Secondhand Lab Equipment from Bankrupt Biotechs Fuels the Next Wave of Scientist-Led Startups

Since cash reserves are insufficient, it is necessary to explore ways to increase revenue and reduce expenditures.

Layoffs are often the preferred approach.When capital is abundant, companies hire fully staffed teams for their operations; yet when cash is tight, they discover that half or even fewer employees can get the job done. Star executives from multinational corporations, accustomed to generous budgets and boasting impressive LinkedIn profiles, clearly struggle to adapt to smaller organizations and rarely stay long. In fact, headhunters often sense shifts in the health of a niche sector before the broader market does.

Transitioning to a CDMO model is also a revenue-generating option.Capacity planned during periods of market exuberance and irrational optimism sits idle as soon as the winter chill sets in. Although Party A and Party B differ inherently in their business models, talent quality, and team management, there is nothing wrong with leveraging excess capacity to generate cash flow. After all, as founders and managers, we must instill confidence in our investors and in the hundred or so employees who make up our company. They are living, breathing individuals, not just a number on the team slide of a pitch deck for the next funding round.

To be even more radical, it would have to sell off its factories and pipeline.Last year, the market witnessed multiple instances of “arm-severing” self-rescue measures, such as halting operations at new manufacturing facilities and selling off factories or product pipelines. For founders and management teams, making these decisions was undoubtedly difficult and painful. However, from shareholders’ perspective, the capital recouped through these actions enabled companies to survive, with the hope that their products would achieve better outcomes in clinical trials and receive more favorable market feedback.

None of these measures are effective; bankruptcy liquidation is the only option.In recent years, no small number of biotech companies have filed for bankruptcy. In 2023 alone, more than ten U.S.-listed biotech firms declared bankruptcy, including Flagship Pioneering–incubated Codiak BioSciences and Nasdaq Biotechnology Index constituent Akorn Pharmaceuticals. If the situation abroad is this severe, it is hard to believe that the domestic landscape in China is any more optimistic, especially given that the count excludes companies that struggled and failed during their Series A and B financing rounds.

As these domestic and international companies successively declared bankruptcy and liquidated their assets,A large number of scientific research instruments and equipment have flowed into the free market.

Like a whale fall nurturing new life, this batch of instruments and equipment will also nourish the growth of a new generation of startups.According to data from VCBeat, as 2023 reached its midpoint, nearly 80 biopharmaceutical startups that had completed seed or angel financing rounds braved the harsh “whiteout” conditions of the capital winter and pressed on toward the “valley of death.” As these companies prepare to move out of shared laboratories in universities, research institutes, or incubators, they require substantial amounts of second-hand instruments and equipment to expand and establish their own laboratory facilities.

Don’t be picky; affordability and practicality are what matter most.Laboratory equipment at universities is typically well-maintained and lightly used, yet such opportunities are rare and hard to come by. The primary channels for circulating these second-hand devices to early-stage startups are the networks of leading acquirers across various provinces and municipalities, as well as connections within startup communities. The former offers comprehensive after-sales support and usage guidance, while the latter holds advantages in terms of timeliness and cost. Not long ago, it was reported that a co-founder of a Suzhou-based company posted in an alumni group seeking buyers for their entire laboratory equipment package. While this situation is lamentable, we hope both parties will benefit from the transaction.

Laboratories are designed and planned according to specific needs, but they all require some essential large-scale equipment.

• Sample storage mostly requires refrigerators, liquid nitrogen tanks, and pharmaceutical refrigeration units;

  
  

• Sample pretreatment requires pipettes, centrifuges, freeze dryers, homogenizers, incubators, biosafety cabinets, and clean benches;

  
  

• The process analysis phase generally requires various types of PCR instruments, microplate readers, gel imaging systems, nucleic acid electrophoresis systems, spectrophotometers, real-time fluorescence quantitative PCR instruments, flow cytometers, cell counters, and so on;

  
  

• The final cleaning and sterilization steps are relatively routine, typically involving autoclaves and ultrasonic cleaners.

