The Biomanufacturing Graveyard

Its a fact of business.  Not every new venture will succeed. And when one fails, people's lives are often damaged, and questions arise. Some say the cheapest lesson is one that you can learn from other's mistakes--and First Bight's report titled "The Industrial Biomanufacturing Graveyard:  A study of previous failures and its illuminations" could be that inexpensive but important lesson that helps keep failure at bay.

The report, free from First Bight's website, analyzes 30 failed ventures for themes--both what fields were being tackled and what aspects of business or technology caused the failure. This information can be particularly valuable to members of the biotechnology/biomanufacturing workforce, because when companies fail, jobs are lost so being able to critically examine a company before joining it could make the difference between a solid opportunity and a looming pink slip.

The first theme in the report is an analysis of the fields involved in the failures--the 'who'. This could be somewhat of a chicken and egg issue. According to the report, over 80% of failed startups and joint ventures had originally targeted biofuels and platform chemistries. However the report did not address the question of whether those two fields simply had more candidate ventures, and thus even if the failure rate was the same across fields, there would be more. Biofuels were a popular target, with environmental incentives from the government pushing investments in that direction. With that said, government incentives are not a sustainable business model, and so the financial incentives that were offered may in fact have led to a higher failure rate.

I found the 'why' of particular interest. Over 80% of the failures were not due to technology. That made me feel good--I am a scientist through and through and would hate to think the poor science had caused so much damage. Business aspects such as commercialization and execution aspects led to the majority of failures. 

Market competition led to most of the failures with three common errors outlined in the report: a failure to understand marketing costs, targeting the wrong market or niche within a market, and underestimating the reluctance of consumers to switch to novel products. That last aspect makes me think the nascent businesses are so excited about their product that they don't realize not everyone is equally excited--like the proud parent listening to their child's squeaky violin recital and wondering why everyone else is flinching.

Another point the report brings up is scaling CAPEX (capital expenditure).  I think that can be a big one. Going from the research bench to large-scale production is immensely complex and full of challenges. And as the report states, the most obvious approach, the Silicon Valley fast-moving, low CAPEX software startup, is not suited to biomanufacturing. The lengthy timelines, specialized factories, and regulations are just some of the obstacles that software generally does not run up against. And obstacles nearly always cost more.

I think the report was a very interesting discussion of something that can be uncomfortable to talk about--what went wrong. But only by examining what went wrong can we learn to do it right. Industrial biomanufacturing is an immensely complex field that requires strategic alliances between science, business and manufacturing to succeed. But given the growing need for products, the advancement in supporting technologies, and continued governmental support, the industry has a bright future.