From Startup to Scale-Up: When Biotech Companies Must Take Security & Compliance Seriously

The Compliance Cliff in Medical Biotech

In the fast-moving world of medical biotech, there’s a steep and often overlooked cliff: compliance. Early-stage companies understandably focus on R&D, clinical validation, and fundraising. But scaling without a solid cybersecurity and compliance foundation is like building a lab on a fault line. One breach or regulatory misstep, and years of progress can collapse overnight.

Case in point: In 2023, 23andMe suffered a breach exposing the genetic data of nearly 7 million users. Lawsuits followed, regulatory scrutiny intensified, and reputational damage mounted. By 2025, the company filed for bankruptcy. While the breach may have only been the nail in the coffin, the message was clear: security and compliance failures can be existential.

For biotech startups targeting global markets or clinical use cases, security and compliance aren’t afterthoughts—they’re survival strategies.

Wellness vs. Medical: Where the Line Gets Drawn

Some digital health tools provide general wellness insights—sleep, fitness, and nutrition. These typically operate outside strict regulations, as long as they steer clear of medical claims or diagnostic functionality [1].

But once a product starts offering clinical-grade analysis, diagnostic suggestions, or lab interpretations, it enters the regulated medical territory. What makes the difference isn't the technology—it's the claims, users, and the outcomes the product influences.

Rule of thumb: If a product could change the course of someone’s medical care, it’s not "just wellness" anymore.

For example, a wearable that tracks steps is wellness. A tool that interprets blood glucose and recommends insulin dosing? That's regulated medical territory.

Staying Under The Radar: Compliance-Light for Startups

Most early-stage startups don’t need FDA clearance, EU MDR certification, or HIPAA compliance in their early days. If your product provides informational or wellness-focused insights—not clinical advice—you can stay outside regulatory scope while building credibility with users and investors [1].

Here’s how to do that responsibly:

• Position your tool as a general wellness service, not a diagnostic or clinical device. Focus on empowering users, not detecting disease.

• Avoid marketing claims related to diagnosis, treatment, or risk prediction. Replace words like “detects” or “predicts” with “may support” or “offers insight into.”

• Let third-party certified labs handle testing and result interpretation. Don’t store genetic data or test results yourself.

• Don’t collect identifiable health data unless necessary - and if you do, use strong encryption, access controls, and regular audits to protect it.

In 2025, BioPharma Solutions was fined $1.5M and lost five years of R&D due to a vendor’s compliance failure. A single oversight delayed a promising therapy by two years and significantly reduced company valuation.

• Use GDPR/CCPA-compliant consent and collect only essential information (e.g. email, billing).

• Publish transparent Privacy & Security policies to demonstrate data stewardship.

• Set a data retention policy to delete stale data, and enforce it.

• Encrypt data in transit and at rest, and monitor for suspicious activity.

• Add a Security or Privacy page to your website explaining your basic data protection practices.

• Ensure Terms & Conditions and Privacy Policy clearly reflect your non-diagnostic nature and limited data use.

  
  

Show you care - without overdoing it:

• Add a Security or Privacy page to your website explaining your basic data protection practices.

• Ensure your Terms & Conditions and Privacy Policy clearly reflect your non-diagnostic nature and the limited data you collect.

  
  

This “compliance-light” posture keeps you nimble while signalling that you take security and user trust seriously. And when you’re ready to scale into the regulated space, the groundwork is already in place.

When Compliance Becomes Inevitable: 5 Triggers

As biotech startups evolve from wellness-focused products to clinically validated tools, the need to address regulatory requirements becomes increasingly important. Understanding when compliance comes into play and the regulatory frameworks that govern your operations is critical for avoiding costly penalties and ensuring long-term business sustainability.

1. Involvement in Clinical Decision-Making:

   If your product supports or guides clinical decision-making (e.g., influencing diagnoses or treatment plans), it falls under FDA, EU MDR, or IVDR compliance, as these regulations ensure that tools impacting healthcare decisions meet strict safety and efficacy standards.

   
   

2. Offering Advanced Diagnostics or Genetic Services:

   When your product involves advanced genetic sequencing, biomarker analysis, or clinical-grade diagnostic tools, it triggers compliance with FDA, EU MDR, or IVDR. These regulations ensure the safety and efficacy of diagnostic tools and medical devices.

