Planning: Why It’s Worth the Time for Biotech Companies
Article Series: Biotech Challenges & Ways to Overcome Them
For biotech companies, the drug development journey is long, and the only constant is change. To support biotech leaders along their journey, we are launching a series of interviews with Joris Pezzini, Executive Vice President of Biopharma, Alira Health. In this second article of the series, Joris covers the fundamentals of planning, one of the three required jobs for biotech leaders to be successful. You can review the first article in this series, The Biotech Industry Today: What Leaders Need to Know.
Joris has more than 15 years of executive-level experience in the healthcare industry, with both science and business roles at biotech, pharma, and consulting firms. Joris is a biotech engineer and received a business and leadership degree from Harvard Business School.
How should biotech leaders think about their approach to planning?
Our biotech leaders often admit they underestimate or overlook the value of planning, as opposed to “acting,” especially in an environment where they often feel that they are in a race with competitors and must move fast and be pragmatic in the moment.
Don’t dismiss planning as a “nice to have” process that you would do if you only had time or a luxury that only bigger companies can afford. Ideally, you will have the mindset that planning has great value; even if it requires slowing down for a period, it will pay off in the long run.
And as we will see, planning is very concrete and, in most cases, a mandatory step to both successful funding and effective execution.
What is planning, exactly?
Planning relates to and is defined by the fundamental pillars of the company. Those pillars should be based on the answers to these questions:
- Pillar 1: What medical value and differentiation does your product/service/platform have, both now and in 10 years?
- Pillar 2: How do you precisely transform this idea into a commercial opportunity, given all the changes that might impact your company during development?
Based on the two pillars of your biotech company, its leaders should develop both a high-level value story and a detailed plan that will help you drive the company forward. You use the story and the plan to convince stakeholders, both internal and external, that what you are doing is right and that you are approaching it in the right way.
On a daily basis, a precise plan is the map that your team follows. If you see something changing in the environment or in operations, you need to measure the impact on the plan and adjust this assumption. Very likely, any single change will impact other aspects, so you must be thorough and transversal to maintain coherence in the plan. A lack of such coherence is the number one weakness most investors see during their due diligence.
Planning is the cornerstone to:
- Define the next value inflection point and how to get there.
- Convince investors to finance the project until this next value inflexion point and define the associated risks/rewards.
- Align leaders/managers of the company on a shared operational plan and ensure a successful implementation/execution.
While it’s easy to agree with all the above theoretically, the lack of planning still represents today the main reason for capital raises to fail and licensing/M&A processes to stop before the finish line. Indeed, only very few assets wear such an intrinsic and obvious differentiation that they can afford to skip the proper planning step to convince the necessary stakeholders. And when inconsistency starts to appear in a due diligence process, confidence is rapidly lost, and almost impossible to recuperate.
What are the three main questions biotech leaders need to ask before starting to build a plan?
- What is my number one weakness? If you’ve already begun presenting your company to potential investors, this will be the number one challenge you receive from them. And it’s often the same question over and over again. You should then do the work to address this weakness in your plan.
- To whom am I presenting my plan first? That defines the style and elements you want to focus on. Ultimately, the plan will be a tool for many stakeholders, and you’ll need to tailor your style of communication depending on the audience and the objective.
- Internally to company leaders: Are we all convinced that we need a plan, and are we ready to invest time to build it? This leads to a follow-on question: how aligned are we on the value story and our differentiation?
What are the dangers of just “winging it”?
A lack of planning has a direct impact on a biotech’s success in convincing investors during due diligence. It also increases the risk to not properly execute on the development of your product. So, the dangers are extreme!
Most biotechs struggle to develop a unified story and plan, and there are often as many views of the exact positioning of a company/technology as there are managers around the table (not to mention board members). Investors feel this, and it also results in unfocused operations in your team on a daily basis.
This struggle is especially true for platform companies. There is often clarity on the lead asset, and an understanding of the need to have a precise plan, working on the technical elements of the drug development and the generation of evidence to support the chosen positioning and differentiation.
But there is a lot of confusion on where to focus efforts (human and financial resources) for earlier assets. And this is where the diversity of opinion among the leadership can be highly problematic.
For platform companies, when it comes to raising money, even if ~70% of the proceeds will go into the lead asset in the next 24 months after the raise, the remaining 30% must be deployed with a high degree of precision to generate value. The issue is the same for human resources, where the greatest pressure is to spend the team’s energy on the lead asset while trying to progress on the platform and/or work on a new generation of products in the employees’ “spare” time. Those hours are precious and can only generate value for the company if leveraged properly. Unified agreement on the part of the leadership as to how money and time should be spent is vital.
What are the best practices in socializing the plan inside and outside the company?
To socialize the plan with your internal (managers, board) and external stakeholders (investors, partners), I recommend repetition, repetition! Beyond that, you can play on two levels:
- Level 1: Formalization (through visuals) and simplification of the overall story. Bear in mind that half of the people do not entirely understand your presentation so keeping it simple and clear is key.
- Level 2: Be prepared to zoom in on the details/technicalities when needed to show that it’s not just a story but a solid plan that can convince experts.
Clearly describe the unknown and/or what is lacking and demonstrate that you have a plan to address them and make decisions step by step. Biology is complex, so it’s okay to not know or not have everything figured out. If you show you are aware of it and that you know how to initiate a process that will get to the answer.
Planning in the current changing environment is challenging. How can biotech leaders build a plan that accounts for that?
Be methodological and build your plan on a series of key assumptions. You should be able to clearly assess the impact of the change of one assumption (being very precise and technical) on the plan, and the operational and financial impacts that result.
When things change, as they inevitably will, update the possible scenarios and discuss risk management with both your board and management team. The goal is to reassure them of the coherence of your plan, showing that all your assumptions connect to each other in a relevant way. The plan is a tool not only to navigate but also improve your company’s operations as well as communication with your board and investors.
The Biotech Industry Today: What Leaders Need to Know
Planning is a key element that allows both funding and execution of your drug development.
Alira Health helps biotechs along the journey to create an innovative product that brings medical value for patients, structuring the drug development process into a series of clear and reachable value inflection points. Our experts can help you with the vital planning process that enables you to successfully proceed with funding and execution.
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