Risk assessment in drug development
- Ellie Gadd
- Jun 26
- 4 min read
Drug development is an inherently high-stakes endeavour, with failure rates in early phases reaching up to 90%. For emerging biotech startups operating in this space, structured risk assessment is a must have - not a nice to have. If executed well, it will pay dividends and significantly improve the odds of success, strengthen investor confidence, and ensure that promising therapies reach patients faster.
Why early risk assessment is critical for biotech startups
Early-stage biotech companies often operate at the intersection of scientific innovation and resource limitation. In the race to reach key milestones and secure funding, many startups prioritise speed but underinvest in strategic risk planning. This can lead to critical blind spots that derail development later.
Embedding early-stage biotech risk-thinking from the start helps companies anticipate challenges across regulatory, clinical, manufacturing, and commercial domains. A structured risk management process will support smarter decision-making and also position biotech startups as credible and investor-ready partners.
Key risks in drug development for emerging biotech companies
But what are the key risks? To manage risk effectively, you must first identify and categorise it. Common risk categories include:
Scientific and technical risks in preclinical biotech development
Incomplete understanding of the mechanism of action (MoA)
Biomarker identification and validation uncertainties
Translational risks between preclinical models and human outcomes
Regulatory risk for biotech startups
Uncertainty about appropriate regulatory pathways, especially for novel modalities like ATMPs, CGTs, or ADCs
Insufficient early dialogue with agencies like MHRA, EMA, or FDA
Gaps in GMP compliance or documentation
Clinical development risks
Protocol design errors and unvalidated endpoints
Slow recruitment, especially for rare indications
Inexperience among CROs or investigators
Biotech manufacturing issues
Process scalability and tech transfer complications
Supply chain constraints, such as single-source materials
Delays in GMP manufacturing slots or validation
Commercial and market access risks
Misalignment between trial endpoints and payer expectations
Underdeveloped Target Product Profiles (TPPs)
Unclear value proposition and pricing models
A proven framework to mitigate risks in early drug development
At 3Biotech, we guide startups through a repeatable, structured approach to risk mitigation, known as our 4-step risk mitigation model:
Step 1: Identify and prioritise drug development risks
Use tools like SWOT, risk registers, or FMEA to assess threats early. Cross-functional input is essential for this to be meaningful; R&D, clinical, regulatory, and commercial teams must align on priorities.
Step 2: Align regulatory and reimbursement strategy early
Engage with regulators early through Scientific Advice or Pre-IND meetings. Collaboratively define your Target Product Profile (TPP) with input from market access experts to ensure your clinical strategy supports future reimbursement.
Step 3: Use partnerships and predictive tools to de-risk development
Partner with innovation clusters (e.g., Catapult, BioWin) and explore AI modelling or machine learning tools to guide development. Non-dilutive EU biotech funding can further reduce capital risk.
Step 4: Build scenario plans and contingency strategies
Use “what if” modelling for trial delays, supply disruptions, or regulatory feedback. Establish exit ramps and pivot points to avoid sunk-cost traps and enable flexible, phased development.
Real-world risk mitigation example from the biotech ecosystem
3Biotech recently supported an early-stage biotech company developing an autologous CAR-T therapy for AML. At the preclinical stage, the company faced high-risk challenges common to cell and gene therapy developers, including vector construct uncertainty, manufacturing complexity, and limited predictive models for toxicity.
Through a structured risk assessment process led by 3Biotech, the team used a tailored FMEA methodology to evaluate over 70 individual risks across CMC, regulatory, preclinical, and clinical domains. Key mitigations included proactive raw material stockpiling to reduce supply chain risks, early-stage validation of construct performance to derisk manufacturing outcomes, and a clear strategy for handling known clinical concerns like Cytokine Release Syndrome and neurotoxicity - both identified as high risks with limited preclinical predictability.
Our structured and scenario-based approach enabled the client to move forward confidently toward its first-in-human trial with a clear understanding of residual risks and a well-defined mitigation plan.
Top mistakes biotech startups make with risk management and how to avoid them
Even the most innovative biotech startups can be tripped up by avoidable missteps. When you're moving fast, it's easy to overlook long-term planning in favour of hitting the next milestone. But that short-term focus can be costly.
Here are four of the most common risk management mistakes we see. Plus tips on how to avoid them:
Leaving manufacturing too late. Waiting until clinical stages to consider manufacturing is a common mistake. It leads to rushed tech transfers, unproven scalability, and delays that could have been avoided with early planning.
Designing studies without market access in mind. Your clinical trial might hit its endpoints, but if payers don’t see the value, your product may struggle to reach patients. Build reimbursement thinking into your study design from the outset.
Expecting regulators to fix problems down the line. Engaging early with agencies like the MHRA, EMA, or FDA gives you clarity and, importantly, time to adjust. Assuming they’ll course-correct your strategy later can leave you exposed.
Underestimating GMP timelines and costs. GMP manufacturing takes longer and costs more than many first-time founders realise. Without realistic budgeting and scheduling, funding gaps can quickly derail your plans.
One quick self-check: Are you planning for the full development pathway or just the next milestone?
Embedding a risk-aware culture in biotech product development
Effective risk management isn’t a one-off exercise; it’s a mindset that should be baked into your company culture from day one.
Here’s how biotech teams can embed risk awareness into their daily operations:
Make risk reviews routine. Add them to cross-functional team meetings and use them to guide decisions, not just flag problems.
Invest in training. Equip your team with practical knowledge of regulatory expectations, risk tools like FMEA, and the logic behind risk-based approaches.
Reframe risk as a strategic advantage. A proactive risk culture isn’t about being cautious; it’s about being prepared. Anticipating roadblocks gives you the power to pivot early, stay fundable, and keep development moving.
Building this mindset across your organisation will reduce uncertainty and lay the foundation for smarter, faster and more resilient biotech development.
Download: Free risk assessment checklist for biotech startups
Looking to reduce uncertainty and stay investor-ready? Our biotech risk checklist is designed specifically for early-stage companies to help you anticipate challenges and plan effectively.
This free risk template covers scientific, regulatory, clinical, and commercial risks and strengthen your development strategy and avoid common pitfalls.
✅ Identify risks before they become roadblocks
✅ Align your CMC and regulatory plans from the outset
✅ Use the checklist as a drug development risk tool to support better decision-making and funding readiness