   
   

3. Storing Genetic or Biomarker Data Long-Term:

   When your company begins storing sensitive health data, such as genetic or biomarker information, compliance with GDPR, HIPAA, or other applicable privacy laws is required.

In 2024, Cencora suffered a cyberattack that compromised sensitive health data from over 27 pharma companies. The breach not only exposed vulnerabilities in how data was stored but also showed how third-party supply chain risks can cascade across the industry

4. Partnerships with Healthcare Providers or Insurers:

   Engaging in B2B partnerships with healthcare providers, research institutions, or insurers may trigger HIPAA (U.S.) or GDPR (EU) compliance, particularly when handling personal health data or Protected Health Information (PHI).

5. Establishing or Partnering with Diagnostic Labs:

   If you start operating or partnering with diagnostic laboratories to process clinical samples—such as genetic testing, blood analysis, or biomarker assays—CLIA compliance (U.S.) will apply. CLIA ensures test accuracy and reliability, making it essential for any startup offering lab-driven diagnostics.

   
   

   While CLIA does not require cybersecurity controls, companies handling test data must also align with HIPAA and possibly FDA software requirements, depending on how results are managed or delivered.

   
   

Key Regulations for Medical Biotech

HIPAA & HITECH: Two Sides of the Same Coin

If your biotech company operates in the United States or handles data from U.S.-based patients, understanding HIPAA and HITECH is essential. HIPAA (1996) laid the foundational framework for protecting patient health information, while HITECH (2009) significantly strengthened that foundation by introducing enhanced enforcement mechanisms, mandatory breach notification requirements, and promoting widespread adoption of electronic health records (EHRs) [2].

Together, these regulations form a comprehensive compliance architecture designed to safeguard the confidentiality, integrity, and availability of health data—while holding all stakeholders accountable to rigorous cybersecurity and privacy standards.

Key Aspects of HIPAA [3]:

• Privacy Rule – Defines permissible uses and disclosures of Protected Health Information (PHI).

• Security Rule – Establishes administrative, physical, and technical safeguards for ePHI.

• Breach Notification Rule – Mandates notification protocols for any breach involving unsecured PHI.

• Enforcement Rule – Outlines penalties and procedures for non-compliance.

A real-world case: in 2023, Enzo Biochem suffered a ransomware attack compromising the health data of 2.5 million patients. The breach emphasized how HIPAA compliance, particularly around breach response and data encryption, is not just a legal obligation—it’s essential for patient trust and business continuity.

Applicability: If your organization stores, processes, transmits, or interacts with ePHI, HIPAA and HITECH compliance is not optional - it’s a regulatory obligation and a critical part of enterprise risk management.

Non-compliance with HIPAA can result in civil monetary penalties ranging from $100 to $50,000 per violation with an annual cap of $1.5 million for identical violations. Violations may also trigger federal audits, investigations, and significant reputational damage that can undermine patient trust and stakeholder confidence [4].

GDPR: Privacy by Design, Not as an Afterthought

If your product touches the European market—even indirectly—GDPR (General Data Protection Regulation) likely applies. It governs how you collect, store, and process personal and sensitive health data, including genetic, biometric, and behavioural information [5].

To comply, you’ll need to:

• Obtain explicit consent before processing sensitive data

• Minimize the data you collect and store

• Provide transparency through clear privacy policies

• Ensure users can access, correct, or delete their data

• Secure all personal data with strong encryption and access controls

  
  

GDPR also requires a Data Protection Impact Assessment (DPIA) for high-risk processing—like profiling, AI-driven decisions, or handling large volumes of health-related data. Whether you’re wellness-focused or clinically regulated, if you process user data in the EU, GDPR compliance isn’t optional—it’s foundational to earning user trust and operating legally in one of the world’s strictest privacy environments.

FDA: Enforcing Cybersecurity Across the Medical Device Lifecycle

The FDA sets the benchmark for cybersecurity not only in medical devices but also in digital health software and connected platforms.

What the FDA Regulates

The FDA oversees technologies that diagnose, treat, or influence clinical decisions—including hardware devices, wearables, Software as a Medical Device (SaMD), AI-powered tools, and connected health applications.

