Case
Studies
#3.
Is it real?
The new management
at a leading platform biotechnology company was confronted with
a project which sought to leverage the company's core technology
to accelerate and improve the accuracy of portfolio screening
decisions made by major pharma manufacturers.
While the
market need was obvious, the ability of the technology to satisfactorily
meet the challenge on a profitable basis was at issue. The project
was consuming an increasing amount of precious cash and had reached
a point where a significantly greater commitment would be required
to proceed. Strong project advocates within the organization were
backed with ambitious projections for the technology. The Street,
meanwhile, was having difficulty even understanding the potential
business.
After an immersion
into the technology by the client's expert team, the BDF engagement
team developed preliminary business models for the technology
which addressed the need to validate the still nascent technology
and to operate an ultimately viable business. Critical was the
need to balance investment risk, cash consumption, and potential
return.
The BDF team
then took "sanitized" business propositions to potential pharma
customers for a real world assessment of the technology and underlying
business propositions. Since there were perhaps two hundred individuals
in the world who could seriously gauge the proposition, the BDF
team used its extensive pharmaceutical and biotech industry connections
to identify those few key individuals whose expert opinion and/or
decision-making authority would truly have a compelling influence
on a purchase decision. Once the decision making structure was
validated, in-depth interviews were conducted with heads of research,
technology development team leaders, and front line scientists
as most appropriate to the organization.
While potential
customers applauded the client’s efforts, it quickly emerged that
the actual volume of procedures in which the technology would
be employed were far fewer than in the clients original projections.
Customers noted that the client's projections represented an "ideal"
situation, often discussed, but rarely seen in actual practice.
Customers, too, had predictable reservations about the reliability
of the technology vis-a-vis an alternative which many had recently
embraced - but also offered concrete suggestions for how to more
rapidly demonstrate its validity.
After an extensive
analysis of the findings, BDF then returned to the client's Board
with two deliverables:
- A difficult
recommendation to terminate the project and redirect resources
into its two more promising businesses which offered greater
shareholder value
- In the
event the client elected to proceed, revised business models,
projections, and technology validation strategies that would
buffer client risk and more rapidly address lingering market
concerns.
BDF's biotech
clients are typically populated by exceptional individuals, passionate
about their work and determined to do what's best for their companies.
BDF can help in making sure that that effort and determination
are directed against the activities that will ultimately create
the greatest value.
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