Value Propositions and Why You Need Them
At several stages of the pharmaceutical lifecycle, an effective value proposition can be the key to your success - whether you’re seeking investment, proposing a partnership, applying to regulators or trying to increase sales.
But what exactly is a value proposition?
A value proposition is your promise of value to be offered and delivered to your stakeholders. It’s your argument for why they should choose you.
Your Value Proposition might be the first (and only) thing that sticks in the mind of whoever you’re pitching to, so it’s important to spend some time thinking about it. Especially if you’re an early-stage startup looking for partners or investors.
Whilst science is important, value propositions are often neglected by biotech startup entrepreneurs. Please read on to find out more about how to use them.
A Primer on Value Propositions
As mentioned above, a value proposition describes the benefit that your stakeholders - e.g. customers, investors, partners, end-users, etc. - should expect to receive through your startup, product or service.
In order to describe that value, you need to understand what value means from the perspective of your stakeholders. In complex industries like pharmaceuticals and healthcare, where there are several stakeholders with overlapping and interrelated interests, this can be a challenge (but see more below).
You may also need different value propositions depending on what you’re trying to achieve. For example, a drug discovery startup trying to out-license one of its drug candidates to big pharma is likely to need a different value proposition to when it wants to pitch a drug discovery collaboration to big pharma.
How to Construct a Value Proposition
Developing a value proposition starts with understanding your target stakeholders. You might already have some knowledge of this based on your experience in your market. However, it’s almost always helpful to speak directly to your stakeholders.
Several people have described ways to approach this, but it can generally be summarised as follows:
- Think of all the jobs that your stakeholder wants to achieve and why they want to achieve them. Start broadly and then think more about which specific jobs you can help them with.
- Consider how your stakeholders might be achieving those jobs today, think about what challenges or pains they have and think about how they would like things to be improved.
- Look at how you can solve your stakeholder’s problems, help them to achieve those jobs, overcome those challenges and improve on what they have today.
After going through these steps, you should be able to put together a value proposition that succinctly communicates the most important benefits or the broad range of benefits that you can provide.
You’ll often find that value propositions have structure like this:
“______________________ helps __________________ for _________________ (without ____________________)”
Dealing with multiple stakeholders
When dealing with multiple stakeholders, we’ve found that it helps to have a core value proposition that will resonate with several different stakeholders. For instance, in healthcare, a value proposition that promises to solve an unmet medical need will also speak to a potential competitive advantage, making it attractive to doctors, regulators, partners and investors alike.
A core value proposition often finds its home in your master pitch deck, on your website, and in slogans and taglines. Therefore, we encourage you to consider the most broadly attractive areas of value.
Nevertheless, sometimes it can be helpful to develop different value propositions for different stakeholders, as they might have different needs. So make sure you have some different value propositions on hand for when you need them.
Finally, this discussion would not be complete without mentioning the value statement, which narrows in on just one benefit or one aspect of value in your solution.
Examples of Value Propositions for Biotech startups
We are now all very familiar with (and tired of) the toll taken by COVID-19. On one hand, we have been blessed with an incredibly rapid vaccine development effort. However, those vaccines have been evaded by the newer SARS-CoV-2 variants and don’t have as large of an effect on transmission as we would have hoped.
Now imagine that your startup has developed a SARS-CoV-2 vaccine that requires one-shot, has shown no severe side effects and is expected to prevent infection and transmission of all current and future variants. What might a value proposition look like?
“A pan-coronavirus that prevents transmission of SARS-CoV-2 with a single shot and no severe side effects”
How about some real-life examples?
AI Drug Discovery is one of the fastest-growing parts of the industry, which means that it can be hard to stand out from the crowd. The pitch decks of two highly successful startups - Atomwise and Healx - show you how value propositions and value statements can be used effectively.
In the snippets above we’ve underlined the areas where the companies show how they can speed up (in gold) or improve the output (in green) of drug discovery. In addition, Atomwise highlights the evidence it has to back up its claims (in red). Healx highlights its main areas of focus (rare diseases, underlined in light blue), and implicitly shows us who its priority stakeholders are.
Atomwise and Healx have both raised over $50 million and have several ongoing partnerships - so take note!
This article has hopefully convinced you why a value proposition is important. At Probacure we believe value propositions are essential and it forms a big part of what we do as we help startups to find partners and investors.
With a well-designed value proposition, you can go out and pitch prospective partners and investors with confidence.