October 2026 • PharmaTimes Magazine • 26-27
// MIDTECH //
Spin city
The petri dish paradox – why the business of science is being failed by scientists
Wherever two or more MedTech start-up founders gather, the conversation follows the same depressingly familiar pattern.
In the breakout areas and coffee bars of conferences and symposia around the world, these identical stories unfold among our brightest scientific minds.
Postdocs and PhDs recount how they have spent half a decade mastering a niche process in surface chemistry, lateral flow diagnostics or immuno-oncology and then, at the moment of their greatest intellectual triumph, they are handed a ball and chain along with a business card that says ‘CEO’.
When they should be in the lab overseeing clinical trials and assay tests, they are in boardrooms with accountants, regulators and marketers with whom they have nothing in common and whose language sounds, to them, like double Dutch.
This is, and always has been, the natural order of things in the world of MedTech, biotech and pharma. It is the unchallenged route through which scientific discovery is commercialised and adapted to the demands of the real world.
‘Adhering to this orthodoxy is the greatest structural barrier to getting transformative tech from the lab bench to the patients’ bedside’
In this conventional pathway, we applaud the spin-out and fetishise the founder’s story because for us, success invariably means commercial success. In reality, however, it is not just inefficient, it is also actively hampering commercial and scientific progress.
Adhering rigidly to this orthodoxy is the single greatest structural barrier to getting transformative technology from the lab bench to the patients’ bedside. The current model, forcing scientific geniuses to become business administrators, is the crime, and the 90%-plus failure rate of life sciences start-ups is the smoking gun.
According to a study by Max G Ostermeier, founder of Implandata Ophthalmic Products, the survival landscape for health tech start-ups is notably more perilous than for general start-ups. While around 90% of all start-ups ultimately fail, this number surges to 98% for digital health ventures specifically.
Although nine out of ten start-ups manage to survive their first year, the medium-term outlook remains depressing, with 70% of companies failing within the first five years of operation. The primary drivers of these failures are led by a lack of product/market fit (34%), followed by marketing problems (22%) and team problems (18%).
The financial hurdles are equally daunting for medical device start-ups, particularly in the US market. Bringing a $510k product to market takes between three and seven years and costs an average of $31m, $24m of which is allocated to regulatory and FDA activities.
For more complex PMA products, the timeline is similar but the cost surges to $94m, $75m of which is consumed by regulatory obligations. A study by MIT Sloan reveals that biotech start-ups led by first-time academic founders have a 40% higher failure rate than those led by experienced executives.
The earnout chains
For the few survivors who manage to limp to an exit, selling their company to a larger CDMO, a pharma giant or a private equity firm, the punishment is not yet over. The founder is invariably the only person who understands the proprietary algorithm, the specific surface chemistry or the peculiar nuance of the regulatory submission and so they are retained via an earnout.
For two years, the founder must stay in the saddle, acting as a consultant or managing director for a business that no longer belongs to them. The motivation that person previously felt to found the company is gone, turning them into a jaded, expensive ghost.
Like a band recording their third album, the creative spark has disappeared, the original tension is resolved and the output is middling.
An auction of innovation
If the current pathway is a death march for good science, then what is the alternative? We need a radical inversion of the current model that stops us trying to force square pegs into round holes.
We need to stop expecting the scientist to become the CEO and instead accept that building a successful MedTech business requires a distinct skillset, including risk management, capital strategy, regulatory navigation and sales execution.
Rather than operate as buyers of services to help commercialise their discoveries, scientist founders should act as sellers to the highest bidder. Imagine an open tender or auction process in which a university or research lab identifies a promising therapeutic target or diagnostic process.
Instead of forcing the graduate student to file incorporation papers, the institution would package the Intellectual Property and bring it to a marketplace of professional company builders. From the outset, the scientist is removed from responsibility for the profit and loss account and, while he or she still has a seat at the boardroom table, it is as a consultant rather than an executive.
The reward for the scientific brains behind the discovery should remain significant, in the form of royalties, a substantial equity stake or a licensing fee, but it should not require the discoverer to learn how to run a payroll.
The scientist would retain a powerful say in the scientific direction of the company, with a seat on a scientific advisory board. He or she would retain veto power over the integrity of the technology, ensuring the business does not cut corners on the science to meet a quarterly target.
However, the CEO, in overall charge, would be a business professional tasked with making crucial commercial decisions about scale-up, manufacturing partnerships, clinical trial design and fundraising.
De-risking the human element
An auction system would allow investors to back the jockey as much as the horse, and it would also resolve the retention crisis we see after acquisitions. If the scientist has never been the CEO, rather than becoming a redundant part of the earnout, the scientist would remain the CTO or chief scientific officer, continuing to innovate, troubleshoot and enjoy the science.
Critics might argue that taking the founder out of the command chair would remove the founder’s passion from the business. However, passion does not pay for a phase 3 trial or navigate the often capricious and costly demands of NICE or the FDA.
The way forward is a divorce of convenience. Marry the capital with the operator and keep the scientist as a treasured, well-compensated, highly influential partner. Let the businesspeople argue about the supply chain and the cap table, while the scientists argue about the science.
Only then will we stop the haemorrhage of good ideas and start curing the diseases that matter.
Ivor Campbell is Chief Executive of Snedden Campbell
PharmaTimes
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