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By Chuck Leddy
| December 4, 2017
So many historical figures have offered opinions on taking risks in life.
“Do one thing every day that scares you,” Eleanor Roosevelt said.
“Go out on a limb. That’s where the fruit is,” suggested Jimmy Carter.
“Take calculated risks. That is quite different from being rash,” from General George Patton.
It can be argued that the reason the biotechnology boom took off is because its visionaries were willing to take risks. But as the biotech sector also has learned, taking great risks requires strong risk management.
“There’s more public concern around biotech companies because they’re working with life itself, so responsible stewardship is even more critical,” says Professor Gary Marchant, director of the Center for Law, Science and Innovation at Arizona State University.
Greater Boston’s biotech firms have developed cutting-edge medicines, medical devices, therapies, and treatment options that have saved countless lives around the world. Danvers-based Abiomed, for example, makes the world’s smallest heart pump, which assists or replaces the life-sustaining pumping function of a human heart.
The life sciences have thrived in the region’s unique ecosystem that brings together elite universities, leading hospitals, growing companies (from start-ups to brand names), venture capitalists, and a culture of innovation that dates back centuries.
The economic data tells the story: The biotech sector has created 66,000 full-time jobs in Massachusetts, and the average salary for those jobs (about $140,000) is more than double the average state salary (about $66,000), according to the Massachusetts Biotechnology Council. Up in Maine, Jackson Labs, a leader in biomedical research, is directly or indirectly responsible for $575 million in economic impact and more than 3,500 full-time jobs, according to Jackson Lab COO Charles E. Hewett.
Risk versus reward
But with this great opportunity comes great risk. And to manage risk requires a strong risk-management approach—being proactive, rather than reactive.
“Risk management is a fluid, ever-changing process,” says Elizabeth Tarricone, senior vice president of risk management at Cross Insurance, an independent insurance broker representing clients in the health insurance marketplace across New England. “Constant monitoring is required as the operations change and evolve.”
What’s the upside of effective risk management? “Compliance with the law, protection from potential liability, good stewardship of resources, and a reputation for being responsible, which will attract stakeholders, from employees to regulators, investors, and customers,” says Marchant.
And the price of ineffective risk management? “It can bring down the entire company,” Marchant says, “based on one mistake or bad product.”
Marchant and others see four major risks facing the region’s booming life sciences industry, and have suggestions for how can they be appropriately managed.
Managing the risks of biotech
Risk management supports success
Risk management strategies must change and mature within each biotech firm.
Complex ethical issues in biotech play a role too. “There’s more public concern around biotech companies because they’re working with life itself, so responsible stewardship is even more critical,” says Marchand.
As Greater Boston’s biotech firms drive innovations that save lives and grow the region’s economy, they’ll need to effectively manage their particular risks. Partnering with experts and insurance providers should be part of that evolving risk management process.
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