Do you want to start a biotech company? If YES, here is a complete guide to starting a biotech business with NO money and no experience.
Okay, so we have provided you an in-depth sample biotech company business plan template. We also took it further by analyzing and drafting a sample biotech company marketing plan backed up by actionable guerrilla marketing ideas for biotech companies. In this article, we will be considering all the requirements for starting a biotech company. So put on your entrepreneurial hat and let’s proceed.
Table of Content
- 1 Why Start a Biotech Business?
- 2 Starting a Biotech Business – Market Research and Feasibility Studies
- 3 Starting a Biotech Business – Legal Matters
- 4 Is Professional Certification Needed to Run a Biotech Business?
- 5 Starting a Biotech Business – Technical and Manpower Details
- 6 Starting a Biotech Business – The Marketing Plan
Why Start a Biotech Business?
Do you know that irrespective of the career you belong to, you could still become your own boss? The reality is that there are several business opportunities available in your field of study/training. If you are a scientist and you intend starting your own business, one of the many businesses you can successfully start is a biotech company; it is an industry that is still pretty much green and open to creative scientists cum investors.
Before we forge ahead, it is important to clearly state that starting a biotech company requires extensive training, experience, creativity, reasonable startup capital, license and detailed business plan. The truth is that you can’t just wake up and launch your own biotech company in the United States; you must follow establish protocols. This industry is highly regulated because of the potential risks involved; it is all about making use of living organisms and system to develop new products.
There are several fields that need the input of biotech companies. Fields like medicine and pharmacy, agriculture (hybrid food production, hybrid bird production and hybrid animal production) and non-food industries (used in the production of biodegradable plastics and bio – fuels et al).
Although some people still have their reservations when it comes to the use biotechnology in agriculture, but the fact remains that it has contributed in no smaller measure to the increase and ease of cultivating crops and rearing of birds and animals.
Much more than being a scientist, the first step you are expected to take if you intend starting your own biotech company is to spend time researching the industry; a detailed research must be conducted if you want to successfully launch your own biotech company. The truth is that you stand to gain a lot when you spend time researching; you will be exposed to information that will help you make life changing business decisions.
One thing about science oriented businesses is that you must keep tabs with the trend or you will end up producing obsolete products. Below is an article that will give you the needed guide to launching your biotech company in the United States and perhaps in any part of the world.
Starting a Biotech Business – A Complete Guide
- Industry Overview
Companies that operate in the Biotechnology industry primarily make use of living organisms or molecular and cellular techniques to provide chemicals, food and services that meet human needs. It is important to state that the Biotechnology industry does not include companies that are involved in developing small-molecule pharmaceuticals, performing contract research or manufacturing biological equipment.
A close study of the Biotechnology industry shows that the industry is growing rapidly, with revenue increasing over the last five years driven by rising use of ethanol, demand for improved crop yields and the increasing medical needs of an aging population.
Even though the industry has grown, a consolidation trend has emerged as large pharmaceutical companies have increasingly targeted industry firms for acquisition, to expand their product portfolios ahead of impending patent expirations. Sustained spending on research and development, including by the federal government, will benefit the industry going forward, driving growth in revenue generation and of course profit.
The Biotechnology Industry is indeed a thriving sector of the economy of countries like Israel, Japan, India, China, United Kingdom, Germany and the United States of America. Statistics has it that in the United States alone, the industry generates well over $109 billion annually from more than 2,230 registered and licensed biotechnology companies scattered all around the United States of America.
The industry is responsible for the employment of over 218,610 people. Experts project the industry to grow at a 1.8 percent annual rate from 2011 to 2016. AbbVie, Amgen Inc., Genentech Inc., Monsanto and Gilead have the lion shares of the available market in the Biotechnology industry in the United States of America.
A recent report published by IBISWORLD shows that in the Biotechnology industry’s short history, its diversity of product offerings, markets, company sizes and funding sources have largely buffered it against major volatility from market fluctuations.
The report further stated that high labor costs and the need for significant upfront investment in research and development (R&D) render the industry somewhat vulnerable to declines in venture capital and government funding. In the years following the recession, cutbacks across these funding sources caused industry revenue to fall.
However, growth boomed in 2015 as companies began to experience returns on their research, which can take years to develop into fully approved products. Capital markets have recovered from the recession, moderately improving the availability of industry investment capital.
Some of the factors and incentives that encourage aspiring entrepreneurs to venture into starting a biotech company is the fact that the market for the various products produced by biotech companies is pretty huge and not seasonal. This makes it easier for qualified entrepreneurs who are interested in the business to come into the industry at any time they desire; the entry barriers are quite high, but that does not on in anyway stop any serious – minded entrepreneur from starting the business.
