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How (partial) exits contributes to the chances of making an impact in the healthcare system

Why you should think about your exit now

The exit is a critical step in the lifetime of almost any Life Science product, in order to deliver on the company’s mission and make a big impact on the treatment and quality of life of patients around the world. While it may feel counterintuitive to think of an exit while developing an innovation, it is essential to be aware of the various options that exits provide. This will enable you to steer swiftly when you find yourself in unexpected situations that will occur over the 10-year+ development cycle of the product. In this series of articles, we discuss the different exit strategies for Life Science innovations, share key insights, and ensure you can make an informed decision to push your innovation to market.

In the previous article in this series, we discussed the common exit strategies in Life Sciences. Of course, the success of a product is influenced by various factors beyond the exit itself. These include, but are not limited to, the product’s efficacy, safety, the competitive landscape, market demand, pricing, and regulatory approval. While an exit can contribute positively, it does not guarantee the success of a product. Factors such as the proper execution of the R&D, continuous innovation, and effective market strategies are also crucial for achieving success in the life sciences sector and making an impact in the healthcare system. All these aspects are ultimately crucial to opening the door to closing a good exit deal.

How your exit strategy relates to making an impact

Innovative companies that pick up a promising scientific discovery are driven to effectively develop the technology into a marketable product or products. The ability to enter the market makes it possible to generate the revenues that justify the effort and capital put into the development stages. For any technology to make impact on the healthcare system and patients, it is crucial to develop a sound product development plan, commercialization strategy, and be ready to mitigate unforeseen events. This is also where exit strategies come into play. By incorporating the exit strategy in the company’s strategic planning, you ensure that you are deal-ready when needed and can tap into the potential that an exit may bring to your company, your product, and yourself.

Before diving in-depth into the opportunities and threats associated with the various exit strategies, as we will in the next article, it is important to understand the general value that exits bring to the value chain of innovative product development. Let us first take a look at five reasons why innovators choose to close an exit deal at various stages of the product development life cycle in order to enhance the chances of success for the product.

Five key drivers for innovators to close exit deals to enhance the chances of success for the product:

  1. Access to Resources: Through an exit, the owner of the innovation may gain access to additional financial resources, expertise, and infrastructure. This infusion of resources can help accelerate the development, manufacturing, and commercialization of the product, increasing its chances of success.
  2. Enhanced research and development (R&D) capabilities: The exit deal partner(s) may have advanced R&D capabilities, including expertise in clinical trials, regulatory affairs, or manufacturing processes. By leveraging such capabilities, product development and navigation through the complex regulatory landscape will become more efficient, thereby increasing the likelihood of success.
  3. Validation and credibility: A successful exit can give the product important validation and credibility. The fact that another reputable company or the stock exchange validates the value of the company will generate confidence among partners and customers, boosting the product’s perceived value and market acceptance.
  4. Expanded Market Reach: Joining forces with a larger company, selling the IP rights to a strong party in a specific market, or going public will quickly expand the product’s market access and distribution. This expanded reach can facilitate the product’s entry into new geographic regions or customer segments, enhancing its visibility, adoption, and impact in the world.
  5. Scale and commercialization: Exiting can enable a life sciences company to scale up its operations and commercialize the product on a larger scale. This can involve expanding manufacturing capabilities, establishing robust sales and marketing infrastructures, or accessing global distribution networks. Such scale and commercialization efforts can significantly enhance the product’s reach.

Varying impacts on the chances of success

Different exit strategies can have varying impacts on the chances of success for a product in development due to their implications for funding, resources, timing, market access, and risk management. The choice of exit strategy should align with the product’s development stage, market conditions, and the overall business strategy. Read more about the impact of the different exit strategies on the chances of success for the product, including the opportunities and threats, in the next article in our series.

Would you like to learn more about exit strategies?

In our series of articles on exits, FFUND discusses the different exit strategies for Life Science entrepreneurs. Learn more about the key insights into the available exit strategies by reading the following articles:

This article is part of the series Exit Strategies for Life Science innovations cocreated by Victor Bakker and Judith Smit.

About the author
Victor Bakker

Victor Bakker