During an economic downturn, biotech companies may face additional challenges raising capital and funding their operations. But an economic contraction doesn’t have to be crippling to a biotech’s strategic plan. Below are six best practices that biotech companies can employ to extend their cash runway during difficult economic times.
1. Cut Expenses
During an economic downturn, biotech companies should rigorously review their expenses and identify areas where they can cut costs without compromising on the quality of their research and development activities. This may include reducing non-essential expenses such as travel, marketing, and attending industry events.
2. Prioritize Projects
Biotech companies can also reduce expenses by prioritizing their projects and focusing on those that have the highest potential for success. This may involve deprioritizing or delaying projects that are less promising or require more resources.
3. Collaborate with Other Companies
Biotech companies can explore collaborations and partnerships with other companies to share resources and reduce costs. This can include joint research and development projects, co-marketing agreements, or licensing deals.
4. Seek Alternative Sources of Funding
Biotech companies can explore alternative sources of funding, such as government grants, philanthropic organizations, or crowdfunding. They can also consider partnering with venture capital firms or other investors who specialize in biotech investments.
5. Extend Their Cash Runway
Biotech companies can extend their cash runway by reducing their burn rate or by securing additional funding through debt or equity offerings. They can also consider strategic partnerships or acquisitions that provide additional funding or resources.
6. Use a Virtual Data Room
Whether in times of economic growth or contraction, the best way to nurture relationships, secure additional funding, or facilitate co-marketing agreements is to employ a virtual data room. A virtual data room is a secure, cloud-based document repository where everything a potential investor or partner will want to see is securely archived and organized. A state-of-the-art virtual data room makes it easy to invite multiple third parties into its secure environment and customize what those parties can see and what they’re allowed to do with the documents they have access to. A virtual data room also makes it easy for administrators to change these permissions as relationships evolve.
Ultimately, biotech companies need to balance the need to conserve cash with the need to invest in their research and development activities to drive future growth. By adopting a strategic approach to managing their finances, biotech companies can navigate through difficult economic times and emerge stronger in the long run.