Abstract

Why Some Diagnostics Technologies Succeed While Others Fail: 28 Case Studies

Mickey Urdea, Chairman & CEO, Tethys Bioscience Inc

Over the last 20 years, Halteres has had the opportunity to work with many diagnostic technology companies (over 200 startups, many large multinational manufacturers) and their investors (angels, venture capitalists, granting agencies, NGOs). In that period, several diagnostics companies that initially appeared to be on a path to success ultimately failed. In 2015, the Bill and Melinda Gates Foundation asked Halteres to conduct a study to help them understand why some diagnostics companies fail and others succeed. For that purpose, we identified 28 diagnostics companies to include in a systematic study. We sought out and interviewed a number of experts from the investment community, company management teams from successful and failed companies and our Halteres Associates, most of whom have worked in diagnostics companies in various capacities. There were many insights shared and recorded.

The 28 diagnostics companies were classified into one of three groups: 1) “Successes” were defined as those companies that had reached commercial sustainability; 2) “Failures” were either out of business entirely or had their assets sold for small sums at the time of the study; and, 3) “Zombies” indicated companies that we felt were likely to eventually fail. Since the initial study was completed, 7 of the 8 Zombies identified were out of the business by the 4th quarter of 2021.  

The 28 companies were assessed based upon 5 phases of growth and the key objectives required to be successful in each phase. Successes tended to check all of the boxes, while Failures tended to fall short at more than one point, but typically one item appeared to be the most significant problem. Most Failures made early mistakes that resulted in company closure, but in other cases Failures managed to stay in business for many years. Most Zombies were rather long lived (~5-10 years).

We identified a number of best practices used by Successes that our interviewees and we felt could have saved the companies that failed. These factors will be presented and discussed.