The bottom line is that the Biotechnology industry is still very much open for new entrants; the competition within the industry is not as stiff as similar industries. If your product is good, it can gain a fair share of the available market in any country or region you intend launching the business.
Starting a Biotech Business – Market Research and Feasibility Studies
- Demographics and Psychographics
People who make use of products produced by biotech companies cut across several industries hence the demographic composition of a biotech company is all encompassing especially when they are also into the production of loads of products.
So, if you are thinking of starting a biotech company, then you should make target demographics all encompassing. It should include medicine and pharmaceutical manufacturing companies, hybrid food processing and production companies, hybrid crop cultivators, hybrid animal breeders, hybrid bird/poultry farmers and non – food industries amongst others.
List of Niche ideas Within the Biotech Business That You Can Specialize in
There are several niche ideas (areas) you can specialize in as a biotech company owner or you can choose to be involved in all the aspects of biotechnology. You can choose to concentrate on the medical industry/pharmacy (drug production), you can choose the Agric industry and you can decide to go into the food industry.
The truth is that if you do your research and market survey, you will be well guided on the industry and products to produce. Whatever decision you make, ensure that it is a decision that will give your business advantage in the market place.
However, here are some of the niche ideas you can major in if you choose to run a specialized biotech company;
- DNA coding, mapping and sequencing
- Processing biotechnologies
- Subcellular organisms engineering
- Cell and tissue culture engineering
- Protein sequencing, synthesis and engineering
- Human health technologies
- Animal health, marine and terrestrial microbial technologies
- Environmental remediation and natural resource recovery
- Agriculture and aquaculture technologies
- Industrial technologies
The Level of Competition in the Biotechnology Industry
That biotech business is considered in many quarters to be evolving and hence a green business, does not rule out the fact that there are competitions in the biotech industry. The truth is that there is hardly any industry or line of business anywhere in the world where there is no competition; as a matter of fact, it is competition that brings innovation in the business world.
If you are looking towards starting a biotech company, then you should brace up for competition in the industry as you are expected to compete with both small and large corporations in the Biotechnology industry. This is why most biotech companies engage in continuous researching in order to produce safe products that will be accepted by the general public.
No doubt, the fact that there are growing competitions in the Biotechnology industry does not in any way hamper the performance of new entrants as most of them know how to recreate and re – strategize to reach out or attract more customers even if it is just cottage companies and farmers in their immediate community.
List of Well – Known Brands in the Biotech Industry
It is the norm that in every industry, there are always brands that perform better or are better regarded by customers and the general public than others. Some of these brands are those that have been in the industry for a long time, while others are best known for how they conduct their businesses and the results they have achieved over the years.
These are some of the leading biotech companies in the United States of America and in the globe;
- AbbVie Biotech Company
- Amgen Inc.
- Genentech Inc.
- Monsanto Biotech Co.
- Gilead Biotech Company
- Novozymes North America Inc.
- Neurotech Inc.
- Syros Pharmaceuticals
- Amyris Inc.
- Lonza Biologics Inc
- Abbott Diagnostics Division
- Canon U.S. Life Sciences, Inc.
- Agenus Inc
- Nitto Denko Avecia Inc.
- QLT USA Inc
- Santa Cruz Biotechnology Inc
- Codexis Inc.
- Cosmo Bio USA, Inc.
- Epeius Biotechnologies Corporation
The fact that the entry barrier for the Biotechnology industry is high means that it is a business that must not be started without following due diligence, it is a business that requires thorough economic and cost analysis – feasibility studies and market survey, if you are looking towards making profits in the industry.
Part of what you need to focus on in this line of business is how to build a standard biotechnology/lab and production plant, gain robust distribution networks, secure the required business license and permits, branding and of course how to maintain your machinery and equipment and to take care of your overhead before your business breaks even. Other cost that should be considered during planning and budgeting are supply of chemicals, packaging materials, maintenance costs et al.
In other to play safe with your investment, it is important that you hire the services of business consultants cum competent hands-on-the job economists to help you carry out thorough economic and cost analysis before committing your resources into the business even if you intend launching a small scale and standard biotech company.
Starting Your Biotech Business from Scratch vs Buying a Franchise
If you are looking towards starting a biotech company, then you should make plans to start from the very scratch. This is because from available research, you can hardly get the franchise of a biotech company to buy; it appears not to be available. Besides, the fact that you can start the business in any capacity means that it is a business that is open to qualified and experienced entrepreneurs with different financial capacities.
