Business Development for Life Sciences Companies: It’s Only Natural

When D. Todd Dollinger and Steve Rhodes founded The Trendlines Group in 1993, it seemed only natural to them to focus the company on life sciences. Both of them gained critical experience in Israel’s fledgling life science industry as the CEO and VP marketing, respectively, at SRD Medical, a medical device start-up.

As the country’s leading marketing consulting and business development firm, Trendlines consults to clients in nearly all sectors of the Israeli market. “We think of ourselves as ‘generalists,’” says Rhodes, now The Trendlines Group chairman. “However, there is no doubt that life sciences — medical devices, pharma and biotech — is at our core. As managers and consultants, we have worked with literally hundreds of life science companies over the last 20 years.”

The Life Science Business Plan in General

All business plans need to be compelling. The “story” they present should be logical and show in-depth understanding of your business landscape. How can you achieve this?

Keep Your Focus … and Your Vision

You must understand -- and you must be able to convey to others -- the unmet (market) needs that you are addressing. Often, to achieve this depth of understanding, a strategic process (for example, research) is involved. Once you have worked through this process, you can build a roadmap to help you focus.
Hold on to your vision though. Your business plan should show your sense of vision. In fact, investors want to “see” that you have a vision; however, for your plan to be believable, make sure that your vision is truly a vision and not a wild hallucination. For that, you need to pass the “test of reasonableness.”

Pass the “Test of Reasonableness”

The “test of reasonableness” establishes the dividing line between vision and hallucination. Each investor's personal, individual test of reasonableness establishes his or her dividing line between what he thinks to be realistic -- and perhaps he wants to buy into -- and utter fantasy. Investors today are flooded with business plans, ideas, summaries, and the next “big” idea. Many investors you’ll speak to are life-science focused. They’re savvy. They know the industry, and they know the marketplace. If your forecasts are unrealistic, you will not pass their test of reasonableness.
How can you defend your plan against investors’ tests of reasonableness?

• First, look at your management team. Do their credentials establish them as authorities? Do they have the credibilitiy such that the company’s projections suggest "they must be right?" Are they the people you would call to check out someone else's projections?
  
• Perhaps the most compelling defense is through benchmarking. Examine comparable companies in terms of stage, product, and target markets. Analyze their profit margins, growth rates, and relative expenditures on items like R&D. If you build your own business case according to these norms, you’ll always have a good defense if someone challenges you.

Use Clear Language

Write your business plan in plain, simple language. Avoid technical terms and complex explanations. When you reach the stage of technological due diligence, that’s the time to pull out the white papers and technical articles.
Your business plan must be professional in its appearance. Follow the rules of good grammar and spelling. Proofread for typos, and format not just so it looks good, but that it is easy to read.

The Life Science Business Plan Up Close

Now that we’ve established some general guidelines, we know that life sciences companies face specific challenges when presenting their technology, solution, or device to potential investor or partners.

Challenge #1: Technology, yes; product, no. Your company has developed a platform but is not sure what its initial product should be.

• Solution: In-depth understanding of the various market opportunities as they relate to your company's core competencies. Learn the market through primary and secondary research; network and receive feedback from medical advisors. Attend conferences to learn the players, meet the leaders, and gain focus.

Challenge #2: There are numerous industry drivers and all of them have an impact on product and business development: investors, regulators, government agencies, doctors, hospital finance committees, GPOs, insurers.

• Solution: Study the value chain; make an industry map for a clear picture of the drivers in your market and how they are inter-related. In the business plan, recognize and address the needs of each of the drivers.

Challenge #3: Long development cycle/process. Five-year projections are the foundation of business plan financials. However, many pharma or biotech companies are still losing money at the end of five years.

• Solution: Develop a value-based business plan that demonstrates the worth of your company above and beyond revenues and positive cash flow: patents, regulatory approvals, prototypes, pre-clinical and clinical trials, and so on.

Nurturing the Life Sciences

Trendlines understands that nurturing life science companies requires unique skills. Tina Ornstein, the company’s managing director, notes, “We know that life science companies face special challenges. From writing business plans to preparing market overviews and strategies to conducting strategic partner searches, we understand and take into account health care economics, the regulatory environment, and lengthy development cycles.” The company boasts a strong network of life science professionals both in Israel and the United States.

The company has developed a strong life sciences infrastructure both in Israel and the United States. This infrastructure includes the following:

1. Trendlines America: The Trendlines Group maintains a U.S. office in the Kansas City, Missouri, area. (The company’s main office is in the Western Galilee.) Mark Dollinger, president of Trendlines America, holds a Ph.D. in the neurosciences from the University of Connecticut. He knows the life sciences development process — and pitfalls. His valuable “insider” insights serve Israeli companies well when he accompanies them on U.S. market trips or represents them at conferences and seminars.
   
   
2. Medical Advisory Panel: Trendlines has built an advisory panel comprised of leading U.S. physicians and researchers from a wide range of specialties and disciplines. These experts are committed to providing guidance to Trendlines in its work with life science companies.
   
   
3. Maryland: Through the Maryland/Israel Development Center (MIDC), Trendlines represents the state of Maryland in Israel. Home to more than 350 bioscience companies, Maryland is a life sciences hub. The National Institutes of Health (NIH), the Human Genome Project, Johns Hopkins, the U.S. FDA, and the Walter Reed Army Institute of Research are all based in Maryland. Close proximity to Washington, D.C. — only 56 km (35 miles) — adds to Maryland’s life science appeal.
   Through its relationship to Maryland, Trendlines brings Israeli companies access to potential partners, experts, and leading decision-makers in the life sciences.
   
   
4. MarketReach America: Along with the MIDC, Trendlines sponsors the MarketReach America program, a unique business development opportunity for Israeli companies involved in the life sciences. In this intensive program in Baltimore, selected Israeli life science or medical device companies have the opportunity to “connect with potential partners, strategic investors, reimbursement, and regulatory authorities,” according to Ornstein.
   
   
5. Misgav Technology Center (MTC): Trendlines is the principal investor in the MTC, a business development center focused on the life sciences. “In 2004, we made a deliberate move to refocus the MTC’s activities on life sciences to leverage our background and strengths for these very early-stage companies,” Rhodes explains. Rhodes serves as the MTC’s CEO. Trendlines itself invests in its portfolio companies through its Trendlines Israel Fund.

Trendlines’ brings special value to life science companies through hard-earned expertise, an extensive life sciences network, and deep understanding of the life science product development process.

The LSA and Trendlines: A natural partnership. When the LSA was looking for a partner to provide business development services to its clients, Trendlines was the natural choice. Since 1993, Trendlines has developed sound business strategies and written compelling business plans for Israeli companies of all sizes. Trendlines’ experienced consultants research and analyze industries and markets to gain a thorough understanding of a product or a technology. From there, they plan and articulate business models and market strategies. Last but not least, Trendlines helps companies find the right partners to bring their products to market.