How to Avoid Becoming a Biotech Zombie Part 2

Putting business principles to work in biotechs requires careful implementation of nine critical business systems.
Feb 01, 2008
Volume 21, Issue 2

The first article in this three-part series aimed at helping companies avoid becoming one of the biotech zombies—companies that have never turned a profit or marketed a drug but somehow managed to survive for decades—presented some general business principles:

  • Slow and steady wins the race: pursue careful, systematic growth.
  • Stick to your core capability while remaining open to its strategic possibilities.
  • Weave together the business plan and the commercialization process.
  • Prepare for the unique stakeholder pressures at each stage of company evolution.
  • Drive the strategic vision in daily decision-making.

Putting those principles to work requires careful installation of some critical business systems. However, in the biotech industry there is no one-size-fits-all organizational design, as there is in many other industries. Each biotech, depending on the relevant science and the product area—from pure biopharmaceuticals to hybrids, vaccines, technology platforms, or devices—is unique, requiring business systems designed for its particular purpose. Moreover, because a biotech company requires an enormous diversity of skills, extra care must be taken to integrate all of these systems to ensure that they work smoothly together.

Carmen Medina
The issue of vitality evoked by the zombie metaphor is particularly apt in this case—a biotech is more of an organism than an organization, more like a living thing than like a machine. Although we speak of systems like marketing and investor relations, it should be remembered that despite the familiar terminology, these systems aren't like the traditional organizational superstructure of departments and functions sitting atop the company's core activity. Rather, they must uniquely meld business and science as well as work tightly together if the company is to achieve profitability and scientific viability required for a biotech to thrive. Therefore, think first of what the system must do: what challenges are peculiar to the industry, the science, the company it must address, and then make sure all of the elements are firmly in place.


Many companies fail to align the business model, including the commercialization plan, with the scientific platform. For example, a company may have a product that has potential applications in many therapeutic areas, but instead of pursuing the more profitable path of outlicensing this intellectual property to companies that can pursue those applications, the company produces the product itself for a single, comparatively low-return application.

Quick Recap
As products move through the commercialization plan and new doors open and others close as a result of the product performance, the strategy should be subject to constant review and, when necessary, adjusted through an ongoing strategy development system. Strategy review and formulation should not be relegated to the annual budget review process, as it is in more traditional industries, but should be addressed by the top management team, including the chief executive officer (CEO), chief financial officer (CFO), chief scientific officer (CSO), and chief regulatory affairs officer (CRAO), who regularly convene explicitly for that purpose.

Keeping the progress of the business plan and the science simultaneously in view, the strategy group is responsible for short- and long-term objectives, contingency planning, and developing strategic alternatives. For example, the group might ensure that clinical trials are designed to demonstrate product value in multiple patient sub-groups and that protocols examine and uncover the cost and benefits of products in populations that represent future target markets.

Above all, the strategy group should remain flexible enough to go where the science leads, while creating business value. This is sometimes easier said than done. For example, the scientists and inventors who establish and lead some biotechs may believe so fervently in their original vision for their innovation that they resist redirecting the company's efforts along a path that is much more likely to pass regulatory muster.

A high-performing strategy system that neither lets the business ride roughshod over the science nor makes of the science a disinterested, academic pursuit, can make all the difference between a scientifically and financially healthy company and the empty shells that are the industry's zombies.

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