Please note that most of the big and successful biotech companies in the United States and other parts of the world started from the scratch and they were able to build a solid business brand. It takes dedication, hard work and determination to achieve business success and of course you can build your own biotech company to become a successful brand with your distribution network spread throughout the length and breadth of the United States of America.
Possible Threats and Challenges You Will Face When Starting a Biotech Company
If you decide to go into biotech business today, one of the major challenges you are likely going to face is the presence of well – established brands in the biotechnology industry both in the United States of America and from other parts of the world. The only way to avoid this challenge is to create your own market (distribution network).
Some other challenges and threats that you are likely going to face is the partial acceptance of biotechnology products and unfavorable government policies. It is a fact that partial acceptance of products and unfavorable government policies can hamper the growth of your biotechnology company. There is nothing you can do as regards these threats and challenges other than to stay positive that things will work well for you.
Starting a Biotech Business – Legal Matters
- Best legal entity to use for this type of business
It is important to clearly establish that if you have plans to launch any form of business, most especially a biotechnology business, the legal entity you choose will go a long way to determine how big the business can grow.
You can either choose a general partnership or a limited liability company for a biotech business. Ordinarily, general partnership should have been the ideal business structure for a small scale biotech business especially if you are just starting out with a moderate startup capital in a small neighborhood and just into production specific biotech products.
But if your intention is to grow the business, produce loads of biotechnology products and have distribution networks spread across the United States of America and other countries of the world, then choosing general partnership might not be appropriate for you. Limited Liability Company, LLC will cut it for you.
There are loads of advantages when you choose Limited Liability Company for your biotech company. Setting up an LLC protects you from personal liability. If anything goes wrong in the business, it is only the money that you invested into the limited liability company that will be at risk. Limited liability companies are simpler and more flexible to operate and you don’t need a board of directors, shareholder meetings and other managerial formalities.
Here are some of the factors you should consider before choosing a legal entity for your biotech business; limitation of personal liability, ease of transferability, admission of new owners and investors’ expectation and of course taxes. If you take your time to critically study the various legal entities to use for your biotech business with the ability to export your products and open chains of distribution networks all across the United States of America and other countries of the world, you will agree that limited liability company; an LLC is most suitable. You can start this type of business as limited liability company (LLC) and in future convert it to a ‘C’ corporation or an ‘S’ corporation especially when you have the plans of going public.
The truth is that upgrading to a ‘C’ corporation or ‘S’ corporation will give you the opportunity to grow your biotech business so as to compete with major players in the industry; you will be able to generate capital from venture capital firms, you will enjoy separate tax structure, and you can easily transfer ownership of the company; you will enjoy flexibility in ownership and in your management structures.
Catchy Business Name ideas Suitable for a Biotechnology Company
In the business world, when it comes to choosing a name for your business, you should be creative because whatever name you choose for your business will go a long way to create a perception of what the business represents. Usually it is the norm for people to follow the trend in the industry they intend operating from when naming their business.
So, if you are considering starting your own biotech company, here are some catchy names that you can choose from;
- Fritz Lackey® Biotech Company, LLC
- Travis Brown and Co® Biotech Company, LLC
- T Y Gusto Group® Biotech Company, Inc.
- Young Brains® Biotech Company, Inc.
- Charles Bronwyn and Sons® Biotech Company, Inc.
- Arizona Connect™ Biotech Company, Inc.
- Scientist Minds© Biotech Company, Inc.
- Bennie Polestar® Biotechnology, LLC
- Kingston DeMint Group© Biotech Company, Inc.
- Outer Space© Biotech Company, Inc.
It is a known fact that in the United States and in most countries of the world, you can’t operate a business without having some of the basic insurance policy covers that are required by the industry you want to operate from. So, it is important to create a budget for insurance and perhaps consult an insurance broker to guide you in choosing the best and most appropriate insurance policies for your biotech company.
Here are some of the basic insurance covers that you should consider purchasing if you want to start your own biotech company in the United States of America;
- General insurance
- Health/Medical insurance
- Risk Insurance
- Liability insurance
- Building Insurance
- Workers compensation
- Overhead expense disability insurance
- Business owner’s policy group insurance
Intellectual Property Protection/Trademark
If you are considering starting your own biotech company, you are mandated to file for intellectual property protection/trademark. This is so because the nature of the business makes it impossible for you to successful run it without having any cause to challenge anybody in court for illegally making use of your company’s intellectual properties. Besides biotechnology products is the brain child of the inventor/group and no inventor would want his or her products to be used by people who intend making profits off their labor without duly compensating them.
