BioWorld International Correspondent
LONDON - Biotechnology companies need a new business model to deal with the emerging paradox that the growth, which is essential to survival, also threatens their core capabilities of being innovative and fleet of foot.
While it is becoming accepted wisdom that biotechnology companies should be concentrating on products rather than technology development, the current organizational model of the pharmaceutical industry is struggling to deliver the new products it needs to meet growth expectations.
In short, it is becoming obvious that the traditional product development model is not the best one for biotechs to emulate, according to a survey of senior executives at 49 leading U.S. and European biotechnology and pharmaceutical companies, carried out by the management consultants Accenture.
While more than half of respondents (53 percent) believe the most attractive growth strategy for biotechnology companies is to become product-driven, 72 percent think they would be wrong to emulate the pharmaceutical approach to product development.
In the past, biotechnology companies licensed products to pharmaceutical partners, which derived more value from them than the biotechs that discovered them. "Now biotechs want to recapture that value while maintaining nimbleness, flexibility and innovation," said Ann Baker, a partner in Accenture's Health and Life Science Group.
In any event, biotechnology companies are not in a financial position to create the traditional organizational structures that exist in pharmaceutical companies. Instead, they should adopt an operating model that excludes the need to own and operate development and commercialization functions.
The research proposes a business model consisting of two main elements: an innovation center, to identify new technologies from outside the company and apply them to increase the speed, effectiveness and efficiency of the entire discovery process; and a "capability" network of third parties providing services, including development, manufacturing and sales, managed by a lean in-house coordinating department.
Baker said that approach would help biotechnology companies avoid the delays they encounter in moving products along the pipeline. "Biotechnology companies compete in an investment-constrained environment and often have to complete one phase of a project successfully before building the capabilities required to move the project through the next phase."
More that 70 percent of the respondents of the survey, carried out in July and published last month, thought the model would be successful, placing biotechnology companies in a more dominant position, and that their companies would consider adopting it.
"This new model would offer biotechs rapid access to the capabilities they need to bring products to market," Baker said. "Ultimately, they would emerge as nimble competitors, unencumbered by traditional organizational structures."