Dr Yang Liu, HSBA alumnus, PhD philosopher and biochemist, and CEO and founder of biotech company Panadea Diagnostics, achieved a significant milestone for his company in March this year. As a spin-off of the Bernhard Nocht Institute for Tropical Medicine, Panadea Diagnostics is now authorised to use the BNITM patents exclusively. In this way, the institute is making an important contribution to better medical care, especially in developing and emerging countries. Panadea Diagnostics specialises in providing high-quality tests for tropical and emerging infectious diseases. We talked to Dr Liu about the special challenges he has faced in recent years, the biotech industry and his studies.
Entrepreneurship: HSBA Alumnus Achieves Important Breakthrough with Biotech Company
What is the business idea behind Panadea Diagnostics and how did it start?
Since March this year Panadea Diagnostics develops, produces, and sells diagnostic tests for the detection of antibodies against tropical and emerging infectious diseases, such as Dengue fever, Yellow Fever, Ebola etc. We use a patented platform technology that allows tests to have a significantly improved specificity compared to other commercially available test systems. This means that fewer false positive results are displayed, and the conclusions drawn are therefore more reliable.
The story of Panadea Diagnostics though already started a while ago. Around ten years back, we had the idea to commercialize the available patented technology from the Bernhard Nocht Institute for Tropical Medicine in order to develop and market diagnostic kits to test tropical infectious diseases. However, at that time, when I engaged with investors and talked to other experts about this business idea, one frequently asked question was: "Are these diseases curable? If not, why would people spend money on diagnosing them?" which was indeed a very valid and difficult question to address. Together with other factors including a premature stage of production and a limited portfolio of available kits, the idea was postponed for a long time. In the meanwhile, I moved on to work in different pharmaceutical companies in Germany.
Then the COVID-19 pandemic destroyed the global market, caused a disruption and a complete transformation of the market landscape. After the pandemic I finally saw the opportunity to realize the long-held business idea. The question that was frequently raised before had been addressed by market realities: COVID-19 lacks a definite cure, but everybody is willing to invest money on testing it. On top, we came to realize that the customer base extended beyond medical institutions in the developed countries. Every country, every company, school, bank, and so on now has the potential to become a customer for such diagnostic tests. In Germany you could even buy such rapid tests for detecting infectious diseases in supermarkets, which has never happened before. Another change was the grown awareness that surveillance activities, both in human and animal populations, are vital to foresee and hopefully prevent future pandemics.
These observations, coupled with the contributions of my colleagues at the institute, who continued to develop more products during my absence, convinced me that it was time to revive our business idea. Given the overall changes in the market landscape and the mindset of people regarding infectious diseases combined with an increased awareness of biotechnology, the business idea gained significantly more credibility and feasibility for investors. So eventually, we managed to convince the investor and launched Panadea Diagnostics.
Panadea is a spin-off of the Bernhard Nocht Institut f眉r Tropenmedizin (BNITM). What were the biggest challenges in implementing it? How long did the transfer process take?
We are indeed the first spin-off company from BNITM with a series of collaborative agreements. Although the institute was very supportive, the stringent laws and regulations held the process of negotiation and discussion extremely long. All in all it took us about one year to settle only the license agreement because the institute has ownership of the IP, and we are the only one being offering exclusive rights of use for commercialization.
Start-ups in the biotech sector are rather rare in Germany (according to a statement by BIO Deutschland e.V., the industry association of biotechnology companies in Germany, from 2022*) as there is still a rather start-up-hostile climate in the research and development-intensive industries and in knowledge-intensive services. Do you agree/disagree with this statement and how did you manage anyway?
Yes, I do agree. One of the interesting points to discuss is "fairness", in terms of "Beihilferecht (State-aid-law)". The law in general tries to prevent the publicly funded institute/university from "unfairly" supporting a privately held start-up. In principle this is a reasonable idea, but the interpretation of the law goes in the direction of "being absolutely equal to the existing company", which means any condition given to us, a start-up, should not be better than the market condition, meaning the condition given to us should be the same as the condition given to a well-established large company. It might be "equal", but not "fair". In other words, I perceived the climate as very hostile to founders. During our negotiation and discussion with various stakeholders, the fear of violating the law held the decision-maker back.
Additionally, the language barrier poses a significant challenge for numerous international talents aiming to establish a business in Germany. They often encounter intricate tax regulations, insurance policies, and other complexities also. We were lucky enough that the institute made every effort to collaborate with us. Nevertheless, it took us over a year to finalize an agreement and we spent a substantial budget towards seeking external consultation and legal assistance. In many other countries such matters are often overseen by government entities or specialized organizations, particularly to foster the growth of innovative startups.
Did your studies at HSBA help you achieve this important milestone?
Back in 2017, I enrolled in HSBA's Executive MBA programme. The holistic understanding of business management gave me the confidence to be an entrepreneur and minimize the fear of being ignorant. And when I started the company, the knowledge I learned guided me to think about all perspectives, not only R&D for example.
Did you also make use of the mentoring programme as part of your studies?
I鈥檓 still in contact with my mentor as he鈥檚 a very kind and experienced senior professional. I always very much enjoyed our regular encounters, where I could share my thoughts and get valuable feedback.
Do you have any piece of advice for upcoming entrepreneurs from HSBA?
If even the slightest hint of becoming an entrepreneur exists within you, you should definitely give it a go. I would encourage everyone to try it, although of course it is risky, you have to be patient and motivated at the same time, and you need to spend all your energy on one goal. Even so it is fun and an experience most people don鈥檛 have and I wouldn鈥檛 want to miss.