Pre-commercial biotech is changing, and the IT systems supporting it need to change, too. The traditional route to market for a new therapy from a pre-commercial biotech is for the startup to run trials before handing over the launch to a big commercial pharma company. While this still happens in the majority of cases, a growing number of pre-commercial biotechs are starting to launch new therapies themselves. 

We highlighted in a previous piece “Capability Building for Emerging Commercial Biotech Companies” that: 

“The biotechnology industry has attracted more than $300 billion in capital recently. In particular in the last 3 years, investments in biotech have tripled from $27B to $67B bringing biotech companies into the limelight for breakthrough drug therapies.” 

This raises questions for pre-commercial biotechs when it comes to IT systems. Should a biotech startup rely solely on spreadsheets and Tier 2 or 3 finance systems, or invest in a Tier 1 Enterprise Resource Planning (ERP) platform? If so, when is the right time for that investment? Read below as our team shares SAP considerations for launch planning as well a benefits of adopting an SAP solution for pre-commercial biotech companies.

The Systems Challenge for Pre-Commercial Biotech   

A pre-commercial start-up initiating its first clinical trial is understandably totally focused on the trial itself. It’s a fast-moving process, so investing time and resources to establish a scalable systems framework is unlikely to make it to the ‘must do’ list at first. 

Finance is often the first function to drive significant systems investment and to maintain financial control and compliance. Tier 2 and 3 finance solutions can meet this requirement, while the rest of the trial process can be managed using Fit-for-Purpose software – spreadsheets, workflow and collaboration tools. Over time, this model gets harder to maintain.   

Process flows, data volumes, and supply chains grow and become more complex, increasing the overhead of maintaining control and compliance. Systems decisions impact product launch planning. If the plan is to hand the launch to a large pharma company, heterogeneous systems make it slower, harder, and commercially unattractive. If the start-up plans to self-launch, it needs robust, integrated systems to manage the launch and future growth.               

Once an investment is made in a Tier 2 or 3 system, there is an expectation to keep it until it delivers a return on investment. That point may come long after the needs of the business have outgrown it.    

Making the Right Choices  

Moving to a Tier 1 ERP is likely to be the right long-term solution for a biotech startup, whether its goals are around growth, strategic partnerships, or being acquired by a large pharma company. It is important to plan for that transition so there is enough breathing space to prepare, stabilizing and optimizing processes in time to be ready for major milestones and transitions, such as a pivotal trial or handover to a big pharma company.       

Any decision on system investment needs to be seen in this strategic context. For example, the immediate benefits of investing in a Tier 2 finance solution to meet urgent financial control and compliance requirements should be balanced against the future impact of replacing it with a Tier 1 solution. While adopting a Tier 1 ERP early in the process may be seen as overkill, this should be balanced against the value of having a solution that will keep up with growth and give the company the required space to prepare for major milestones such as pivotal trial and launch.  

Adopting an SAP S4/HANA solution early in the process can target functionality where it is most needed – for example in finance, without having to invest immediately in the full range of SAP capabilities – while also retaining the scalability benefits of a Tier 1 ERP.   

Adopting SAP Early in the Pre-Commercial Biotech Lifecycle  

Today, SAP S/4 HANA can be implemented using what might be termed a LEGO® approach, starting with a narrow range of functionality and adding components as needed, in a structured, modular way. This calls for discipline. Customizations should only happen where they deliver a clear competitive advantage, otherwise the integrity of the LEGO® model is lost, making future integration more complex. Building from a small base and growing functionality as the business grows avoids the risk of taking on too much in the middle of the pre-commercial stage when the focus is on the trial.   

This piece was originally published by Crescense, a Clarkston Consulting Company and authorized SAP value-added reseller.