So, if you want to protect your inventions (biotech products) your company’s logo and other documents or software that are unique to you or even jingles and media production concepts, then you should go ahead to file for intellectual property protection.
Is Professional Certification Needed to Run a Biotech Business?
Apart from the results you get as it relates to producing effective, safe and well – accepted biotech products, professional certification is one of the main reasons why some biotech companies stand out. If you want to make an impact in the biotechnology industry, the you and your team mates should work towards acquiring all the needed certifications in your area of specialization.
You are strongly encouraged to pursue professional certifications; it will go a long way to show your commitment towards the business. Certification validates your competency and shows that you are highly skilled, committed to your career and up-to-date in the market.
These are some of the certifications you can work towards achieving if you want to run your own biotech company;
- Chemical Handler’s Certificate
- Biotechnology Management Certificate
- Biotech Project Management Specialized Certificate
- Degree or Diploma in Chemistry, or Microbiology or Biochemistry and related courses
Please note that you cannot successfully run a biotech company in the United States and in any country of the world without acquiring professional certifications.
List of Legal Documents You Need to Run a Biotech Company
You are not expected to operate a biotech company without registering the business with the government of your country and obtaining the required legal documents. Once you are caught operating this type of business illegally, you are likely going to end up in jail.
So, it is important to approach the corporate affairs department of your country to incorporate your biotech company and make inquiries of the legal documents you would need to operate freely. You can engage the services of an attorney to help you with the process.
Once you are done with incorporating your company, you can then apply for both federal and state license and permit. The truth is that the industry is highly regulated and as such due process must be followed if you want to run your own biotech company.
Here are some of the basic legal documents that you are expected to have in place if you want to legally run your own biotech business in the United States of America;
- Business and liability insurance
- Tax Payer’s ID
- Fire certificate
- Chemical Handler Certificate
- Certificate of Incorporation
- Business License
- Business Plan
- Non-disclosure Agreement
- Employment Agreement (offer letters)
- Employee’s Handbook
- Operating Agreement for LLCs
- Insurance Policy
- Company Bylaws
- Memorandum of Understanding (MoU)
- Building License
- Franchise or Trademark License (optional)
Financing Your Biotech Company
Starting a biotech company is capital intensive and as such you must make plans to raise your startup capital. If you have a good business plan, it will make it easier for you to raise your seed capital from the bank and angel investors. One good thing about biotech companies is that it attracts grants from the federal governments of most countries, crowd funding and international foundations.
So, ensure that you explore all the available means to raise your seed capital to start your biotech company. It can be challenging though, but keep at it until you get the amount required to successfully setup your biotech company. Here are some of the options you can explore when sourcing for startup capital for your biotech company;
- Raising money from personal savings and sale of personal stocks and properties
- Raising money from investors and business partners
- Sell of shares to interested investors
- Applying for loan from your bank
- Pitching your business idea and applying for business grants and seed funding from donor organizations and angel investors
- Source for soft loans from your family members and your friends
Choosing a Suitable Location for a Biotech Business
In the United States and in all countries of the world, there are zoning laws guiding the location of biotech companies and that is why it is important to talk to a qualified real estate agent before choosing a location for your biotech company. In most countries, you are not expected to build a biotech company in a residential area.
Despite the fact that biotech products are used by households, farmers and a host of companies in various industries, it is important to choose a location that will give you economy of scales; a location that will give you leverage to favorably compete in the industry as a new entrant and also make reasonable profits.
Before choosing a location for your biotech company, ensure that you first conduct a thorough feasibility studies and market survey. The possibility of you coming across similar business that just closed shop in the location you want to open yours can’t be ruled out. This is why it is very important to gather as much facts and figures before choosing a location for your company.
Starting a Biotech Business – Technical and Manpower Details
If you are considering starting a biotech company, then you should make plans to build a standard biotechnology lab and production plant. So, you are expected to have basic biology lab equipment and tools that are used on daily basis such as microscopes, test tubes, beakers, Bunsen burner, Densitometers, DNA Sequencers, DNA Synthesizers, Hot Plate, Micropipette, Autoclave, Incubator, Compound Light Microscope, Graduated Cylinder, and Electronic Balance/Digital Scale et al.
Even though you can get fairly used of the above listed equipment and machines, but it is advisable to go for new and latest machines and equipment that can serve you for a long time especially if you have the required finance to make the purchase. Even if you don’t have the required amount, you can enter into an agreement with the suppliers of such machines and equipment and spread the payment over a period of time.
