Top risks in research and development
The risks involved in research and development (R&D) are complex, and can evolve as a project grows.
Businesses working in this field must therefore be aware of the particular exposures that may apply to their research and development processes.
Companies involved in the research and development of new drugs and medical devices tend to fall into two groups: the biotechnology firms that develop the drug or device and the service organizations who help bring those products to market. Each group faces its own distinct set of risks, which are in turn affected by the length of the research process and how quickly a company moves through it.
The following risks are amongst the most important for life science companies working in research and development as they discover, develop and test products.
Discovery risks
Every research process begins with discovery. This stage is relatively low risk, but it is not completely without potential problems. Primary liabilities at this point in the process include directors and officers liability, public and employer liability and basic property cover.
Exposures in testing and development
During development and pre-clinical testing, biotechs are exposed to a wider range of risks. These include property losses and business interruption, as stock moves out of a company’s control for the first time.
Supply chain partners
Third party support is essential for many life science companies, but it can also bring its own set of exposures to the foreground. Third party suppliers must have adequate protection of their own professional liability, in case of accidental breaches of contract or use of intellectual property.
Manufacturing exposures
Manufacturing brings with it a considerable degree of risk. Before a clinical trial can take place, companies must produce a large amount of the product. As this is often outsourced, there is a risk of loss, as well as risks connected to temperature or atmospheric changes in transit. The risk of business interruption is also heightened.
Risks in clinical testing
Actual bodily injury or harm is a key risk in the clinical testing stage, because volunteers may have adverse reactions to the drug being administered. There are also continuing risks such as business interruption and property damage throughout this stage of the development process.
CFC offers a range of life science insurance products for businesses working in research and development. Find out more about our R&D life science policy, or get in touch to discuss your requirements in more detail.