After struggling with a certain direction or having market conditions radically change, many companies come face to face with very unpleasant possibilities for growth. Some of these companies wilt away, but many re-invent/reposition their business or entire companies to get to where the action is. Here are some examples of metamorphosis in the life sciences.

• Helicos BioSciences is a pioneer in next generation DNA sequencing and moved from a purveyor of instruments to become a molecular diagnostics company, offering their own tests as well as services.

• Pfenex had initially offered its bacterial-based protein expression system for production of biotherapeutics, but now has repositioned it to express a large variety of proteins for early stage and preclinical work.

• Biocept was focused on providing technology for cell isolation but now is developing assays for personalized medicine in early detection, diagnosis and monitoring of cancer

• Similarly OncoMethylome Sciences moved from out-licensing cancer biomarkers to developing their own diagnostic tests for early cancer detection

• The most famous repositioning of all is probably the failed heart medicine turned lifestyle hero – Viagra. This drug repositioning concept is currently a popular approach in the pharmaceutical industry, even having its own dedicated conferences

And it is not just emerging and growth stage companies that change their tune. Companies such as IBM, PerkinElmer, and GE have all evolved their life science strategies, both through acquisitions as well as internal repositioning.

What are the benefits of changing direction and redefining their strategy? Surely one has to first admit that things are not going well (or could go much better). Since wholesale change is not easy there must be a big payback on this:

• Move up the food chain to higher value/margin products

• Get away from crowded segments with vicious competition

• Access larger segments that will continue to grow in size and breadth

• Reduce internal expenses and leverage current technology in new ways

• Make shareholders more optimistic about the future

What can you do next: acknowledge there must be a better way, find the greener grass, and get ready for a big change. Like the knobby, spiky cecropia that will soon become the biggest moth in North America, changing your business or company direction can be a very healthy metamorphosis leading to a much brighter future.

If we look at some of the recent acquisitions, we can see that most are completed with mutually beneficial terms.  However, as the need to grow couples with the weakened state of many smaller companies, the rate of acquisitions should increase and terms should become more onerous (or favorable, depending on your side of the table.)  An indicator of this strain is that according to Steven Burrill, CEO of Burrill & Company, 200 of the 387 public biotech companies are now trading below cash value.  With this as a backdrop, how does one ensure that the best outcomes can be achieved for everyone.

If you are a smaller company trying to make it through this period and avoid predation, you need to be strong, smart and fast like the agile rodents that have not become food for the foxes.

• Be strong – Of course cash flow is primary, but also keeping a disciplined focus on the company’s objectives is paramount.

• Be smart – Be very aware of the environment, have realistic expectations of growth (or lack of), know your competitors and neighbors, and treat your people well.

• Be fast – Keep open to the changing situation, be quick to learn of changes to the market, and foster nimbleness in the organization to adapt to these changes.

If on the other hand you occupy a higher position in the food chain and there is less chance of being consumed, you will have an abundance of opportunities below you.  However before you gorge yourself on all those tasty morsels, be sure to use the utmost care and discipline.

• Be very selective – since “successful” acquisitions are few and far between, this is not the time to fill up on bargains.  It is estimated that upwards of 80% of acquisitions do not meet the goals of the acquirer.

• Be sure there is compatibility between the companies across many areas such as business methods, style, and culture.

• Spend the effort to really understand the future market opportunities.  With the current situation changing rapidly, be sure you have a reasonable handle on this.

• Strike when opportunities are present.  Though careful and deep analysis are necessary, be sure you can move fast enough to pull the trigger in time.  There are other predators competing for the same game.

So whether you are crawling along the ground or soaring through the skies, be sure to keep a diligent eye on your surroundings.  This is a critical time to avoid predators as well as to have a tasty feast.