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Investing in the Biotech Industry
Biotechnology is a field that tackles problems across a variety of industries from agriculture to medicine. It utilizes methods of genetic engineering to construct or improve existing organisms. The most obvious applications are pharmaceuticals, molecular diagnostics, and vaccines. However, it can be used to create alternative meat products, isolate human cells to develop tissue and genetically-edited plants. Most projects for developing drugs fail, and it takes a long time to get new drugs to market. This makes the biotech sector an investment risky for investors and the media tends to focus on biotech’s high rate of failure and lengthy lead times for development.
The pipeline of a biotech company is one of the most important aspects for any investor. In order to be successful, a biotech company must develop an efficient clinical trial program that will meet its short-term financial requirements. Clinical trials can be costly and take many years to complete. A successful biotech business should have at minimum some drugs that are in Phase 3 or greater, and multiple drugs in Phase 2 or later.
As R&D firms prepare to launch new products that are based on their culture, their perspective will shift in order to deliver value to the patients. This change will surface new trade-offs and decisions, requiring thoughtful attention to the investment, the organizational structure, capabilities, and culture. Biotech companies that are successful have found ways to communicate and spread their goals across their organization and maintain the connection to their R&D driven research. This will ensure the right priorities are guiding commercial success while fostering innovation.
