METODOLOGÍA Momento de cuña.

The two principle routes for commercialising publicly funded research are to license the IP to an existing company in exchange of royalties or set up a spin-off company and take an equity stake. Universities may choose either mechanism, dependent on the opportunities and their institutional policies. Licensing the IP to an existing company in the target industry is relatively simple and can be executed reasonably fast. The risks

and resource requirements associated with licensing are much lower than in forming spin-offs. However, spin-off is often the mechanism of choice where a market does not presently exist for the product or service involved, or when the IP may have the potential to generate larger financial returns to the research institution (Rogers, Yin, & Hoffmann, 2000; Siegel, Waldman, Atwater, & Link, 2004).

Licensing has traditionally been the most popular mechanism for promoting research commercialisation. A licensing agreement provides a company with the legal right to use a university’s invention for further commercial development. In return, the university receives revenue in the form of upfront fees at the time of closing the deal, and annual, ongoing royalty payments that are contingent upon the commercial success of the technology in the market (Siegel et al., 2003a).

One of the strengths associated with licensing is that the university can control to whom to license the technology. A non-exclusive licence is desirable if the university invention has broad applications and can be used in multiple industries. On the other hand, when the invention requires significant private investment to reach the market, the university may consider granting an exclusive licence. This is especially the case in drug discovery (Lowe & Ziedonis, 2006). Without an exclusive licence to protect the potential target from competition, a biopharmaceutical company is often unwilling to take the high risk and invest the time and hundreds of millions of dollars in development and clinical testing that are needed to bring a new drug to market (Jensen & Thursby, 2001).

The downside associated with licensing is that royalties can only be earned if a licensee has successfully turned a university invention into a marketable product. Given the uncertain nature of university technology, the probability of taking it to market is often very low (Jensen & Thursby, 2001). Along the way, the licensee may dramatically improve upon the licensed technology before developing it into a new product (Levin,

Klevorick, Nelson, & Winter, 1987). If the original university patent becomes less relevant to the final product, the licensee may not need to pay royalties to the university. Even if the licensee does pay royalties, the time it takes a university from signing a licensing agreement to obtaining financial returns can be rather long. For biomedical inventions that need Food and Drug Administration (FDA) approval, 8 to 12 years of development is not unusual.

Until recently, many Australian universities have been focused on the spin-off route. In a study of the role of spin-off companies as a commercialisation channel for public research, Yecken and Gillin (2002) reported that the rate of spin-off establishment has increased since 1995 (Figure 4.10). Between 1998 and 2000, 78 direct research spin- offs4were established by public sector research agencies. Support for use of spin-offs as a commercialisation route was particularly strong for large and medium research universities. There are a number of reasons behind favouring the spin-off route.

First of all, creating a spin-off is perceived to offer higher overall financial return than licensing to an established company (Thorburn, 2000a). Holding equity of a spin-off provides a university with options or financial claims on the company’s future income streams. The attractiveness of equity is that the university can capture value from the spin-off, even if the licensed technology fails to be taken to the market. This is because the value of the equity is linked to the overall success of the spin-off, not to the success of particular IP. Spin-offs often go public long before they have introduced products into the market. By cashing out equity holding in a spin-off, the university can receive a financial return on its technology within a few years (Feldman, Feller, Bercovitz, & Burton, 2002).

4_{Direct research spin-offs are companies which have been created in order to commercialise IP}

arising out a research institution where IP is licensed, usually through a patent, from the research institution to the new firm to form the founding IP of the firm (Yencken & Gillin, 2002, p. 10).

1995

1996

1997

1998

1999

2000

0

10

20

30

40

Year

N

u

m

b

e

r

o

f

d

ir

e

c

t

r

e

se

a

r

c

h

s

p

in

-o

ff

s

Figure 4.10 Direct spin-offs established by public research institutions. Source: data for the plot are obtained from Yencken and Gillin (2002).

Secondly, establishing a spin-off can enhance the commercialisation of university inventions that would otherwise go undeveloped because they are too uncertain for established companies to pursue. In a survey of industry licensing executives, Thursby and Thursby (2000) found that one of the most important reasons why established companies do not license IP from universities is the early stage of development of the inventions. When existing companies do license university inventions, they tend to license technology that is at a later stage of development (Thursby, Jensen, & Thursby, 2001). Matkin (1990) reported that the most common reason for university researchers founding their spinoffs was that existing companies would not license and develop their inventions, and they wanted their technology to be commercialised.

Another reason why setting up a spin-off is considered to be more attractive than licensing is that it can enhance economic development, not only through producing innovative products, but also through job creation particularly for highly educated people. According to the estimation made by the Allen Consulting Group (2003),

in 2002, the total economic impacts associated with commercialisation of publicly funded R&D through spin-offs included 10,000 jobs.

Despite the advantages associated with the spin-off mechanism, forming a company often requires substantial resources from the parent research institution. To support a spin-off, the university needs to acquire skills in a number of areas where it may have limited experience, such as raising capital, identifying and enlisting commercial board members and managers, and valuing assets.

4.5

Summary

This chapter explained some of the main factors which have contributed to Australian universities’ involvement in research commercialisation and described the TTO-based structural arrangements that have been implemented.

To encourage universities to commercialise their research findings, the Australian government has introduced a number of policies and support schemes, particularly in the biotechnology sector. The aims of these government initiatives are to strengthen university-industry linkage and to facilitate the transfer of scientific discoveries to industry. By allowing universities to own patents resulting from government sponsored research, the National Principles of Intellectual Property Management for Publicly Funded Research provides strong incentives for universities to participate in research commercialisation. Although this patent policy does not mandate IP-based technology transfer as a university practice, most universities have instituted formal policies and systems to manage and commercialise the IP resulting from publicly funded research.

After understanding the historical background and the general context of the research commercialisation phenomenon in Australia, we are now in a good position to answer the two guiding research questions formulated at the beginning of this study (p. 6).

Chapter 5

Divergent Views on Research Commercialisation

Give no decision till both sides thou’st heard.

Phocylides (Greek poet, 6th century B.C.)

5.1

Introduction

This chapter addresses the first research question of this study and explores how research commercialisation is perceived from the perspectives of Australian academic scientists, technology transfer managers, and entrepreneurs/business managers.

Although research commercialisation has been defined as the transfer a new scientific discovery from academia to industry in the thesis, this definition does not cover all possible meanings that have been attached to the term. I provided a working definition at the beginning of my thesis to set up the boundary for my research and to minimise ambiguity.

My interviews1 with various participants revealed that in practice there are multiple definitions of research commercialisation. The term has often been used loosely, referring to different matters by different participants. The specific meaning which they attach to the term shapes their motivation, objectives and patterns of behaviours.

At the individual participant level, most of the respondents are not fully aware of the existence of multiple meanings associated with research commercialisation. They

often assume that other participants have the same understanding, and therefore do not see the need to specify their perspective. However, without stating the specific meaning in which they refer to can lead to many problems in the commercialisation process.