What Is Biotechnology and How to Start a Biotech Company?

What Is Biotechnology

A hands-on guide to biotechnology—from investing in it to starting your own BioTech firm.

To say that Covid has been a biological nightmare for the world is an understatement. In a bid to wake up from it, companies and investors have turned their attention to science, medicine and innovation—or simply, biotechnology. With vaccines and cures becoming the need of the hour, BioTech rose like never before.

Across the world, BioTech has been experiencing substantial growth. As per a McKinsey report, the share price of BioTech companies in China grew by more than 106% between January 2020 and January 2021. In the U.S. and Europe too, the average share price increased at nearly thrice the rate of the S&P 500. 

In addition to that, the report mentions that BioTech companies across the world witnessed a 186% growth in their initial public offerings (IPO), amounting to US$34.3 billion. Venture capital activity also grew by 45%, with BioTech startups raising US$3 billion in January 2021. The numbers suggest that BioTech companies are set to make it big in the years to come.

So, what is biotechnology?

In 1919, Hungarian agricultural engineer Karl Ereky coined the term “BioTechnology”. As the word suggests, it refers to biology employing technology to advance healthcare, environmental care and more. The Biotechnology Innovation Organization defines it as the “cellular and biomolecular processes to develop technologies and products that help improve our lives and the health of our planet.” 

With these technologies and products, experts are able to better fight rare diseases. But that’s not all. While BioTech is most commonly associated with medicine and pharmaceuticals, it also plays a significant role in other areas such as sustainable food production and climate change.

Should you invest in BioTech?

That depends on your risk appetite. Investing in BioTech stocks is risky business. That’s because biotechnology firms usually spend large amounts of time and money to develop drugs, even though they might never be sold.

Still, if the McKinsey report is anything to go by, investors are clearly onboard with the BioTech boom. In fact, they are wondering why the boom took so long. The Chief Executive Officer at Loncar Investments Brad Loncar said in an interview, “As a BioTech investor, for years and years, it’s been frustrating that we have all of these amazing new technologies that are transforming medicine that the general public doesn’t necessarily see.”

Over the last two years, shares of the top BioTech companies have increased by more than 60%. It’s clear that people are excited about—and even counting on— inventions in the BioTech industry. 

How do you start your own BioTech startup?

Here are some foundational steps you can take:

Obtain enough funding

At the outset, starting your own BioTech company requires a lot of funding. This factors in the time and money you will spend on research, patents, marketing and more. So make sure you impress your investors. 

Do your research

Is your product or service relevant to your target audience? Is it feasible? Will it last? Make sure you have an answer to all such questions. 

Design a comprehensive business plan

The BioTech industry has several risks—technical and scientific. For instance, when a few scientists tried gene editing to cure HIV patients, they ended up making the patients’ conditions worse. When creating a biotechnological product, there are also the odds of a biological weapon being produced—accidentally or intentionally. Incidents like these often put off investors’ appetites. A comprehensive business plan shows your investors that you know what you are doing and will succeed at it. You must convince your investors to trust you with these risks.

Get patent protection

To prevent a bigger company from coming in and realizing your idea before you do, file a patent or intellectual property claim. This also helps reassure investors.

Build a team

You won’t get too far without a dedicated team of diverse people, especially in the field of science. For instance, if you want to develop a medical device, having a clinical background is not enough. You also need engineers. So, build your team accordingly.

Breaking into the BioTech industry is no easy feat. But once you do, there is no telling how far you will go.

Header Image by Freepik

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