When it comes to the success in the biotech industry, research & development (R&D) is vital. R&D focuses on the discovery and creation of new products and solutions ranging from pharmaceuticals to medical devices to agriculture. The Biotech R&D sector not only generates revenue but is also a key driver of high-quality employment opportunities. 

The risks associated with biotech R&D, including clinical trials, are complex and can impact both the company developing the product, drug or device as well as associated service organisations that help bring the product to market. 

The R&D risks

The R&D journey takes an initial idea or a discovery through a long and complicated journey to product approval and eventually, market. 

There are risks at every stage through development, pre-clinical testing, clinical trials, and approval. These can include:

  • Liabilities such as directors & officers
  • Loss of a key individual through death or ill health
  • Supply chain disruption or failure resulting in business interruption
  • Clinical trials risks
  • Intellectual Property
  • Regulatory risks 

At any stage, these risks can bring the entire process to a standstill, or worse, failure. For example, to get to the clinical trials stage, you’ll need to produce a large amount of the product. This process is often outsourced to one or more Contracting Manufacturing Organisations (CMOs), which means the stock could be exposed to loss, temperature and atmospheric changes while in transit or at partner sites. As a result, the risk of business interruption also increases. 

People risk is another key area to consider – and once that’s often overlooked. What happens to your R&D project if something happens to your lead scientist or the brains behind the business? Key person cover is often required at outset by investors before the project can commence for exactly this reason. 

Risk management strategies for biotech companies

The risks in biotech R&D are different to many other sectors and will be specific to each individual company. 

Understanding the risks your business could face will enable you to build the resilience you need to get your dream off the ground.

Engaging with a risk management adviser who has experience within the life science or biotech sector can be extremely beneficial. They can provide valuable support in really getting to grips with, and mitigating the risks you could be exposed to in order to help secure the success of your biotech R&D project. 

This process should be seen as strategic and business critical. Areas that should be reviewed include people risk, supply chain management, clinical trials risk management and business continuity planning. 

Risk assessments may need to be carried out and having a business continuity plan (BCP) is key. 

Insurance is of course a fundamental part of risk management and certain covers will be required by law or by investors for the project. Again, seeking the services of a specialist biotech or life science insurance broker is important – off the shelf policies bought online will rarely provide the cover needed. 

A good insurance adviser will take the time to understand your business and specific R&D project and help you protect your business with smart, flexible, high-performance insurance and risk management solutions to meet your needs. 

Take control of your biotech R&D risks

Effective risk management enables your business to make better decisions, avoid the typical pitfalls and deliver on its plan. 

The better you understand your risk environment, the better you can anticipate what’s coming around the next corner and create the ideal risk programme for your business. This will then act as an enabler for growth, discovery and the success of your biotech R&D project. 


Hanna Beaumont FIRM

Client Partner, Science & Technology


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