With the global biotechnology market poised to grow exponentially over the next decade, it’s no surprise that many visionaries are looking into starting their own biotech firms.
As with jumpstarting any startup, however, setting up your own biotech company can be a complex process that requires careful planning and execution.
Funding is also a big concern, with matters such as laboratory upkeep and staff compensation to worry about on top of research and development (R&D) costs.
Regardless of whether you’ve already secured funding or not, you need to consider the major costs that your company might incur in its early years.
That being said, here are some of the key expenses that you need to consider to better the chances of your biotech startup being able to take off—and to ensure its long-term success in the future.
Real Estate
The space in which your team will work is one of the first things you need to consider when setting up your own biotech firm.
Some startups approach incubators to take advantage of top-notch facilities and other resources, especially for “wet lab” processes that are crucial in biotech. However, the waiting list for incubator acceptance can be quite long, and time is of the essence when it comes to R&D.
Unless land, construction, and wait time are not much of an issue, you would need a real estate option that wouldn’t drive up your budget and cause process delays. It is largely for this reason that some biotech startups opt for less expensive commercial spaces or even co-working laboratories—the latter being a great alternative if you want lab infrastructure and office areas all in one place.
They’re found in areas with mature and rising biotech and life sciences scenes, in cities across the U.S. and Europe, and even on the other side of the world, in places like Singapore and Hong Kong.
Regardless of which option you choose, it’s extremely important to gauge your lab space’s capacity to meet safety regulations. If you’re opting for a shared lab space, it would be ideal to rent a biosafety level 2 facility at the very least.
These facilities are built to handle the demands of comprehensive lab work, as they have amenities that mitigate risks caused by hazardous agents like toxic and caustic chemicals, as well as disease-causing microorganisms.
Overall, cost-effective options such as the ones mentioned above could help you save time and money until you have enough resources to expand.
Lab Equipment
Lab infrastructure and equipment could eat up a sizable portion of your budget, especially if you’re an early-stage startup. Depending on the nature of your R&D efforts, you might need specific equipment that standard laboratory spaces may not provide.
It would be ideal to plan your equipment acquisition to build your products such as inhalation devices in advance to prevent backorders as well as rush orders, which come with extra fees for expedited shipping. Of course, you have the option of using shared lab spaces that come fully equipped with microscopes, centrifuges, safety cabinets, incubators, water baths, cold storage, and other essential features.
In addition to core lab equipment, you should also consider hardware and software for data processing and other “dry lab” procedures. Such equipment may include computers, inventory management software, project management apps, and experiment tracking tools, to name a few.
When ordering your equipment, it’s important to factor in taxes and shipping rates, which may vary depending on where you are.
Lab Supplies and Consumables
Obtaining supplies and going through the ordering process can be tedious for most startups, but these are necessary steps to ensure the longevity of your company. Aside from the common lab equipment, you also have to consider supplies like reagents, enzymes, dyes, and other prepared solutions.
Delays in orders, product defects, and delivery issues could take a toll on your procedures, so it’s important to vet suppliers properly in order to get your money’s worth. You can join industry groups or use lab supply marketplaces to connect with a network of suppliers. Ideally, you should connect with suppliers that promise reasonable rates and return policies on top of a frictionless ordering system.
Ongoing Maintenance and Upkeep
Biotech relies heavily on wet lab procedures, which is why preventing health and safety hazards during lab work is of paramount importance in this industry. As such, you also need to invest in services that ensure the regular maintenance and upkeep of your space.
These may include scheduled workplace cleanups and proper disposal of chemical and biohazardous waste. On top of that, you also need to consider maintenance, repair, and replacement costs for any equipment that might break down over time.
Staff Compensation
Paying a full-force staff to do crucial lab work is no joke. Aside from scientists and researchers, you would also need lab managers, lab technicians, and other personnel who specialize in areas relevant to your research. Hiring industry veterans and senior scientists might be a challenge, with scientists of Ph.D. caliber getting salaries of up to USD 120,000 per year.
How you go about your staffing needs depends on you, but you may need biotech recruiters to help you out. These professionals specialize in hiring the right experts within a reasonable timeline, plus they can help plan competitive salary packages to entice more competent and proficient staff members. This may be helpful for projects that are timely and foundational, like preclinical work for medicine development.
Legal Fees
Lastly, you need to consider the costs you might incur for legal matters. With this, you could use some legal experts to help with issues relevant to starting and operating a business.
A legal expert can assist you in matters such as licensing, permits, and other concerns related to regulatory compliance. And as with any industry, a good legal team comes with a substantial cost.
In the biotech sector, it’s advisable to get legal guidance when it comes to intellectual property (IP). Your IP serves as one of your company’s most prized assets, considering its potential for commercial revenue through the development of tangible products.
You can work with your legal staff on matters like determining patentable discoveries, license terms, and claims. Patent filing can cost anywhere from USD 10,000 to USD 50,000. In other domains outside of the US, fees can be relatively more affordable.
In Singapore, for example, patent applications can cost up to SGD 7,000 exclusive of filing fees. That being said, this forward-looking country also offers enterprises numerous government-mandated incentives and schemes that can further help fledgling enterprises quickly expand their operations.
Final Words
Despite the challenge of finding capital, starting and growing a biotech firm is inherently an exciting venture. As with any business, you need to strategically optimise your resources and keep your burn rate manageable to sustain long-term operations and profitability.
In any case, working in biotech is ultimately rewarding once you realize how your company is contributing to scientific advancements that transform people’s lives.
