Regulatory Know-How Gives Incumbents Distinct Advantage Over Biotech Startups in FDA Submissions

Ruxandra Teslo, a prominent voice in the biotech sector, recently highlighted a significant challenge for emerging biotechnology companies: navigating the complex U.S. Food and Drug Administration (FDA) submission process. Her observation underscores how established firms benefit from inherent regulatory expertise, creating an uneven playing field for startups aiming to bring innovative therapies to market.

Teslo stated on social media, > "We know this would be catalytic for start-ups from multiple sources: firstly, informal surveys with founders, who have often never seen an FDA submission in their life." This fundamental lack of direct experience with intricate regulatory pathways, such as preparing Investigational New Drug (IND) applications and navigating clinical trial phases, poses a substantial barrier. The process demands rigorous preclinical studies, extensive documentation, and adherence to evolving guidelines, often requiring specialized expertise that early-stage companies typically lack.

In contrast, Teslo noted, > "results from economics of innovation show that large incumbents benefit from regulatory know-how." Larger pharmaceutical and biotech companies possess well-established regulatory affairs departments, deep institutional knowledge, and significant financial capacity. This allows them to absorb the substantial investment—often exceeding $2 billion per drug—and potential delays inherent in the approval process. Their experience enables more efficient navigation of complex requirements, including adapting to recent shifts within the FDA.

The high cost and lengthy timelines, sometimes exceeding a decade from discovery to market, contribute to a high failure rate for new drugs, particularly impacting resource-constrained startups. This regulatory burden can stifle innovation and limit market entry for promising therapies from smaller entities. Consequently, some U.S. biotech firms are reportedly considering conducting early-stage trials outside the country, in regions like Europe or Australia, to bypass domestic regulatory uncertainties and accelerate development.

The ongoing discussion within the industry emphasizes the need for streamlined regulatory processes to foster a more dynamic environment for innovation. Initiatives like the "Clinical Trial Abundance Initiative," to which Teslo has contributed, advocate for policies that reduce the cost and complexity of clinical trials. Such efforts aim to level the playing field, ensuring groundbreaking discoveries from startups can more readily translate into accessible treatments, rather than being hindered by regulatory hurdles.