Biotechnological Business Models

The industry's focus on living organisms of the human species and the strict regulations that it imposes create unique considerations for business leaders. These characteristics make the industry an ideal incubator for innovation. They have led to major breakthroughs in the production of biofuels and agricultural yields and life-saving pharmaceuticals.

When it comes to strategies that generate revenue biotech start-ups have a myriad of options. The majority opt for a technology partnership or an asset-creation-and-out-licensing strategy. Technology-based partnerships can produce higher revenue and lower financial risk, whereas outlicensing and asset creation strategies can generate significantly more returns. A growing number of research-stage biotechs operate in a hybrid approach that combines both approaches.

People who choose an approach that is focused on product development will be successful commercially when they are able to get their pipeline to a suitable stage and find a pharmaceutical partner or investor with a large sum of money. This is a costly proposition. It is important to consider the balance between opportunistic strategies in leveraging assets from outside and make best scientific decisions for the development of home-grown products.

Alternately, the "platform" model can provide an alternative route to earning revenue. It is a less expensive option than biotechnologically engineered nutritious supplements the product-oriented development, but it also involves significant risks. In this model, a biotech owns and develops its platform technology before working with large pharma companies to develop a portfolio of drug discovery projects that focus on specific disease areas (i.e., disease x in biology y). Advinus Therapeutics, among others, have adopted this approach.