Running a lean organization and keeping costs down is essential for start-up life science companies to hit milestones and attract additional capital before running out of funds. The challenging funding climate over the past few years further underscores the necessity of extending the cash runway as long as possible. The virtual biotech model is one option for start-up companies to quickly and cost-effectively de-risk assets. Virtual companies outsource most product development functions, thereby minimizing expensive corporate infrastructure while maximizing flexibility and expertise.

There are many examples over the past several years where companies developing products or treatments with just a handful of employees quickly reach inflection points for investment or exit, receiving financial windfalls from VCs and big pharma. Despite these success stories, the virtual model can also have the reverse effect. The cumbersome task of managing multiple suppliers and outsource partners can take leaders’ attention away from strategic decisions, particularly if multiple partners are involved in a project or there is a misalignment of capabilities. Additionally, outsourced processes often become duplicated in-house due to a lack of accountability, requiring additional headcount. This can quickly diminish funds and delay milestones.

To harness the potential of the virtual biotech model to accelerate timelines, de-risk assets and attract investors, it is imperative to utilize a strategic framework that goes beyond simply outsourcing. To successfully utilize a virtual model, organizations must carefully select vendors with broad capabilities and the depth of expertise needed to execute their vision and streamline processes through enhanced communication and accountability.