10 tips for a pharmaceutical startup
1. Be in line with progress
The pharmaceutical industry began to develop with the creation of drugs that were based on large molecules, then small molecules, protein preparations, drugs based on monoclonal antibodies were created, international sales of which are now growing at an average of 25% per year. According to leading scientists, the future lies in cell and gene (including RNA) therapy.
2. Look for partners to help with clinical trials.
There are drugs that have been treated by hundreds and even thousands of patients “on their knees”, simply by agreeing with a doctor in a hospital. Pharmaceutical companies often refuse such drugs, because this cannot be called clinical trials. I would advise such teams to find partners who will help you do the tests correctly. I have one such partner who says: "send me the drugs, I will test them myself." But such a partner, unfortunately, is only one. Do not spare money for good preclinical and clinical trials, according to their results, investors will decide on investing in your company. Protect intellectual property worldwide with good international lawyers. But even if your drug cannot be patented, but it treats people better and with fewer side effects than drugs,
3. Make contacts
Large Western pharmaceutical companies (collectively called Big Pharma - “bigpharma”) work very carefully with scientists, institutes and biotechnology companies. Bigpharm creates some of the new drugs inside itself, buys something “outside” - from small venture companies. Now Bigpharma is trying to follow the model of outsourcing new research and developing innovative drugs, which opens up additional opportunities for relatively small, but united and effective teams of developers. Western companies, on the other hand, have very strong intelligence, and they have a good idea of what they need. If you want to sell something to a Western bigpharm, then do it through a person from the western pharmaceutical industry, who has already had experience in such transactions and who is well acquainted with companies that can become your investor.
4. Join a partnership
In 2010, a deal was closed between Pharmstandard and Affitech, the world leader in monoclonal antibodies. This is the first example when a Russian pharmaceutical company bought a leading European innovative biopharmaceutical company. This purchase will allow Russia to reduce the lag in the field of monoclonal antibodies by 10 years. However, it is unlikely that anyone else from the Russian companies will be able to organize such a large-scale deal, so I advise everyone else to enter into partnerships with Western developers and develop drugs together.
5. Take advantage of the market
You can enter the Russian pharmaceutical market faster and cheaper than the American or European. And this competitive advantage must be used. If we learn how to make good molecules, attract money there, make a good clinic, clinic, competently register and bring drugs to the market, then our products and biotechnology companies will be in demand all over the world.
6. Discuss conditions directly with the investor
We had a case when, on behalf of a Russian investor, we agreed with a German pharmaceutical company on the distribution of German cancer drugs in Russia. Negotiations with the Germans were conducted through their investment adviser in Switzerland. The Russian side agreed to take all the obligations to bring the drug to the Russian market: clinical trials, registration, marketing and sales. Arriving at the negotiations already with our client, we found out that the consultant skillfully hid one significant fact from us: a German company is ready to deal only if the Russian investor pays $ 30 million in advance. The consultant can be useful to help the investor find a suitable pharmaceutical company, and the company is an investor, but then all negotiations should be conducted directly.
7. Look for the right investor
Build a company not to sell and make money, but to treat people as well as no one has treated you before. Look for like-minded people among entrepreneurs, investors, scientists in Russia and around the world. For starters, you can choose the five best investors in the world and first turn to them.
You definitely need to attract successful entrepreneurs, owners of a stable regular business from the pharmaceutical industry. Often, business leaders can simply buy your development from you, leaving you with some share, for example, a percentage of sales in Russia, money for reaching certain stages of the development of a drug or stock in a company. Typically, investors want control (51% or more), but options with 26-30% plus veto also occur. Our fund is ready to consider the acquisition of smaller blocks of shares in promising developments to combat old age and fatal diseases. Most good ideas die of mediocre management, which cannot commercialize them, and has an overestimated value for these ideas. With a good investor, you can always agree on the structure of the transaction, which will be beneficial for both parties.
8. Do not ignore public finances
In addition to private investors, in Russia today you can attract money from government agencies: the Ministry of Industry and Trade, Skolkovo, the Russian Venture Company (RVC), Rusnano. With the participation of RVC, quite a lot of specialized funds have also been created: the RVC Biofund, Maxwell, Bioprocess, the Biofund of the Republic of Tatarstan, etc. The best offer in Russia is grants from Skolkovo and the Ministry of Industry and Trade. I would advise taking money from RVC on the terms of co-investment, and then go to larger investors. Do not forget about all kinds of foreign grants for specific research topics, for example, from the American National Institute of Health (NIH). Unfortunately, many transactions in Russian funds with state capital are not based on scientific, preclinical or clinical data on drugs, but from connections and from the desire for personal income from managing funds. You can already agree on the deal and conditions in the fund, when suddenly a brave fellow comes and wants to wrap up your project or receive a bribe from you. You need to be prepared for this and decide in advance what you will do in this case.
9. If possible - earn yourself
Attracting money to a pharmaceutical startup is extremely difficult. The ideal option is to do risky projects in parallel with some existing business, for example, with the purchase and promotion of a generic that is already sold on the Russian market. This will give you regular funds for your own research and development. Another good option - to any pharmaceutical startup, you can add a component to create and market an effective biologically active additive (BAA). Supplements are quick to register, they do not need clinical trials, they are easy to sell via the Internet. In addition to money, the development and launch of dietary supplements will help you prepare sales channels and gain the necessary experience to bring the original drug to the market. My friends invested $ 10,000 in a dietary supplement company, and 10 years later their capitalization reached $ 50 million.
10. Get innovative IPO
There remains another alternative - the stock market, but it is difficult for innovative companies without a significant sales volume to attract investors. So far, there have been only two pharmaceutical innovative IPOs in Russia (Institute for Human Stem Cells and Farmsintez), and both have been successful. In order to make it easier for pharmaceutical startups to be publicly traded in Russia, it is possible to pool such companies and put them on an IPO together with a large domestic manufacturer interested in innovative pharmaceuticals. There is also the possibility of an IPO stratap going to western sites such as Frankfurt or the American technology exchange NASDAQ. There you can raise up to $ 10 million, but the cost of preparation will be quite high, about $ 300,000. If you are looking to import medicine from Asia, you can get in touch with for the best medicine exporters, there are many that you can search online.