Measuring Success in the Biotech World

4/28/09

What defines success in biotechnology? I’ve noticed that many companies are described as being successful, but there’s no widely agreed upon definition for success within the industry. Lack of agreement on a definition of biotechnology success can serve as a source of friction within a company’s senior management group—some of whom may be trained in business, some in science—but whose job it is to define this unified vision. Let’s look at the various players both within and outside of the industry to gain some perspective. How do we measure success?

Job creation? Politicos have a need to be able to tell their constituents about all of the wonderful jobs they’ve created in their districts. And what jobs register better with voters than high-tech, high-paying biotech jobs (even if they’re not exactly well understood by the public)? A new or expanding biotechnology company is going to create jobs, and not just for scientists. Business people, lawyers, HR specialists, accountants, administrative assistants, even the cleaning crew that comes in at night all need to be hired. Biotech jobs help build up the scientific community and enhance the reputation of the area in attracting other high-tech workers.

Scientific discovery? Every industry scientist dreams about coming up with the 21st century version of Paul Ehrlich‘s Magic Bullet, the wonder drug that will alleviate any one of mankind’s incurable illnesses. In truth, the discovery of new medical innovations (i.e. new and novel drugs) is rare, and in most medical scientists careers, it will never happen. Along the way, however, one can publish some significant papers that contribute to the overall advance of scientific progress. It is important to understand that science is an incremental process, with only occasional breakthroughs. As Isaac Newton put it, “If I have seen further it is only by standing on the shoulders of giants.” Actual breakthroughs are much less common than suggested by hyped-up media reports on the nightly news.

Financial return? Venture capital organizations won’t invest in companies that they don’t think will return a profit. While “wildly successful” might be an idealized outcome, a “reasonable” financial return is what they’re are after. This can come through an initial public offering, sale to another company, or out-licensing of a drug. Note that not every company that VCs invest in is expected to provide a positive financial return. It’s more about hitting a reasonable number of shots on goal. Depending on the level of return, one success can more than outweigh a handful of financial duds.

Drug approval? This prospect gets the clinicians and the regulatory folks’ blood flowing. Getting a drug approved is a difficult thing to do. The FDA eventually approves for sale only about 3 to 5 percent of drugs that enter clinical trials. The rest are abandoned because … Next Page »

Stewart Lyman is Owner and Manager of Lyman BioPharma Consulting LLC in Seattle. He provides strategic advice to clients on their research programs, collaboration management issues, as well as preclinical data reviews. Follow @

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  • Bob Busch

    I am a 20 year veteran of the pharmaceutical industry. This is a great article, in my opinion. It covers a lot of ground and is objective. The failure rate for start-up drug companies is very high. I don’t think the public really understands that.

  • CMCguy

    Because drug development takes combination of so many disciplines, many of which you well highlight, the best outcome is for something that achieves success across all/most those perspectives. At the same time majority of people doing the work have to be content with small victories because the full blown accomplishments are rare.

    I disagree with indicated approach to “punish” “me-toos” as first frequently when a program was initiated there was nothing directly to duplicate (and once become aware of competition that is ahead of you the investment so high that its too costly but to carry on). Occasionally companies will work on “well-trodden” areas but usually only because do believe have something new and/or what is out there has serve shortcomings. Secondly me toos can at times be benefit for portion of patients where other drug do not work/have bad tolerance (drugs rarely one size fits all). Finally, such products provides some stability/source of funds as the profits from me toos do get put back into R&D so will promote innovation in different areas.

  • PaulH

    Good article.
    The only area that is missing is a discussion on access – making a needed treatment cost effective to both the maker and user.
    Relative to “me toos”, these should be purer drugs and should lead to less side effects and interactions than the original. As more of the population is on multiple drugs, this becomes more important and utlimately benefits the user.