Commercial Due Diligence for Life Sciences Investors: What to Look For

Before reinvesting in a Life Sciences portfolio company's commercial organization, investors need an honest assessment of what's working, what isn't, and why. Here's a framework for getting that assessment right.

The Reinvestment Decision

For Life Sciences investors, one of the most consequential decisions is whether — and how much — to reinvest in a portfolio company's commercial organization.

The company has missed revenue targets. The commercial team has turned over. The pipeline isn't converting. Leadership is asking for more runway to "fix the go-to-market."

Before writing another check, you need answers to three questions:

1. Is the commercial strategy fundamentally sound, or does it need to be rebuilt?
2. Is the current team capable of executing a corrected strategy, or does the team need to change?
3. What specific changes are required, and what will they cost?

Getting honest answers to these questions from inside the organization is difficult. The people closest to the problem have the most at stake in how it's characterized.

A Framework for Commercial Due Diligence

An effective commercial due diligence process for a Life Sciences portfolio company should cover five areas:

1. Strategy Validation

Is the Go-to-Market strategy based on validated customer insights, or on internal assumptions? Has the company conducted rigorous Voice of Customer research? Is the target market segment well-defined and prioritized correctly?

2. Pipeline Analysis

What does the pipeline actually look like? How accurate is the forecast? Where are deals stalling, and why? What is the average sales cycle, and how does it compare to initial projections?

3. Team Assessment

Does the commercial team have the right skills for the current stage of the company? Is turnover driven by compensation, culture, strategy, or leadership? Are the right people in the right roles?

4. Process Evaluation

Is there a documented, repeatable sales process? Is it being followed? Does it align with how customers actually make decisions? Are there adequate sales tools and collateral?

5. Market Dynamics

Has the competitive landscape changed since the original Go-to-Market plan was developed? Are there new entrants, pricing pressures, or reimbursement changes that affect the commercial opportunity?

What Good Looks Like

A company worth reinvesting in will have honest answers to these questions — even if some of those answers are uncomfortable. Leadership will be able to articulate specifically what went wrong and why, and will have a credible plan for correcting it.

Red flags include: inability to explain why deals are stalling, attribution of all commercial problems to external factors, and resistance to outside assessment.

The Value of an Independent Assessment

The most reliable commercial due diligence comes from an independent party with no stake in the outcome — someone who can interview customers, review pipeline data, assess the team, and provide an unvarnished view of the commercial situation.

This is not the same as asking the company's leadership to self-assess, and it's not the same as a financial audit. It requires deep expertise in Life Sciences commercial operations and the judgment to distinguish between fixable execution problems and fundamental strategy failures.

*Monona Technical Resources provides commercial assessments for Life Sciences investors prior to reinvestment decisions. Contact us to discuss your situation.*