As regards acquiring a facility, if you have the finance, it is to your advantage to acquire a property or lease a facility to be used for your biotech lab; it usually gives you the freedom to design the facility the way you want to it to be and install safety gadgets as you so desire. But if you are low on cash, then you don’t have any option other than to rent a facility.
When it comes to creating a workforce structure for a standard biotech company, then you should look towards getting qualified and competent people to fill the following roles; Chief Executive Officer (Owner), Senior Research Fellow/Biotech Scientist, Plant Manager, Quality Control Officer, Human Resources and Admin Manage, Merchandize Manager, Sales and Marketing Manager, Accountants/Cashiers, Laboratory Assistant/Plant Breeder/Glasswasher, Production Workers/Machine Operators, Distribution Truck drivers and Cleaners.
Over and above, you will need a minimum of 5 – 20 staff members to successfully run a small scale but standard biotech company. Please note that there will be times when you are expected to hire experts to help you handle some key research work, so always make a budget for that.
Starting a Biotech Business – The Marketing Plan
- Marketing ideas and Strategies
Once you have a product, it is your responsibility to market and promote the product. The truth is that there are competitions in the biotech industry; everybody is trying to be ahead of their competitors, that is why you must develop a good marketing strategy to gain your own fair share of the existing market. You must go all out to employ strategies that will help you attract customers or else you will likely struggle with the business because there are well – known brands that determine the market direction for the biotechnology industry.
People and organizations will purchase and make use of your biotech products if they know that they are going to get value for their money.
As a matter of fact, your marketing strategy will center on safety, quality, efficiency, pricing and above all excellent customer service. The truth is that if you are able to put the above stated in place, you won’t struggle to retain your old customers and at the same time win over new customers.
Businesses these days are aware of the power of the internet which is why they will do all they can to maximize the internet to market their services or products. In other words, a larger percentage of your marketing efforts will be directed to internet users and your website will become your number one marketing tool.
These are some of the marketing ideas and strategies that you can adopt for your biotech company;
- Introduce your biotech company by sending introductory letters alongside your brochure to medicine and pharmaceutical manufacturing companies, hybrid food processing and production companies, hybrids crops cultivators, hybrid animal breeders, hybrid bird/poultry farmers and non – food industries and other key stakeholders within and outside the city where your biotech company is located
- Advertise on the internet on blogs and forums, and also on social media like Twitter, Facebook, LinkedIn to get your message across, so that those on the social media or those who read blogs will know about your biotech product
- Create a basic website for your business so as to give your business an online presence
- Directly market your products
- Engage in roadshows in targeted communities from time to time to create awareness of biotechnology, and promote your business
- Join local biotech company associations for industry trends and tips
- Provide discount days for your customers
- Advertise our business in community based newspapers, local TV and radio stations
- List your business on yellow pages ads (local directories)
- Encourage the use of word of mouth marketing (referrals)
Strategies to Boost Your Biotech Brand Awareness and Create Your Corporate Identity
If you are in business and you are not deliberate about boosting you brand awareness and communicating your corporate identity, then you should be ready to take on whatever the society portrays your business to be. One of the secrets of larger corporations is that they are willing to spend fortunes year in and year out to boost their brand awareness and to continue to communicate their corporate identity the way they want people to perceive them.
If your intention of starting a biotech company is to grow the business beyond the city where you are going to be operating from to become a national and international brand by opening chains of distribution networks and exporting your products, then you must be ready to spend money on promotion and advertisement of your brand.
No matter the industry you belong to, the truth is that the market is dynamic and it requires consistent brand awareness and brand boosting cum promotion to continue to appeal to your target market. Here are the platforms you can leverage on to boost your brand awareness and create corporate identity for your biotech company;
- Place adverts on both print (newspapers and magazines) and electronic media platforms
- Sponsor relevant community based events
- Leverage on the internet and social media platforms like;Instagram, Facebook, Twitter, YouTube, Google + et al to promote your biotech company
- Install your billboards on strategic locations all around your city or state
- Engage in roadshows from time to time in targeted farming communities to create awareness of your biotech company
- Distribute your fliers and handbills in target areas
- Contact medicine and pharmaceutical manufacturing companies, hybrid food processing and production companies, hybrid crop cultivators, hybrid animal breeders, hybrid bird/poultry farmers and non – food industries and other key stake holders throughout the city where your biotech company is located informing them about your biotech company and the products you sell
- List your biotech company in local directories/yellow pages
- Advertise your biotech company in your official website and employ strategies that will help you pull traffic to the site
- Position your Flexi Banners at strategic positions in the location where biotech company is located
- Ensure that all your staff members wear your branded shirts and all your vehicles and trucks/vans are well branded with your company logo