Industry needs dominate debate at RE$EARCH MONEY Conference on commercialization

Push versus pull

Technology pull trumps technology push — but both are essential for successful commercialization. That message from National Science Advisor Dr Arthur Carty came as close as any during last week’s RE$EARCH MONEY conference to crystalizing debate on what is required to increase the return on investments that governments have made in Canada’s science and technology base.

Carty was just one of a host of prominent experts to address the more than 150 delegates that assembled in Ottawa November 9. Also speaking were, Mike Lazaridis, president & co-CEO of Research In Motion Ltd (see page 6), Laura Kilcrease, managing director of Austin TX-based Triton Ventures and panelists from industry, government and academia.

Carty outlined the achievements Canada has made to date but focussed more on what is required moving forward. He predicted that the next federal Budget would likely contain measures supporting commercialization but stressed that the need to invest strategically “in areas of discovery and activities that will deliver real value” was paramount, as is the need to maintain and build on existing cross-sectoral partnerships.

“I have always been of the opinion that smart money follows good ideas and good people,” said Carty. “When it comes to markets and customers, those who compete in these markets are those who should be making those decisions.”

The importance of strategic investment decisions generated a wide range of views, particularly when the technology involved emanated from a post-secondary institution. Members of the conference’s investment panel agreed that the challenge of successfully developing and commercializing university-based knowledge is complex and difficult, compounded by Canada’s relatively weak receptor capacity and the reluctance of the venture capital industry to take a longer view on investment decisions. The result is too many firms with too few products in development seeking scarce investment dollars.

BIRTH CONTROL PROBLEM

“We have a birth control problem in Canada in terms of the number of companies we create. We don’t have enough to fund them. There are 395 biotechnology companies in Canada and we can’t finance them all. We’d be lucky to finance 50 or 60. If we did that, there would be a biomedical revolution,” says Dr James Murray, senior advisor to WestLink Innovation Network. “Building a large business is like a large construction project. You need a wide set of skills. Founders have to recognize their limitations and pave the way for people with different kinds of skills.”

Catherine Eckenswiller, an associate with the Smart and Biggar law firm, said the problem of securing sufficient and appropriate investment has grown in recent years as venture capital seeks investment prospects with shorter routes to market and products that are less regulated. And even when firms receive financial backing, how that money is spent will ultimately determine the success of the venture.

“You must allocate funds properly to build your IP (intellectual property) portfolio. You need a strong sense of the target market,” says Eckenswiller. “Companies need a strong sense of their target market and develop an appropriate budget. Don’t just patent widely and then drop some later.”

For universities and colleges, there’s a growing clarity surrounding their respective roles in the commercialization process. While there’s consensus that university-industry interaction is critical, it’s equally important — as noted by Dr Lorne Babiuk, director of the Vaccine and Infectious Disease Organization — that universities are not turned into contract research organizations. The university panel concurred that there’s appropriate time for hand-off to industry and that it’s essential that collaborative projects are focussed on industry needs.

“The notion of two solitudes is an absolute myth,” says Dr Howard Alper, the Univ of Ottawa’s vice rector. “My graduate students work in industry and companies come on site for brainstorming sessions. It’s a partnership, a team, a two-way street.”

From industry’s perspective, the generation of IP is not nearly as important as the training of skilled personnel or the need to strike a common direction. At Pratt & Whitney Canada, a rigorous process has been developed to determine which party is responsible for certain aspects of a project. Called the technology readiness level, it ranks R&D projects on a scale of one to nine, from basic targeted research to a final product. Research ranked between one and four is conducted by universities. The middle range is conducted by industrially focused organizations like the National Research Council, while the upper range is performed by the company.

“This system serves Pratt and Whitney extremely well,” says Dr Hany Moustapha, the company’s principal fellow and manager of technology and collaboration programs.

Babiuk added that when transferring technology from a university to industry, it’s important to migrate the people with the knowledge and expertise to speed up the commercialization process.

ROLE OF GOVERNMENT

The role of government also came under scrutiny, but opinion was divided on the appropriate level of intervention required. Some, like Toronto Star columnist David Crane, argued that mechanisms such as the tax system, flow through shares and higher rates of depreciation for companies that use advanced technologies would be effective.

There’s also the need to maximize the return on investments government have made in R&D. Most agreed that the number of programs was excessive and that action was required to improve the system.

“We need to create a place where the entrepreneur can go to navigate the madness, the cacophony that is out there,” says David Fransen, assistant DM of Industry Canada’s policy sector. “We need to use technology to provide a single window to all services. This could eventually lead to a rationalization of programs and support mechanisms.”

Another role for government was described by Dr Gilbert Drouin, president of Valorisation Recherche-Québec (VRQ). He outlined the function of the government-funded VRQ in valorising or making technologies and companies market-ready, and creating industry-driven organizations responsible for groupings of Quebec-based institutions.

“So far, 40 companies have been created and have leveraged money two-to-one. It’s a beginning, a useful tool to commercialize research results,” said Drouin. “It’s a combination of push and pull. Often we move corporations out of universities too early. You need the professors to drive the technology effectively.”

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