NZBio09 Part 2

Strategies for Commercialisation in a Changing World

Paul Adams of Everedge IP

  • IP protection = patents = patent attorneys – the view of most people.
  • The mostly commonly used IP protection tools are free e.g. ©, ™.
  • Each has its own weaknesses and strengths – an integrated approach is the strongest.
  • IPC (IP commercialisation) – need to do something beyond IP protection to generate value. Raises the question will I make money from my investment in IP? P&G in 2002 stated that 92% of its patents had no business value.
  • Every $1 of R&D expense requires $7-15 for IPC.
  • Three things to IPC – Capability (makes up 75%) , IP and Capital.

NZ Lacks the capability:

Experienced managers who have done large deals, in international markets, multiple times in San Francisco/ Boston. The net result is you end up investing money into R&D to a team lacking commercialisation experience which does not work.

Solution:

  • Recognize that you can’t commercialise everything.
  • Actively select the best projects – those with great science, a large market that is growing and has commercialisation potential.
  • Concentrate all available resources on star projects.
  • Bring in outside resources to increase the success probability and learn from the process for the next project.

Dorenda Britten of Design Industry Innovation Strategy

Used the Britten motorcycle story as an example of extreme blue skies research which didn’t engage in the business side of the company. The biz and tech people did not engage each other.

‘ it is not a right to practice blue skies research, it has to be earned’.

Roger branch of Kinross Partners

VCs are still interested in biotech because it is a longer life investment.

Science is the search for truth whereas business is the search for profit – bound to have friction between the two because of this.

Mega Trend in the biospace = market fragmentation and there is a blur between produce and service.

This is the traditional commercialisaiton model.

imageBioBiz Models

  • RIPCO – outsource product development and commercialisation
  • FIPCO – fully integrated
  • NRDO – no research – develop and commercialise only
  • Tech Platform
  • Joint Venture

Investors don’t care about commercialization – they care about exits.

This means you need to start with the ‘end’ (building a business to sell).

  1. Who are the buyers of my business?
  2. What do they gain?
    1. New product for existing customers
    2. New customers for existing product
    3. New product to block competition
  3. What is biz worth to the buyer? Versus time to build own, for leveragable gain.
  4. What milestones and capital are needed to achieve exit?

To achieve exit you have to survive long enough under these conditions:

  • Get to + cash flow immediately
  • Sort your biz model out – be clean and concise
  • Get in front of customers
  • Hard to get another round of investment
  • Cuts are a must
  • Aim for the must have product
  • Series B and C are smaller in size
  • Cash is king
  • Survive to 2011

Partnering is becoming more favourable over M/A – want to preserve the in built entrepreneurial culture, creativity and nimbleness of the organisation.

Need to have a good board (with networks) and leadership team – get people who have done it before, want leaders who are 3 years down the track.

____________________________

Graeme @ graemefielder.com

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