Which companies will last? Success begins with the basics
Founding a new company is a high stakes business. Many leaders begin with an exciting, well-funded solution and then struggle to build a sustainable business over time. Investors, sponsors, investigators, and patients demand that we build high-quality organisations for the long term. A novel solution paired with strong business fundamentals and measured growth are critical for success.
The clinical research industry is centred on developing new and innovative therapies. Regardless of fluctuations in funding, the geopolitical climate, and macroeconomic headwinds, companies in this space are bringing life-changing therapies to the world, at a faster rate and higher volume than has ever been done before. This drive for innovation creates continuous opportunities for new companies to support the mission of improving health.
For new entrants venturing into this sector, the landscape can be daunting. Leaders of new companies must fundraise with cautious investors in a post-COVID world, fluctuating interest rates, and navigate complex regulations while ensuring patient safety and data integrity. While all or some of these issues can impact the outcome of a start-up, the truth is that long-term business success hinges on business fundamentals: ultimately, whether a company succeeds or fails depends on business acumen and strategic execution.
The foundations of business strategy
When a company is started with a new solution to improve all or part of the research ecosystem, the keys to success are as simple (or complex) as these three questions:
- Does the solution solve a problem?
- Are people willing to pay for it?
- Can you make a profit?
The first two points can be simplified even further: clinical research, and business in general, is about people. Companies must tailor solutions to the people who will consume them and pay for them. These people happen to be patients taking part in research, the physicians overseeing them, healthcare professionals and teams delivering them, and the sponsors running them. All are individuals, humans… people.
Everyone is looking for consistency, quality, and reliability - will this company do what it says it will do? Can I trust this company? Consumers and investors must believe that a company will fulfill its promises and deliver high-quality services. Many have come and gone whilst overpromising. The fundamental of delivering with quality remains the key to longevity, building trust with sponsors and retaining clients for a lifetime, not just a study.
To do this requires the discipline of knowing how fast you can grow while keeping an unwavering commitment to quality and execution. Too fast, and there is risk to patients, quality, and data integrity; there are many examples of this in the COVID gold rush. Too slow, and the cash required to fund a business can become too much of a burden on the business, which brings us to the next point.
While people are the core of all business success stories, profitability remains the measure of success. Businesses, by definition, must become, remain and grow in profitability to succeed. Making the tough choices of where to spend, when to spend, and when not to can only be done with a clear plan, strong discipline, and a board who are engaged and supportive. Making mistakes within a range of tolerability is one way to think of this. It is an art as much as a science, and experienced leaders and board members have seen it enough times to get it right most of the time while embracing learning from times when you get it wrong.
Succeeding in a volatile market
Clinical research companies, from the smallest to the largest, have been forced to reset compared to the market peak of COVID revenues. Following the spike of funding and reduced investment caution during the pandemic, conditions have reset to a new baseline - although, this baseline is still higher than pre-COVID levels, and the industry has continued to grow at a CAGR of 5.6%.
Although it is impossible to predict precisely when and how market conditions will shift, change is always certain. Since companies cannot control these fluctuations, strategic preparation is key. By assembling experienced teams familiar with navigating such shifts, start-ups can create resilient businesses capable of thriving in any market.
While the specific conditions surrounding availability of funding change, the fundamentals are once again constant: whether a start-up or established company, those with great assets solving real problems in global health are poised to succeed. However, companies that fail to prioritise the needs of their market during the development process will fall short.
Regardless of the funding environment, great businesses succeed. In fact, the harder the environment, the easier it is to see whether a product or service is really needed in the market, whether people will pay for it, and if they will come back again for more because you did what you promised. When funding is abundant, business fundamentals may go unaddressed. Currently, the market has course corrected with restructuring and reorganisation of larger organisations and some small companies falling by the wayside. The upside of a challenging market is the opportunity for savvy start-ups to get the basics right and deploy capital where it makes the biggest impact.
How start-ups can seize the opportunity
Start-up leaders have a unique ability to purpose-build their companies to solve a specific problem or challenge in ways that may be impractical for legacy companies to do without larger changes to their core business infrastructure. Even in the face of a volatile market, these organisations have the potential to thrive while bringing new treatments and technologies to people. As lofty as this goal may be, it begins with a funded business model and commitment to long-term company growth. Leaders who are able to achieve this with their companies are the ones best poised to be the next generation supporting the advancement of health and well-being across the globe.
About the authors
Samantha Eells’ passion for serving people, improving health and well-being, and creative endeavours led to the founding of Lightship. In her prior work at Harbor-UCLA Medical Center and UCLA, and as a founding team member at Science 37, Eells honed a skillset for creating and building ideas that keep people and their health at centre. She also finds inspiration in nature and connection with the environment important for driving change and purpose. In partnership with her co-founders, Lightship was founded to make clinical trials accessible for everyone. Together with the Lightship team, Eells works to offer access and choice for patients so that health equity can be improved through better treatment options for all people.
David MacMurchy is focused on developing better access to healthcare and improving patients’ well-being. MacMurchy is a leader in the health & life sciences sector with over two and a half decades of experience working for leading organisations. Prior to joining Lightship, he led a team of more than 9,000 delivering clinical trials across Europe, Asia, and Africa at PRA Health Sciences (ICON). MacMurchy helmed the life sciences practice as a partner for EY (Ernst & Young) in Europe, supporting pharmaceutical and biotechnology companies, focusing on growth, planning, and technology capabilities. His career of collaborating with global healthcare providers in the United States, Europe, and China includes over 10 years with IMS Health (IQVIA) and Pfizer.
