to be more conventional in their monetary projections and capital market estimations.
With the increasing regulations in healthcare, biotechnology entrepreneurs, who are planning to launch their startup companies, should be ready to launch their product in a market, which is more sensitive to prices.
As the industry gain more experience in developing new drugs, predicting how well new drugs will perform in the market should be easier than it was in the past. However, it is also important to note that since there are many similar drugs in the market, drug companies have to go through longer, larger and more financially draining trials in order to prove the drug’s edge over existing diagnostic or treatment process. It is still hard to determine whether continuous innovation will play a part in developing efficiency. Over the last two decades, costs associated with developing new drugs have increased steadily.
Biotechnology entrepreneurs might have to change the rules in order to achieve efficiency in the way they get new drugs to market, and ultimately contain cost. There are several ways to accomplish this, and these are through Pharmacogenomics, repositioning and reformation of existing product and product incubation.
Taking Advantage of Pharmacogenomics
A person’s response to a particular drug is a complex trait reliant on many different genes. Pharmacogenomics refers to the study of the inherited variations in genes that determine the person’s reaction or response to drugs and how the variations can be used in forecasting a person’s response to the drugs, whether good, bad or neutral.
Currently, there is an ongoing race to catalog as much genetic variations located within a human genome as possible. These variations are referred to as SNPs or Single Nucleotide Polymorphisms, which can be used as a tool to predict an individual’s drug reaction
Biotechnology entrepreneurs representing companies, which engage in drug development and testing, such as pharmaceutical companies, can reap immense benefit from SNP screenings. They can use Pharmacogenomics as a tool in selecting patients who are more likely to respond positively to treatments. By doing so, the number of patients needed to participate in clinical trials will be greatly reduced, which in effect can decrease the costs and time associated with clinical trials. Consumers will end up benefitting from this through reduction in the cost of drug. Instead of the usual method of trial and error used in matching the right drugs with patients, companies will be able to analyze patient’s genetic make-up and give the best drug therapy from the beginning.
Not only that, but by excluding people whose pharmagenomic screening shows that the drug being tested has negative or no effect to them, companies are likely to highlight the drug’s usefulness to a particular group of patients, which consequently increases the drug’s chance to make it to the marketplace.
By being able to forecast a person’s reaction to a drug before prescription, doctors will be more confident in prescribing the drugs and patients will be more confident in taking them. Because of this, emergence of companies wanting to develop new drugs tested in the like manner is likely to see a surge.
Repositioning and Reformulation of Existing Product
More and more biotechnology companies are discovering the advantages of product repositioning over drug discovery. There is an emerging trend on companies giving up on the freshness and innovation of discovering new drugs to pursue a more cost and time efficient commercialization of old drugs using new methods. Companies are letting go of their discovery-based model and are adopting new business models to cut time and cost. A great example of companies employing alternative business models are biotech companies who are having their partially or fully developed drugs licensed for a completely new market, indication and formulation. Some companies are gearing towards reformulation, wherein they are making their generic drugs significantly better by reformulating them. Other companies venture into creating combination products for new or known indications by combining two or more co-formulated drugs.
There is usually more knowledge and better understanding associated with old drugs, making product repositioning and reformulation a viable alternative to new drug discovery, since they involve low cost and risk. The repositioned drug may have to use the patents for methods of use to discourage generic competition. As the cost of developing new drug continues to grow, this trade-off is worth considering.
On the other hand, it is possible that there will come a time when there will no longer be an availability of drug candidates in late stages of development, and companies who are pursuing the repositioning strategy may eventually have to go back to discovering new drugs or to start considering paying others to do it for them.
The increasing demand for late-stage drug candidates is opening up opportunities for academic research companies. These companies are sticking with the discovery-based model to discover drugs and bring them to late-stage. Their goal will be to take advantage of the funds available, whether philanthropic, public, or corporate, to come up with drug candidates that are validated clinically and have an existing market to license them.
Entrepreneurship in the biotechnology industry is still without a doubt, a cutting edge. Today, it is easy for companies to lose sight of profits due to the need to develop new technology, raise capital or secure partner. A successful biotechnology entrepreneur should know that these are not ends by themselves.
Kimberly is an internet researcher, writer, and contributor at entrepreneurweek.com blog network. He may be reached at firstname.lastname@example.org.
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