Catalyst - Fall 2011 - Convert Your Passion into Your Strategy
From the outset you need a decison path
The road to market for a biotechnology or medical device company can be compared to the less-than-leisurely stroll taken by Dorothy in the Wizard of Oz. It’s is a long and winding path, fraught with interesting characters and seemingly overwhelming and dangerous challenges. There will be potholes, for sure. And, difficult choices to make. Companies will need some friends to lean on – advisors who can keep them moving forward, even when challenges knock them off the path.
There’s little question the pathway to getting a drug or device to market requires heart, brains, and courage. But, at the end of the day, hopefully, as Dorothy and friends each got what they needed when they reached their destination, companies find the prize – commercialization realized -- is worthy of the journey.
The choices are fairly straightforward when it comes to commercialization, claimed Dr. Edgar Harrell, managing partner of Harrell Capital Partners, LLC. “A company can develop the drug or device, license it or sell it (or a combination of those three,)” he said. “The bottom line is getting to the stage where there is true value proposition. You have to get the company to the point where someone is interested enough to take it to the next level, but you don’t have to go to the stage where you put it on the market yourself.”
You Gotta Have Heart…
It’s one thing to be enthusiastic and another thing to be blinded by passion. Warren M. Pearlson, director of Business Development at New York’s Target Health Inc., said that before an entrepreneur even starts down the path toward commercialization, they “better be sure the product is a real product and that there is a market for it. I realize it almost goes with out saying. But you would be surprised. There are some bright people in this business who are almost too smart for their own good.
“They know their product but their knowledge of how to get to market is somewhat lacking and they don’t recognize that. Some are willing to accept that and listen to people who have the experience and some aren’t.”
In his book, “Six Secrets to Startup Success,” John Bradberry discusses the importance of using passion for all it’s worth – but not getting trapped by it.
Two important points he makes in the book can be adopted by all entrepreneurs – whether they are trying to commercialize a drug or sell a new car.
Attach to the market, not your idea. When someone becomes emotionally attached to their business idea, they almost always assume there’s a greater market demand than there actually is, the author wrote. As a result, time and financial resources are invested assuming there’s going to be a ready and willing customer base.
Don’t let your passion get in the way. It’s easy to begin to see the pathway to market through rose-colored glasses. But before a company even starts off on the road to market, passion must be converted into strategy – one that makes sense, can get funded and anticipates challenges and how to overcome them.
No matter how passionate you are with your company’s mission or product, you must know there are many important decisions to be made on the pathway toward commercialization. Get your head on straight, surround yourself with a team that’s “been there, done that,” and start asking – and answering -- the critical questions on the table.
Which direction are you headed and which path will you follow?
How long should it take to get to the destination?
How much money will you need – for both expected and unexpected expenses?
Then, companies need to be realistic. Dr. Michael Ackermann, senior vice president of Global Commercialization at Quintiles, based in Durham, N.C., explained that “many small companies still believe that the scientific novelty will carry them to a successful product.”
However, he said, in this economy larger companies want the answer to one important question before they are willing to show any serious interest: How will this product be differentiated by the time it launches into a specific treatment paradigm?
“So, whether a small company wants to commercialize themselves or not, they will definitely have to think about a commercial road map/decision path” at the very outset of the process, Dr. Ackermann added.
Pearlson agreed, noting companies must face “crossroads” at the outset of the process. Know where you want to go – what your end game is – and make decisions early on in the process, as the company is being formed. When putting your strategic plan in place, consider three pieces of the puzzle at the outset, advised Pearlson:
What do you have? Think about your drug, for example. Is there one indication that can get you fast tracked that will provide income allowing your company to build out the rest of the drug’s potential?
Where you are going? Knowing where you are going to file (U.S.? Europe? A Third World Country?) allows you to know everything needed to do it right the first time. “The last thing you want is to get to the end and find out that a study is needed that you didn’t do,” Pearlson said. “That does happen. Big Pharma can handle it, small companies can’t afford it.”
What will it cost? This should be a no brainer for any company looking to commercialize anything.
Dr. Eric Darr, executive vice president and provost at Harrisburg University of Science and Technology, advised that determining costs depends on who you are and what you have in hand.
“If you are Big Pharma, you either believe in the “Great Scientist Model.” You surround great scientists (or diseases) with expensive research teams. You spend millions doing that and hoping for success,” said Dr. Darr. “Or you take a brute force approach and bet all your money on a giant fishing expedition. You hope to reel in something. Both ways are incredibly costly, but a big company has the resources and team in place to have those options.”
Smaller companies don’t often have those luxuries, said Dr. Darr, former consultant for Andersen and COO of Knowledge Planet, “For them, the issue is time as opposed to money. They know their competitors are also working on compounds in diseases as well. Smaller companies have to choose which direction to go and go forward, hoping to get there before the competition.”
However, money is still the biggest challenge, especially for a smaller company – in any industry. With so many issues surrounding capital for early stage companies, both Dr. Darr and Pearlson said the most important is, `will you have enough money to get to the next milestone?’”
Nothing to Fear but Fear Itself…
With a little bit of courage, and some foresight, entrepreneurs can start out on the road knowing the end game in advance. There’s less to fear when you know where you are headed, explained Dr. Ackerman.
“The key is to do a thorough analysis of the options that are potentially available. The changing environment has opened tremendous new opportunities for a company if they want to commercialize their asset without having to build an expensive commercial infrastructure,” he said. “The exit strategy has to fit the overall goals and strategic objectives of the organization as well as its financial and management strength.”
Hamid Ghanadan, president of the Linus Group, a life science-focused marketing firm in California, said one of the best ways to eliminate fear of the unknown is to, well, find out what you don’t know. Positioning the company, he said, based on market needs and the most cost-effective approach to attaining success, is a critical component to commercialization.
Dr. Harrell couldn’t agree more. The concept of proper positioning comes into play – sometimes even when a company is certain about exactly where they intend on going.
Case in Point: A team of scientists from Penn State launched NanoHorizons in 2002, with intentions of developing and commercializing nanomaterial-enabled products in the early solar market, explained Dr. Harrell. Ben Franklin Technology Partners financed a feasibility study to determine how the company should best position itself in the market. Today, NanoHorizons’ advanced nanoscale silver additives provide environmentally friendly antimicrobial and performance-enhancing characteristics to consumer, commercial, and industrial products. Seems as though, thanks to a willingness to be flexible about what would get them to profitable commercialization soonest, and proper market positioning, NanoHorizons was shooting for the sun but it found clouds with silver linings.
Much the same as Dorothy and company each had individual goals in mind, an entrepreneur who believes he or she has the next game-changing biologic or medical device or technology in hand has to head down the road, arm in arm with advisors who know where they are going and a roadmap showing how to get there. Then, with a strategy in place, you strap in and hold on for the ride of your life. Hopefully, when you get to the end of the road, you wake up from one dream – ready to begin again
EisnerAmper's Catalyst: Fall 2011