The pharmaceutical industry has been growing exponentially in the quest to satisfy the requirements of the aging population around the world. However, there are very few startups or small businesses that are found in this sector. According to the World Health Organization, one-third of the pharmaceutical market is primarily controlled by ten major drug companies, based in the US and Europe.
So, why is it that people are hesitant to launch startups in this sector? It is mainly because of the risk associated with the biotech and med-tech industry. Nevertheless, there are ways to manage those risk factors and drive the growth of the business. Therefore, let us learn a little more about those risk factors and ways to overcome them.
How to Deal With the Risks Associated with Medtech and Biotech Startups?
Risk management for biotech and MedTech startups is not rocket science, and anyone can deal with those issues with proper knowledge and understanding. The tried and tested way to manage these risks is to prevent them and limit their impact on the company whenever and wherever possible. Businesses must follow some primary methodologies to deal with the risk factors. These methodologies include:
- Recognizing the Risks: The first step for effective risk management is to identify the risk factors that might come along the journey of growing the business. Businesses must consider different hypothetical scenarios that might arise, such as a sudden disruption in the supply chain or a sudden spike in demand for pharmaceutical products.
In such instances, it often becomes difficult for new startups to be able to consider all the risk factors. Therefore, it is recommended to seek assistance from pharma experts or consultants.
- Scrutinizing The Risk Factors: After recognizing the risk factors, the next thing to analyze them and determine their possible impacts on the business. For instance, a company must thoroughly investigate the effects a disruption in the supply chain could have on the overall functioning of the business.
Understanding the potential consequences of a disrupted supply chain on the employees and customers could go a long way in running a successful business.
- Giving Precedence to The High-Risk Factors: After determining the impact of the potential risk factors, the next thing to do is understand when or how these things are likely to happen. Focus on the most likely aspects and the ones that would have a severe impact on the business.
Once done, it’s time to focus the industry’s efforts to get prepared to deal with those factors and minimize their impact on the company’s overall functioning.
- Softening The Blow: After determining the impact and severity of the risk factors, the next thing to do is to develop necessary measures and actions that could minimize the damage caused by those factors to the business.
For instance, if there was a sudden disruption in the supply chain, make sure that the company has sufficient stock to last and fulfill the customers’ requirements until the issue is resolved. This way, businesses can brace themselves for any risk and still emerge victorious on the other end of the tunnel.
Strategies For Minimizing The Impacts Of Risks
There are many ways to minimize the impact of the risk factors or even avoid them altogether. For instance, if a MedTech startup has issues with GMP compliance, they can hire GMP compliance services to deal with the problems. Similarly, the impacts of the risk factors can be minimized with:
- Policies: Companies can devise specific policies to minimize the impact of risk factors or even avoid them. Various standards available online can be leveraged to manage the risk for a Medtech or biotech company.
- Insurances: This is one of the commonly used risk management strategies used by almost every business. Insurance gives a company the much-needed assurance that the business operations would still be carried out if anything goes south.
- Consultancies: One of the best ways to manage risk is to seek assistance from any consultations that specialize in the pharmaceutical industry. Leverage the experience and expertise of consultants to stay ahead of time and avoid and mitigate every risk factor with ease.
Risk management is vital for biotech and MedTech startups because only a few out of many manage to survive in this volatile business environment. Further, many benefits come with effective risk management, such as attracting investors for the business. So, all in all, effective risk management is crucial for biotech and MedTech startups to survive and thrive.