The role of commercialisation in biotechnology

Collaboration and cooperation are key when taking research to market, writes Rowan Gilmore.

There can be no question that the current level of both government and private support for research in the life sciences is unprecedented. I can remember, when I left Australia in 1997 for the second time to work overseas, that several friends of mine in medical research lamented they would shortly follow because of the scarce opportunities here.

I returned home to an environment quite different in 2003, in which biotechnology had surpassed telecommunications and IT as an emerging industry that could eventually underpin Australia's place among global leaders in the new economy. The emergence of bio-precincts, federal and state government strategies, new medical research institutes and the NHMRC have given tremendous, and much welcomed, impetus to the life sciences.

Rightly so. Highly skilled and high-growth jobs, so important to a modern economy, require a vibrant industry grounded in innovation and ongoing research, and biotechnology is a good target. The Australian Institute for Commercialisation's (AIC) research shows that if just 20 of today's several hundred technology-based companies perform as the likes of Cochlear or ResMed, by the end of the next decade the economy will be more than $20 billion richer each year and today's trade deficit eliminated.

However, taking products to market, whether motivated by a desire to serve the public good through elimination of disease, or simply to return a profit, requires good business practice. To make a difference, biotechnology must be synonymous with commercialisation.

So, how successful are we likely to be? Certainly, in some sectors of the life sciences, such as the creation of new medicines, Australia's returns will be limited by the absence of a local major pharmaceutical player that can reach global markets. However, value can still be realised by creating opportunities within the drug discovery process. Australia has done well in the areas of medical devices, agricultural and marine medical research, where the playing field is less dominated by a handful of large multinationals.

Building scale

I believe one of our biggest barriers is quite simply one of scale. In the 2001/02 National Survey of Research Commercialisation undertaken by the AIC for the Commonwealth Department of Education, Science and Training, the AIC found that for every dollar invested in R&D, Australia's research bodies roughly produce just one-tenth the number of global patents when compared to their American counterparts.

Now I will readily admit that the number of global patents is an imperfect measure of the commercial potential of research, and that it might say more about the funds available to register a patent than the quality of the science, but consider this in parallel: we produce start-up companies at twice the rate of the US! I accept there are mitigating factors, but this, to me, points to an inescapable conclusion: on average most of our start-up companies are founded with a mere fraction of the intellectual property of those in the US.

One only has to look at the portfolios of university commercialisation offices to see the number of single-product (or more correctly, single-patent) companies seeking money for a part-time CEO or to write a COMET application. Why don't we collaborate and cooperate more?

Commercialisation would be far more successful within the confines of an existing company that has already found distribution channels for its product, established its operational infrastructure, and has solved some of the capital and marketing issues.

These are the sorts of obstacles that will eventually doom many of the eager new start-ups, losing both egos and intellectual property in the process. At some point in the not-too-distant future, Australia will be better off with grants programs that encourage collaboration and industry consolidation and build scale through existing vehicles, rather than programs that drive the formation of new start-up companies that are created simply to provide a corporate structure amenable to manage additional downstream funding.

Starting with companies

What else can be done? The AIC is embarking on a new national pilot known as TechFast, funded by the Australian Department of Industry, Tourism, and Resources and several state governments. It turns the traditional model of commercialisation of publicly-funded research on its head. Rather than starting with the IP and pushing it to market, we are starting with small existing companies that already have some existing sales, and something of a track record in product and business development. After analysing their needs, we farm new IP for them from Australian universities and CRCs to extend or enhance their product line, thus accelerate their growth.

Through this process, by June 2006, the AIC will also have collected some valuable research on commercialisation in Australia and the innovation 'gap' that separates academic or research institutions from industry. So far, the difficult part has not been to find excited SMEs wanting to participate, but discovering what's available that can be commercialised from deep within research bodies. We fear that good IP management, which is the starting point of successful commercialisation, is only just beginning to be embraced by the academic community.

There are encouraging signs, which are exciting, even exuberant for the life sciences, only recently 'discovered' after decades in the background. So too was the late 1990s for IT and telecommunications, driven by Y2K mania and the convergence of media. There are lessons there that should be heeded by those in the life sciences. If biotechnology is indeed about commercialisation, then stronger strategic focus on managing IP, the pathways to market, and building greater scale through portfolios of IP, should be where we are looking to move.

Dr Rowan Gilmore is CEO of the Australian Institute for Commercialisation.