🟢 Premarket Submission: Building Cybersecurity by Design

Manufacturers must demonstrate [6], [7]:

• Threat modelling and risk assessments

• A secure architecture with trust boundaries and access controls

• A documented Secure Software Development Lifecycle (S-SDLC)

• Results from static/dynamic analysis, fuzzing, pen testing

• A Software Bill of Materials (SBOM)

• Vulnerability management and patching strategy

  
  

🟠 Post-Market Surveillance

FDA also requires ongoing monitoring [8]:

• Real-time vulnerability tracking

• Security updates and patch releases

• Coordinated Vulnerability Disclosure (CVD)

• Risk re-assessment after updates

  
  

Neglecting these leads to recalls, enforcement actions, or market access loss.

EU MDR vs IVDR: Your Regulatory Fork in the Road

As your biotech or digital health product matures, it’s only a matter of time before the European regulatory cliff comes into view. The EU’s Medical Device Regulation (MDR) and In Vitro Diagnostic Regulation (IVDR) define what you can - and can’t - bring to market. And for software-first companies, understanding where you land is critical to scaling safely and compliantly.

Which One Applies to You?

• MDR (Regulation (EU) 2017/745) applies to medical devices, including Software as a Medical Device (SaMD), wearables, decision-support tools, and digital therapeutics that diagnose, monitor, or treat conditions [9].

• IVDR (Regulation (EU) 2017/746) covers software and systems used to analyze biological samples - like genetic or biomarker testing platforms [10].

  
  

If your software interprets lab data (e.g., blood or DNA) to support clinical decisions, IVDR likely applies. If it aids diagnosis or treatment without touching raw biological samples, you’re probably under MDR.

🟢 CE Marking: Security Built-In

To legally market a digital health product in the EU, companies must obtain CE marking under the applicable regulation. Both MDR and IVDR now treat cybersecurity as an essential element of product safety and system integrity - especially for connected or AI-powered software.

You’ll need to show:

• Secure software development practices

• Protection against unauthorized access, tampering, or data loss

• A cybersecurity risk assessment built into your risk management system

• Plans for updates, patching, and vulnerability response

• Clear instructions and cybersecurity controls in your technical documentation

Cybersecurity must be baked into your product from day one - and continuously reassessed across the lifecycle, especially after launch [11].

🟠 Post-Market Surveillance

EU regulators require a Post-Market Surveillance (PMS) system for both devices and software. You’re expected to monitor real-world use, respond to emerging risks, and update your risk management file as needed. Skip this, and you risk losing CE marking - or worse, facing fines, market withdrawal, or regulatory investigations from national authorities.

Upgrading the Engine: Building for Compliance

By the time you're ready to scale into regulated territory, it's too late to bolt on compliance as an afterthought. Regulatory expectations - from FDA to EU MDR/IVDR, HIPAA, and GDPR - aren’t just checklists. They demand a deep operational shift in how you design, build, and manage your product and company.

Crossing into the clinical space means upgrading your engine - laying a secure, scalable foundation that can withstand audits, attacks, and real-world risk.

Evotec experienced a cyberattack in 2024 that disrupted operations. The incident showed that security infrastructure is as vital as lab equipment or cloud investment.

The earlier analogy compared scaling without compliance to building a lab on a fault line. Here, you're rebuilding the engine for long-distance travel—not patching the tyres after you’ve crashed.

Start with These Fundamentals

• ✅ ISO 27001-style controls – Role-based access, vendor vetting, logging, and secure infrastructure

• ✅ Secure product design from day one – Data encryption, API security, input validation, and secure code practices

• ✅ Privacy-by-design principles – Data minimization, explicit consent, and anonymization

• ✅ Risk assessments & threat modelling – Anticipate vulnerabilities across the software and vendor stack

• ✅ External pen testing & remediation – Test regularly, fix fast, and retest to validate

• ✅ Incident response plan – Define roles, communication protocols, and escalation paths

• ✅ Team training – Turn compliance into culture with regular awareness sessions

Conclusion

Founders who build with compliance in mind don’t just survive—they scale faster. A clear compliance roadmap signals maturity to investors, builds trust with users, and unlocks access to global healthcare markets. At Sekurno, we help healthtech and biotech companies build secure, compliant foundations from day one—turning regulation into a growth enabler, not a blocker.

References

1. FDA General Wellness Policy for Low Risk Devices

2. What is the HITECH Act?

3. HIPAA for Professionals

4. HIPAA Penalties (eCFR)

5. GDPR Article 9(1)

6. FDA Cybersecurity Premarket Guidance

7. FDA Software Premarket Submission Guide

8. FDA Postmarket Cybersecurity Guide

9. EU MDR

10. EU IVDR

11. MDCG Cybersecurity Guidance