Traditionally, biotech startup costs were steep, think: $10M minimum. Now, due to infrastructure changes, it’s more achievable, but can be close to $100K at the low end of the spectrum. Every decision for growing biotechs depends on lab budget and lab operations and management. One manual, inefficient process or poor decision can take up half the year’s budget or delay research milestones significantly.
Today, biotech finance teams are working closely with lab managers to set up efficient, modern workflows that incorporate the latest software and lab technology. By eliminating operational risks like inefficient lab spend going unnoticed or wasting precious scientists’ time on manual tasks, biotechs can innovate faster and use funding effectively.
The prospect of starting a biotech lab is daunting. The average biotech startup success rate is 20%, with pharmaceutical companies at a success rate closer to 10%. But with the right strategies, biotechs can be efficient with spend and lab management, increasing their likelihood of achieving success. As the finance team, so much can be set up correctly and improved upon to maximize efficiency in the lab.
A great idea is only as strong as the foundation underneath it. Simple inventory tracking, consolidation of internal lab systems, and standardizing processes in terms of cost can all create this backbone of financial stability. Too often, biotech companies will bleed money and time just trying to copy inventory from one system to another, or from one paper to another. When biotech labs are only concerned with the science and not maximizing the overall lab efficiency, the system will eventually break down.
Researchers are required to not only think about the complex science involved with new biotech endeavors, but to also consider the financial implications of the work they are doing. From the finance side, it is important to keep the entire scope of the research in mind at all times.
When creating a new venture or new lab entirely, plan out the budget of all supplies, equipment, and salaries with the end goal in mind. Think about how much money is needed for new hires down the road in a new phase of R&D and how that fits into the budget you may start out with. Before all of this, also remember to keep safety in mind. Accidents are common, so budget for replacing equipment, counter surfaces, and misused supplies.
Operational Risks for Biotech Finance Teams and How to Avoid Them
Setting a system up in a certain way or choosing one tool over another can make or break a biotech finance team’s workflows. Here are four risks to operating a biotech lab at max efficiency, and how to avoid them.
Research funding is competitive and requires a close watch on every aspect of the financials. This starts with the initial funding and how the budget is spaced out across the R&D process.
There are many ways to improve initial biotech startup funding that can drastically improve the initial phase of setup in your lab. Make sure your investors have a clear understanding of how your research will make them back their investment. Take special care to address the concerns they have financially and the finance team is going to be able to maintain the lab’s time frame.
Ironing out these potential issues in the beginning will only lead to more stable cash flow further down the road. Once you are out of the investment phase, keep careful track of how long the initial investment will last and at what points cash flow may become a concern. Maximize every dollar invested into your lab — the research is essential, so eliminating waste at every possible turn contributes to more innovation and faster development.
When beginning a new biotech, time to milestone is everything. Starting a new lab location can be time consuming and tedious, and without the right tools and expertise, can be costly. Being organized throughout the setup or move of a lab can save weeks of time which can then be put into beginning the research earlier.
As the finance team, this falls under your domain of making sure that processes for packing up, moving, and setting up in the new location are completed as smoothly as possible, and hiring experts if appropriate. One option for setting up or moving locations is to hire a lab setup service to handle almost the entire process. These services are well worth their price, especially if your team has never relocated or is a first time project for many members. Regardless of whether it is your team or a third party, taking the time to ensure your lab move goes as quickly and as safely as possible can save you valuable research time on both ends of the move.
Take a close look at lab operations to identify areas to optimize. Find areas where consolidating systems can save time. Similarly, ensure that researchers are not being redundant in their routines, saving time and reducing the risk for manual error.
If one researcher is calibrating a certain piece of equipment before they leave each night, ensure that another is not repeating this process when they get in. These things may seem simple but running a lean lab can be a difference maker when you’re nearing your goals.
Computers and digital technologies can be integrated into almost every lab process, so it’s important not to overlook how it can help in finance practices as well. Spending hours manually entering inventory and transferring it into the next supplies order can be done with a few clicks when set up properly.
These small automations to lab processes can save scientists time, which gives them back time to conduct the research shortening the total time it takes to reach goals.