3. Product Development Times and Regulatory Clearances:
The third critical factor in respect of BT is the long gestation period of products. The development cycle can stretch from about 3 years to about 10 years, depending on the level of innovativeness of the product. And, of course, the risk of ultimate failure looms large all along.
Another compounding factor at play is the need of regulatory clearances for BT products (unlike in IT). Considering the nature of application of BT products, it is essential for the authorities to review products for safety, efficacy and quality and also to ensure that ethical norms are not breached by the developers (e.g., during pre-clinical or clinical trials). To add to the woes of industry, India has multiple regulatory bodies and the lack of clear jurisdictional demarcation results in superfluous regulatory reviews. In fact, in some cases, regulatory clearances have dragged on the development cycle by a few years (this problem is not limited to India; regulatory timelines are the bane of industry through out the world.).
Once again, BT is at a disadvantage.
4. Cost of Failure:
All commercial enterprises face the risk of product/concept/service failure. BT and IT are no different. But what is unique about most BT enterprises (especially the younger ones) is their dependence on a single product line. The cost of development forces many BT enterprises to depend on a single product line for several years. Consequently, many are unable to branch out the risk of failure. The implication is that the failure of the product is nearly equivalent to the failure of the entire business.
The other risk for BT firms, which does not apply to IT firms, is that product failure can result from market dynamics, as well as from regulatory action. Getting one’s product approved for commercialization is onerous enough for companies, but they also have to adhere to regulatory norms over the entire product life cycle.
