From a general business perspective, biotech firms are considered an exciting industry to work in because of the developing technology has the potential to improve lives. These firms are also very unique in terms of the specific liabilities they regularly encounter. While each business is greatly different from the next, implementing certain risk management steps and obtaining a customized biotech insurance program will provide your business with a strong foundation to grow and avoid unexpected detours.
High Levels of Risk
Biotech firms must weigh the potential for returns against their inherent risks. The development period is a lengthy process when money is invested into it, with the hope that they will launch a successful product, since developing a drug can be extremely expensive. Also, biotech companies must get their drugs FDA-approved in order to sell it in the market, which is an intricate and time-consuming process.
With the whole series of trials in this industry, along with the FDA keeping a close watch at every stage, it’s not rare for the product to not end up being a viable option. The entire process could take as long as a decade during which the firm is not making any profit on the product. Furthermore, there could be major technological challenges during the research and development that could negatively impact the product.
Since biotech firms face a risky development process, many analysts have a difficult time determining an accurate value. Even if the company can successfully market its product, the market still might not receive it well and litigation risks can be high if users encounter negative effects.
It is quite common for biotech firms to be dependent on a specific supplier in order to produce their end product. Without taking note of this dependency, there can be a large uncovered exposure if anything was to happen to that supplier’s ability to produce. The “off-the-shelf” property policy would not respond to this type of claim since there’s no impact to the biotech firm’s facility, even though the supplier’s loss could be just as destructive as a fire in the biotech firm’s main lab.
Research and Development Funding
Unlike most businesses, biotech firms that are in research and development don’t normally make a profit during this time. The time it takes these firms to get an actual product to market can be extensive and involve various types of funding mechanisms that may or may not continue even after the development.
Biotech firms are tied to a wide variety of contracts with suppliers, vendors, trial sites, trial participants and funding agencies which may require a vast assortment of coverage concerns. It’s prudent that, as a part of the risk management process, those contracts are carefully reviewed with a biotech insurance provider that is familiar with these types of firms.
About Moody Insurance Worldwide
Moody Insurance Worldwide, a division of Moody & Associates that was founded in 1914, is a leading provider of risk management programs and insurance coverage to individuals and businesses across the East Coast. We write all sizes of businesses, with technical expertise in many key industry areas, and provide personal insurance programs for estates and high net worth individuals. Our licensed, experienced commercial account managers can work with you to determine the coverage that you need at a competitive rate. Contact us today at (855) 868-0170 to learn more about what we can do for you.