Virtual biotech - a sustainable business model?

This morning the newly appointed Chairman of the Danish Biotech Association Martin Bonde expresses his concern regarding the sustainability of the virtual biotech model (http://medwatch.dk/).

The challenge he sees appears to be a lack of committment and progress associated with the virtual model - due to the perceived lack of internal resources - and lack of focus by the contracted vendors.

What Martin points at is a real issue and a real challenge - and requires skills and experience to handle.

However, the solution is not to shed doubt on the business model.

The job can certainly be done in a virtual set-up with great speed, enthusiasm and commitment - both by the internal team and the contracted vendors. The trick is to tailor the set-up right for the specific project. And to understand that vendor management is the ultimate skill required in this setting.

It is a classical mistake to believe that a "virtual set-up" equals having only a single project manager making contracts with vendors. This model fits sometimes (only rarely) - and usually the biggest compromise - from the investors point of view - is lack of progress, lack of financial control and sometimes even lack of success. And it always seems to come by surprise. Since time is one of the most important cost-drivers in this field it is indeed surprising that so many people continue to believe that the "virtual set-up" equals a single project manager.

You do not need to employ more people in full time positions to be more successful in a virtual set-up. Virtual teams work very well and give you all the competences, commitment and support you need to manage your vendors efficiently and smart - and the beauty is that they provide it on an as needed basis.

By setting your team in this way you acknowledge and embrace two key elements of outsourcing clinical projects in a virtual environment:

1. You capture your vendors agenda. It is their business to serve multiple costumers. And it is NOT their agenda to do it fast! You need to embrace that fact - and build it into the way you set-up your project team - and the way you define your outsourcing strategy. In some rare instances you may be successful with one project manager. In most cases, however, you will need a team. Considering a virtual team to manage your project in a virtual set-up - this may be the key to your success.
2. The significance of entrepreneurial leadership. Leadership is the key especially in virtual set-ups. Leadership can not be expressed by signing contracts and letting go on your leadership tools through contracting of complex projects to a single vendor who also has other agendas. Depending on the nature and complexity of the project - do not forget to set the right framework for being able to display leadership.

Sustainable business models have been lacking in the biotech field. But the current paradigm shift that appears to be happening can in fact be supported by success stories. 

But like everything else in life - it is a challenge to get i right - and usually requires some failures on the way.

Martin Bonde

Christian Meyer