  
  

Based on the aforementioned equipment, supplemented by some specialized instruments, it can basically meet the needs of a startup inMicrobiology Laboratory, Molecular Biology Laboratory, Cell Biology Laboratory,andTissue Culture Laboratoryneeds.

Taking the mid-to-low-end product lines of domestically produced microplate readers as an example, the price range for a second-hand unit can be RMB 20,000–30,000, depending on its condition, which is 40%–60% of the purchase price of a brand-new device (this ratio also reflects the price range for most second-hand equipment in usable condition on the market). Moreover, some second-hand units from the mid-to-high-end domestic product lines can even be acquired for just tens of thousands of yuan, representing savings of over 70% compared to the purchase price of new equipment.

A single device can save tens of thousands of yuan at a minimum, and over one hundred thousand yuan at a maximum.What was snatched back is not money, but time to survive.As the founder of your company, whether you are brimming with ambition and sharp-eyed, having just secured a new round of financing, or have made little progress for over half a year and find your mindset becoming unbalanced, you should return to rationality and adhere to your most critical responsibility as a startup founder:Ensure sufficient cash on the books to keep the company alive.

Save tens of thousands by buying a used microplate reader instead of a brand-new one? Go for it! Saving tens of thousands is equivalent to nearly two months’ salary for an employee. Saving over a hundred thousand provides the entire company with an extra month’s worth of operating cash. Eager to build a GMP-compliant workshop right after securing Series A funding? Think twice! Consider assessing your finances first to see if shared facilities are a viable option. In our younger days, we were savvy cost-cutters who even repurposed pipette tips as medicine scoops. Securing financing should not lead to reckless spending. In a market environment where even listed companies face criticism for maintaining only two years’ cash reserves, emerging startups should place greater emphasis on keeping sufficient cash reserves to weather economic downturns.

The explicit thread here is the circulation of scientific research instruments and equipment, while the implicit thread is the dissemination of standards and knowledge.

Data and Information。No matter how advanced the equipment is, if it cannot be properly operated, it will ultimately end up gathering dust in a corner of the laboratory. When these instruments and devices are handed over to new users, they come accompanied by inherited documentation from previous owners, including user manuals, standard operating procedures (SOPs), FAQs for common issues, and even alternative suppliers for upstream consumables and reagents. Armed with this foundational information, emerging startups can engage in R&D with a shorter and gentler learning curve.

Knowledge and Wisdom。Rational and effective asset utilization is a core competency for R&D teams. This applies not only to cash management but also to equipment usage. By rethinking experimental design, teams can accurately plan the actual consumption of consumables and reagents; they should record and monitor the frequency of use and utilization rates of high-energy-consuming equipment, such as ultra-low temperature freezers; and they must formulate future usage plans based on the shelf life of equipment and reagents. Passing down this experience will become vital wisdom for a new generation of founders seeking survival during economic downturns.

Don’t forget that Chinese people, with their agrarian societal foundations, are truly universe-level masters of achieving proficiency through practice. Over the past three years, driven by the widespread adoption of desktop-scale equipment and the emergence of affordable test kits, Chinese laboratory technicians have turned PCR testing into a routine task as mundane as tightening screws, securing a cost advantage that dwarfs global competitors. This experience has, to some extent, fed back into the IVD industry, optimizing both costs and efficiency. The prerequisite for this achievement has been the large-scale sharing of equipment, standards, and knowledge.

The interweaving of light and dark threads forms a vast root network that provides vitality to the fundamental base of China’s biopharmaceutical R&D. Nourished by the falling leaves of cyclical change, this root network continuously extends and expands, sprouting new buds. Driven by the existence of this network, the overall R&D efficiency of the biopharmaceutical industry is steadily improving at a pace almost imperceptible to the naked eye, gradually piercing through the industry’s boundaries. This gain in efficiency is too subtle to be quantified by numbers; it unfolds as slowly as the growth of a tree, yet its momentum is unstoppable.