When & How to Pivot a Biotech Startup

While "pivot" may have become a trendy term among startups and entrepreneurs, it’s more than just buzz. A well-executed business pivot can be the difference between failure and success. Companies like Netflix, Slack, and Instagram are prime examples of how a successful pivot can unlock new growth opportunities. For instance, Netflix transitioned from a DVD rental service to the world’s leading streaming platform, and Slack emerged from a failed video game project to become a dominant SaaS messaging tool for businesses.

Pivoting can be a powerful tool for business owners, but knowing when and how to execute it is crucial. In this article, we’ll dive into the key aspects of pivoting in the biotech world, such as understanding the right time to pivot, different types of pivots, and how to approach a pivot strategically. We’ll also cover startup pivot examples relevant to life sciences, where the challenges are notably different from tech startups.

Understanding the Role of a Pivot

In the startup world, pivots are a well-known strategy for adjusting course when needed. While often associated with changes in product features or business models, pivots involve adapting to new information or challenges in order to keep moving forward. For many entrepreneurs, pivoting can be a defining moment—one that takes the business in a more successful direction when the original strategy isn't gaining traction.

In biotech, a pivot could mean shifting focus from one promising drug candidate to another or redirecting research to a different application of existing technology. It’s about staying flexible and adapting to real-world insights as you work to build a sustainable, impactful business.

When Should You Pivot Your Startup?

Knowing when to pivot is critical. A small business or early-stage startup can spend years pursuing a promising idea, only to hit a wall. But how do you know when it’s time for a course correction versus persevering?

Here are common signs that it may be time to pivot your business plan:

• You’ve invested heavily in R&D without results or discovered your compound lacks potential.
• The metrics for success, like clinical trial results or market share, aren’t materializing.
• Preclinical studies or clinical trials have failed.
• Market conditions, such as too much competition or shifts from the pandemic, have changed the profitability of your product.
• Customer needs or patient feedback show your target market isn’t responding as expected.
• Your business strategy and messaging no longer resonate with your target audience.
• Partnerships and investors have shifted focus, leaving your new product or business model vulnerable.

If any of these apply, it’s time to decide whether an iteration or full pivot is the right move.

Types of Pivots

In his book, The Lean Startup, Eric Ries outlines several types of pivots used by successful startups. While originally intended for tech companies, these pivots can also be applied to life sciences and biotech startups. Here are a few relevant pivot types:

• Technology Pivot: This occurs when you discover a better or different new technology that achieves the same goals more efficiently. In biotech, this could mean using a different research method or molecule to achieve the same therapeutic result.
• Zoom-In Pivot: Instead of focusing on a platform or broad product range, you narrow down to a minimum viable product (MVP) that can be brought to market more quickly. This allows you to focus on a specific aspect of your technology that has the most immediate commercial value.
• Zoom-Out Pivot: The opposite of zooming in, this pivot takes a narrow product focus and expands it into a broader platform with more use cases. For example, an mRNA technology that began as a single therapeutic can be turned into a platform for multiple treatments.
• Customer Need Pivot: Feedback from customers or patients reveals that the problem you're solving either isn't urgent or doesn’t exist at all. A customer need pivot might mean repositioning the product or working on a new product entirely.
• Customer Segment Pivot: Sometimes, your product solves a real problem, but for a different target market than originally expected. This pivot involves repositioning your messaging to reach a more appreciative customer base.
• Business Architecture Pivot: You might need to shift from a high-margin, low-volume model to a low-margin, high-volume approach (or vice versa) depending on your market share and profitability goals.
• Engine of Growth Pivot: While many biotech startups rely on long-term R&D and fundraising to sustain growth, some may benefit from shifting to an “engine of growth,” like licensing or partnerships with established pharmaceutical companies.

Identifying which of these pivots applies to your business will help you execute it more effectively.

How to Execute a Pivot

Executing a successful pivot requires both speed and precision. Here are several strategies to help your biotech startup pivot smoothly:

• Act Quickly: Once you’ve decided to pivot, don’t hesitate. Delaying can waste resources and hurt your bottom line. Successful pivots are often those executed with decisiveness and agility.
• Concentrate on What Works: Take a close look at your business model and metrics. Focus your efforts on what has the best chance of success. This could mean concentrating on a new market or new revenue stream.
• Skill Up or Hire: If your pivot involves moving into an area outside of your expertise, consider hiring new team members or learning the necessary skills yourself. In biotech, this could involve hiring scientists or specialists in a new field.
• Consider a New Business Model: Sometimes, it’s not the product that needs to change, but the entire business model. If you’re struggling with commercialization, consider pivoting to a partnership model, licensing your technology, or even shifting to a SaaS platform depending on the nature of your new business.
• Be Comfortable with Change: Entrepreneurship involves risk, and part of that is being comfortable with change. Let go of what isn’t working, embrace the shift, and keep moving forward.

Parting Thoughts

Before pivoting, it’s important to evaluate whether an iteration on your existing business strategy might solve the issues at hand. Sometimes, making small adjustments to your marketing strategy, product features, or customer base is all you need to regain momentum. However, when these iterations aren’t enough, a full pivot may be the best path forward.

It’s often the people who drive successful startups. A strong team willing to adapt and evolve will often be the key to success. Back your people and allow them the flexibility to steer the company in new directions when needed.