Opportunities for startup clinical research companies are more prevalent in niche areas not covered by large clinical research organizations (CROs). Your smaller company can best succeed by locating individuals or small development companies with new pharmaceuticals, nutriceuticals, medical and dental devices requiring clinical testing before they can be marketed. Pharmaceutical corporations pass on many testing opportunities because they calculate their profit will not exceed development costs. Large CROs frequently refuse these same projects if the product developer doesn’t have the capital to pay their fees. CROs and pharmaceutical manufacturers know that more than 80 percent of products they test never make it to market.
Develop a business plan. Your plan needs a statement of the legal structure and describes how you intend to operate. It should include the qualifications of the major personnel who will supervise the research, your understanding of the market opportunity, competition and financing needs.
You may want to incorporate to protect yourself, corporate officers and the board of directors from legal liability. A person or company hiring your firm to do their clinical studies may sue you for a variety of shortcomings, including incompetence, if your test findings show their product to be ineffective.
Your qualifications and those of other employees, including your board members, give investors, banks and potential clients confidence in your startup’s capacity to succeed. Find the best people available. A stirring rod broken by a careless technician can ruin a batch of test material that may take a month and thousands of dollars to replace.
How large an office and how much staff you need depends on the clients you obtain. Conducting a clinical trial requires professional staff to collate input from physicians who examine study participants. You will need record keeping personnel, computer technicians, office and accounting staff. Plan for hiring technical employees and consultants, including statisticians, doctors and pharmaceutical scientists.
Create a realistic marketing strategy that accounts for the number, size and specialties of your competitors. Make trips to scientific conferences, visits with research companies and laboratories that may be able to give you leads on newly developing potential products. Explore product areas where profits may be small enough that larger competitors may not pursue them.
Thoroughly research the financial needs of your business venture. You will require substantial amounts of money to put in place the infrastructure needed to become a viable CRO. One way to obtain that infrastructure is to get a client to help underwrite cost. Investors, venture capitalists and banks may help if you present a good business plan.
Always protect yourself and your company with sufficient insurance.
- Always protect yourself and your company with sufficient insurance.
Roy Sylvan has a Ph.D. in communication studies. He directed a large city department of aging, was COO of a consulting company and provided management training to companies and nonprofits. Writing for more than 40 years, Sylvan has authored articles in trade journals, magazines and blogs, and wrote a how-to book on starting a business.