High Tech CROs

TL;DR

Services businesses with physical labs for outsourcing core workflows of drug discovery, clinical trials, and manufacturing. They make money via services contracts and JVs/royalties.

Companies

Ginkgo, WuXi, GenScript, DynoTx, Plasmidsaurus, Adimab, Adaptyv Bio, AlloyTx, SomaLogic, Emerald Cloud Lab, Strateos, IDT, Twist, Medable

Compound portfolio company Culture Biosciences

Overview

Pharma/biotechs outsource 60%+ of their spend so that they can focus on their precise core competency.

We’re particularly excited about building automated labs for core lab outsourcing. So much of drug discovery is already being outsourced right now (animal testing, chemical synthesis, PK/PD, toxicity). It’s being dominated by scaled players, especially those with labor cost advantage like WuXi.

But, if a startup could rapidly be competitive by digitizing and automating those primary workflows. By adding a data flywheel with the operational leverage from automation/digitization, a startup could outpace the industry’s already tremendous 20-40% EBITDA margins.

Moreover, the core insights on GTM is that high-tech CROs go into biopharma’s outsourcing budgets not IT budgets. The sales cycles are thus far easier because pharma’s already used to paying lots for outsourcing.

You also don’t rely on them changing any of their deeply engrained workflows. They now just have an easier-to-use API.

We’re also particularly excited about startups automating clinical trial recruitment with the ultimate goal of being an end-to-end clinical trial operator. The company’s core competency beyond cheap operation should be optimizing for each individual trial the most efficient and effective possible route with modern tools: integrate the short-cuts to getting human evidence as detailed in Shelby’s fantastic post and biomarkers.

The ultimate long-term question is whether such a business models captures enough of the value it creates. Many of the companies founded as services for drug discovery eventually pivoted to developing their own internal pipelines (Schrödinger, Genmab, Abcellera, Vial, Reformation Bio, etc.). We’re willing to bet that the trend towards ever-larger outsourcing as well as larger and more frequent partnership deals will continue to accelerate. But one should still be thoughtful about what the optimal business model is for your specific tech/approach.

TL;DR

Services businesses with physical labs for outsourcing core workflows of drug discovery, clinical trials, and manufacturing. They make money via services contracts and JVs/royalties.

Companies

Ginkgo, WuXi, GenScript, DynoTx, Plasmidsaurus, Adimab, Adaptyv Bio, AlloyTx, SomaLogic, Emerald Cloud Lab, Strateos, IDT, Twist, Medable

Compound portfolio company Culture Biosciences

Overview

Pharma/biotechs outsource 60%+ of their spend so that they can focus on their precise core competency.

You also don’t rely on them changing any of their deeply engrained workflows. They now just have an easier-to-use API.

High Tech CROs

TL;DR

Companies

Overview

Further Reading

High Tech CROs

TL;DR

Companies

Overview

Further Reading