Merit customers continually tell us that digital infrastructure is one of their major determinants of company value when they raise capital or get acquired.
One Merit customer, a late clinical-stage biotech with an injectable aesthetics therapy, intimated that having Merit and Microsoft’s digital infrastructure in place increased their acquisition price by $500M.
In contrast, last month, another late-stage, biotech that did not invest in necessary digital infrastructure lost $635M in enterprise value, dropping 39% in their stock price in one day. This drop came from FDA audit observations indicating a lack of control and data completeness, which caused their product not to get approved for commercial offering. (Incidentally, this was not a Merit Solutions customer.)
How do you ensure your organization’s storyline resembles the first example and not the second? Read on.
Here are five top reasons digital infrastructure drives biopharma company value and better positions your biotech or pharmaceutical company to raise capital or ready for M&A activity:
- Commercial and operational growth. The ability to grow commercial and operational volumes and expand your business model is commonly referred to as “scalability.” But trying to do either or both without digitally-enabled processes often leads to extra people headcount, manually performed operations, lack of visibility for decisions, and lack of control and compliance as volumes and expanded processes occur. Investors know this, and to protect their expected future cash flows, they want to mitigate this risk by knowing the company is operating digitally.
- Governance and control. Moving to digital necessarily includes evaluating and implementing adequate controls and overall operating governance of the way work gets performed, the way protected data must be secured and stored, and the way collaboration with outside stakeholders occurs securely and within compliance. Having compliance, control, and governance in place ensures that the biotech can contain risk and maintain compliance under those future expansion scenarios.
- Establishing your credible alternative. Reliable digital infrastructure is part of your story to execute your best alternative to a negotiated agreement (BATNA). In the case of our injectable therapy customer, their go-it-alone plan was to hire 160 salespeople and offer their therapy through provider practices in the US that already provide other injectable treatments for different aesthetics. Our client hired their chief commercial officer and, with the digital infrastructure implemented by Merit and Microsoft, was prepared to succeed at their go-it-alone plan. They also lined up licensing partnerships to offer their therapy globally. When their acquisition price was arrived at, it had to consider that the company was fully capable of scaling on its own, and thus it drove a higher acquisition value.
- New digital business models. The number one advice Gartner Group gives biopharma CIOs in 2022 is to get to a digital platform that allows you to easily create new digital experiences. Surveys indicate that biopharma companies are past the phase of spending on lift and shift of their legacy apps into a secure cloud environment and are moving to spend on new, digitally enabled ways to harness data and provide experiences to patients, providers and customers. Enterprise value goes up for the biopharma driving digital disruption and down for the biopharma that is disrupted.
- Secure collaboration. Our customers are constantly collaborating with outside parties to drive their drugs and therapies forward. We are all familiar with Zoom, Teams, and e-mail. But now, there are new ways to digitally collaborate in real-time with outside parties while maintaining security and compliance with controlled documents and data. Biopharma companies that enable real-time, secure collaboration with external parties will move faster and win the game.
Whether your biopharma is early-stage or growth stage, preparing for M&A or raising capital, getting the proper digital infrastructure increases your enterprise value.
Is your organization prepared to drive top value? Find out with a FREE consultation with a Merit Solutions solution architect. In this discussion, you’ll learn the benefits of applying a digital infrastructure within your business. Claim your FREE consultation now. If you have any questions, contact us.