No risk, no profit...

In the companies active in the Central and Eastern European life science sector residues a huge R&D potential. Then why CEE region is not one of the world leaders in this area? This potential remains undiscovered and underestimated and the fact of its existence travels very little beyond the region of Central and Eastern Europe. Only a small percentage of companies have managed to achieve an international success. Therefore, would it be possible at all to create favorable conditions and develop appropriate business tools to help in the development of small and medium-sized businesses in the life science sector in our region? Let's try to answer this question.

A hypothetical situation – Central European enterpreneur runs a service company which combines business knowledge in the biomedical sciences and pharmacy, but he is also active in the field of trade and marketing. The scale of this business positions his company as one of the small and medium-sized enterprises. The company employs 12 people, who jointly carry out an increasing number of incoming orders. Half of the employees are specialists in molecular biology, biotechnology, protein chemistry or biochemistry. All of them have a wealth of highly specialistic experience that they like to share with each other, thereby increasing the quality of services provided by the company. Frequent brainstorming in the rented lab spaces often raised ideas to improve services, for example through the introduction of methods of reducing unwanted post-translational modifications of proteins. There were also ideas to create innovative products, such as cancer diagnostic tests or specific restriction enzymes. However, none of the debated “hot” projects have been implemented so far.

Despite the high potential of the emerging business ideas, our Central European entrepreneur is afraid to take the risk. Actually, no one can blame him. The introduction of new technologies or products in the company would force the entrerpreneur to change priorities and rearrange the employees' engagement. This, in turn, could adversely affect the efficiency and delivery times, and, what is even worse, the quality of the provided services. At this moment, the company's budget does not allow for the opening of additional research and development or hiring new professionals. Lease contract of the rented laboratories impose certain restrictions on the activities carried out within them and outsourcing seems to be risky as the company cannot afford the patent protection of their ideas. On the other hand, the ability to obtain additional and probably not inconsiderable revenues from a new branch of business is very tempting. But, as they say: no risk, no fun. The situation therefore appears to be a standoff. But is that so?

The easiest solution to dilemmas connected to technology development and introduction of innovative projects through small and medium enterprises is to find an appropriate business partner and conduct the project mutually, for instance, through so-called joint ventures. The presence of accomplice allows to share risks and costs and greatly decreases the time of idea development. However, finding the trustworthy business partner itself requires time, force and, most of all, large determination. Further verification of resulting pool of potential candidates and selection of the best ones is a series of successive meetings, resulting, naturally, in further costs. The best solution for companies looking for an appropriate partner in business would be to organize all of these meetings in one time and one place. This would allow to lower the necessary expenses.

A different path of advancement for Central Europe bio-sector is to acquire external funding. A general and convenient source of money for SME are EU funds. It has to be remembered that year 2013 comes to an end and it is the last one to apply for such financing. It is going to be necessary to wait for next distribution of EU fundings for at least one year. There are other financing sources, coming from different national institutions, but their number cannot match the demand and this one is rising. Alternative source of money required for R&D projects are investment funds and private investors - both are looking for interesting projects to invest in. The better the innovative product or service fits into the market demand and the closer is the perspective of large profit, the more eager to invest they are. Such solution seems to be the best, although for the companies looking for investors it is often a big challenge to fulfill the formal requirements for the money flow. Another obstacle is incompetent presentation of even the most obvious business potential to the potential investor.

One of such places where the Central European entrepreneur is given the possibility of meeting both major investors concerned with high-risk projects and potential business partners, ready to take part in mutual research and development activities, is, held for 13 years, BioForum. This event was conceived in Central European realities and, unlike any other one, perfectly knows the needs of this region. Furthermore, it is able to answer these needs in an effective way. BioForum will take place on 28th-29th of May in Lodz, Poland. More information you can find on cebioforum.com.

Author: Justyna Grzelak, BioForum Project Manager

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