Business Models for Innovation in AMR
The emerging health crisis brought on by Antimicrobial Resistance (AMR) has opened up opportunities for the scientists and innovators to address the challenge through interventions in Drug Discovery, Diagnostics and Devices. The causal factors of inappropriate use of existing antibiotics, emergence of pathogens and resulting infections due to climate change, and the lack of a robust pipeline of next-gen therapeutics, among others, has brought AMR at the center stage as a prominent health concern going forward.
In spite of the opportunities in the domain that have the potential to scale globally, many innovators and startups struggle to cross the ‘Valley of Death’ to bring their solutions to market, or to scale and sustain. Highlighted here are a few factors to consider for entrepreneurs, especially those working in the domain of AMR.
It’s important to start at the basics-the core team. It is essential to have a non-scientific member in the core-team whose prime responsibility is to scout market opportunities and to raise funds and investments. This dispassionate view-point emerging from knowing the pulse of the market will be critical for the business success of the team.
A common mistake Indian entrepreneurs make is of putting all their eggs in one basket! They start with a myopic view of introducing their products in the Indian markets first, and thereafter of charting international territories. While this incremental approach may seem safe, it seldom appeals to potential investors. Selling in India is tough due to immense competition leaving small entrepreneurs fighting for a miniscule share of a small slice of the pie! In such case, Investor won’t see a sufficient ROI against the risk they would be taking in funding a startup. They would thus steer clear of making any financial commitments. Instead, if the entrepreneurs simultaneously consider other emerging economies, like Africa, South Asia and Latin America which have a good demand for their product, it would make more commercial sense.
A narrow and linear view of the scope of the product-in-development restricts the commercial scope and hence the market opportunities. For example, considering a solution to cater to only hospitalized patients might create a very niche market which is hard to penetrate due to dependence on the line of approvals required, differential pricing strategies, demand & usage, logistics requirements, and scalability potential. The innovators need to simultaneously explore seemingly unrelated parallel markets that might find use for their product and are easier to venture into.
Additionally, developing a broad range application for the product, like platform technologies, immediately opens different market opportunities rather than confining to a niche market. Bugworks, for instance, expanded its perceived scope of use by positioning their product for use against bioterrorism!
For AMR specific solution developers, it is also important to consider the trident of human health, animal health and environmental factors, aka One Health, that needs to be tracked, and controlled for positive outcomes. Positioning solutions that have cross-applicability and agility of use across sample types could make a solution look attractive to implementation bodies, and hence the investors.
Plug into Partnerships
Growing one’s business is paramount for startups at each stage of their entrepreneurial journey. The role of partnerships in helping achieve this cannot be emphasized enough. From prototype testing and pre-clinical trials to market deployments in domestic and international markets, partnership could be one of the defining factors for the success and sustenance of a solution. Tapping into networks and opportunities through partners, and their networks is one way of snowballing a promising solution in different markets and for different customer segments in a short span of time. From the angle of raising funds this makes sense too since the investors and funders would view the pairing of a startup with a credible partner as de-risking of their investment.
Values and Volumes
AMR is emerging as a public health challenge with 30% of world’s AMR cases reported from India. The public sector is a big market for startups and innovators working in AMR but is limited by multi-stage delays in deployments and approvals, while providing low profit margins. Unless the government streamlines the integration of AMR innovations for these entities, it is impossible to scale promising solutions for communities where they are most required. Financial models have to evolve to absorb innovations for the last mile. For instance, payment models for the novel antibiotics could be based on value and not volume. Amortization models that work on lowering the book value of a loan over a period of time could enable more small enterprises in reaching the market and in sustaining long-term. In countries like the US, Japan and in Europe, Impact Bonds, specifically the Social Impact Bonds (SIB), are being successfully implemented in the public sector for positive social outcomes whilst dividing the performance risk of a service between partners. These pull mechanisms need to come from the government and other international agencies; however, it is important for startups working in AMR to be aware of these financing models and to explore these with their potential partners and investors.
A hawk-eye view on the lab-to-market journey, a periodic assessment of business models and market strategies, and the agility to pivot are core requisites for startups to be successful in the challenging yet growing AMR market.
C-CAMP hosted a series of webinars on AMR, as part of its activities as a CARB-X GAN member, in December 2021 to discuss the various facets that the startups and innovators in this domain need to consider while developing and scaling their solutions. This blog draws from one of those webinars titled ‘Business Models for Innovation in AMR’ by Dr Anand Anandkumar, Co-founder & CEO, Bugworks Research, held on 16th December 2021.
Disclaimer: The blog is a compilation of information on a given topic that is drawn from credible sources; however this does not claim to be an exhaustive document on the subject. It is not intended to be prescriptive, nor does it represent the opinion of C-CAMP or its partners. The blog is intended to encourage discussion on an important topic that may be of interest to the larger community and stakeholders in associated domains.