How Biotechs Can Manage Risk and Efficiency in a Changing Healthcare Landscape

Martin Trautmann, Gloria Kwon, and Ariana Mavaddat, Life Science Leader

With the success of each product commercialization effort, biotechs are often left without enough bandwidth to ensure strategies and plans are in place, and instead become hyper-focused on task execution. By understanding required resource needs and addressing key gaps, emerging biotech companies can effectively adapt to the changing healthcare environment while staying focused on sustainable business growth. When preparing for product commercialization, biotechs need to assess internal capacity and capabilities with the following goals in mind:

1. Optimizing operational infrastructure for flexibility and cost savings

A combination of interpersonal skills, strategic thinking, executional ability, and high levels of motivation and awareness is essential to success. Achieving this requires careful planning around hiring decisions and determining which functions to internalize or outsource as the company works to build an optimized operational infrastructure. In smaller companies with limited resources, a lean infrastructure built on a core management team allows for maximum operational flexibility. The management team is responsible for identifying critical functions and accountabilities at each stage of the biotech’s development and determining whether to build or leverage capabilities to optimize resource allocation and minimize overall risk.

Robert Scala, head of North American Commercial Planning and Operations for DBV Technologies, a global clinical stage biopharmaceutical company, notes that biotechs have unique hiring processes during the early stages of development that differ from traditional pharma. “In the world of biotech, you need to have people who understand how to build from scratch and then manage functions and workstreams once up and running,” he said. “It takes a different mindset to design a function, put the right teams in place, and stand up the organization simultaneously.”

2. Commercial readiness and planning to support global product launches and portfolio growth 

A solid foundation built in the early stages of a company’s development is critical for a successful first-product launch and can ensure a natural progression for the rollout of line extensions and new products.

“For most biotechs, your first-product success will make or break your company,” Scala said. “Many biotechs go through financing droughts and feel pressure to put things on hold, only to be delayed at launch. But not being prepared at launch leads to suboptimal execution, which has a much higher impact on the company in the long term as compared to a few months of at-risk spending.”

While few biotechs achieve a successful first launch, it is imperative for those that do to ensure a strong foundation to support subsequent launches. At the expansion stage, the company is using its previous success as a platform to redefine its business. At this stage, the management team needs to focus on increasing integration across functions such as R&D, production, sales, and marketing while also identifying/hiring managers experienced in building strong links within companies.

Scala points out the importance of making this transition, adding, “The people who get you to this point may not be the people who get you to the next level. As managers, it’s our job to ensure that the organization evolves with business and environmental changes.”

3. Leveraging capabilities and executional capacity without large up-front investments 

Given the wide range of capabilities requirements, biotech companies often employ lean management teams and outsource many operational aspects to partner vendors.

“The goal is to avoid costly mistakes that other startups have made. Finding that healthy balance, between not overspending but having enough capability to scale up, is what I try to achieve,” Scala said.

Additionally, there are many operational functions that are simply better executed by highly specialized vendors, such as contract manufacturing and government pricing and contracting. While it is common for medium-to-high risk companies to develop a hybrid capabilities model to reduce large up-front investments, management teams need to have a strong understanding of the requirements for outsourced activities to deliver a timely and high-quality product while continuing to build functions that are strategically relevant and will help drive company initiatives.

For many biotechs, it is tempting to try and rebuild the infrastructure of a Big Pharma environment due to a sense of familiarity. However, the key to success is to focus instead on building scalable solutions that allow the team the flexibility to adapt to the changing needs of the product and company life cycle.

Based on experience with hybrid models, Scala noted that “this model allows you to flex and scale up or down with relative ease. The benefit is to build capabilities over time while simultaneously being prepared to launch your first product.”

4. Comprehensive viewpoint of internal and external factors that could impact success

Understanding the competitive landscape and industry trends along with changing demographics can influence internal strategies and decisions. For example, keeping a finger on the pulse of regulatory shifts is necessary for the success of a new product launch. Given the fast-paced reality of the market, there is a need to inform quicker strategic decisions as compared to the traditional strategic planning process, which typically takes between about 10 months.

In a constantly changing environment, the key is building flexibility rather than a static plan. “Having dynamic planning with the ability to adapt to changing circumstances is crucial,” Scala said. “You may be designing processes that are impacted by regulatory or other financial considerations that will require you to change the plan, timelines, and level of investment needed.”

Assessing the current organizational structure, process, and capability is a critical first step to preparing for product commercialization. With a clear understanding of infrastructure and resource needs, biotech companies can leverage strategic partnerships to augment internal capacity and capability to deliver results in an efficient, cost-effective way.

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