A Global Strategy for Innovation Commercialization

December 2011 / January 2012 By: Sudeep Basu and Pratap Khanwilkar Volume 9 Number 6

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Dr. Sudeep Basu (sudeep.basu@frost.com) is global practice leader at Frost & Sullivan and Dr. Pratap Khanwilkar (prk38@mail.pitt.edu) is a visiting professor, Coulter Program director and executive-in-residence, University of Pittsburgh.

Global strategies for innovation commercialization have been pursued with success previously in fields such as high-energy physics, weather prediction, aircraft and spacecraft development and space exploration. Today’s global grand challenges are to provide adequate and affordable energy and healthcare to an ever-burgeoning human population that has recently hit the seven billion mark. There could not be a more opportune time for early stage global collaboration in innovation commercialization to tackle challenges in areas like clean energy and medicine. We suggest some methods by which such collaboration partners can be identified and also highlight bottom-up and top-down approaches that may promote successful early collaborations.

Environmental Constraints
The United States has been a recognized and accepted world leader in innovation commercialization, though some question the country’s ability to maintain its leadership. In the last decade, the rise of emerging economies and a long-drawn economic slowdown and resultant resource crunch across most mature economies have changed the competitive landscape in the flat world. The impact has been dramatic on both clean energy and medicine. Pharma-biotech companies have suffered the consequences of patent expirations and rise of generics, coupled with increasing R&D costs. Early stage life science startups too have been adversely affected by decreasing venture money.

In contrast to medicine, clean energy is a relative newcomer to the global agenda. In the United States, the creation of the Advanced Research Projects Agency-Energy (ARPA-E) and the initial strides made by the organization under the leadership of Arun Majumdar are now threatened by resource prioritization challenges. When compared to investments being made in this area by other nations, the current ARPA-E appropriation begins to look disappointing.   

While universities and federal labs are not the only entities immune to these funding constraints, the environment today increases the burden on the universities and other federally funded labs to further develop and commercialize innovation focused on these global problems.

What then is a potential solution to this challenge? The answer may emerge by taking a closer look at the connected and flattened world, which exhibits significant differences in market competencies in technology development and deployment. A representative case in point from the energy sector is geothermal energy, which is predicted to grow at a compound annual growth rate of 8.9 percent. The current installed capacity for geothermal energy in the U.S. is about 3,000 megawatts or 30 percent of the global installed capacity. Interestingly, Asia Pacific, led by Indonesia and the Philippines, is at the forefront with 40 percent of the world’s installed base. This is in stark contrast to the origins of technology development and related intellectual property landscape in geothermal energy technologies.
An in-depth excavation of such global opportunities across technologies and markets can significantly increase growth potential by identifying specific development and deployment targets. Therein is a huge opportunity for U.S.-based companies, government labs and universities engaged in the development of select technologies in areas such as clean energy and medicine to develop partnerships with appropriate target economies to create jobs at home and leverage the growth of these emerging markets.

Potential partners emerge in areas where funding is not as significant a challenge as are other factors, like availability of trained personnel, R&D infrastructure and technology management and development expertise.

At the BIO International Convention 2011 in Washington, D.C., a delegation of industry leaders from Poland were seeking partners. Poland is unique as it has the rare privilege of being a positive growth economy in the EU during the recent global slowdown. Among the attendees was the EIT+ institute based in Wroclaw. Generously funded, EIT+ has a focus on biotechnology, nanotechnology, energy technologies and information and communication technologies. EIT+ is focusing on developing global partnerships to augment its internal R&D and technology commercialization capabilities. This presents a great partnering opportunity for U.S. universities with an entrepreneurial ecosystem to look for synergies with EIT+ and similar institutions globally. Approaches could range from co-funding for co-development and commercialization of specific technologies, exchange of expertise and personnel, training programs and cross-utilization of R&D infrastructure. While specific IP sharing mechanisms must be worked out, joint development of technologies could enable easier, faster and larger market access. As EIT+ scouts globally for partners, a few U.S. universities and institutions have taken the lead and are in early discussions.

Think Global, Act Local
The example of EIT+ suggests a bottom-up implementation approach in which U.S. institutions leverage their unique human infrastructure and IP assets to develop productive global innovation commercialization collaborations. Investigator-by-investigator, such collaborations, if successful, will only increase the eventual organizational transformation and predisposition for such partnerships.

This bottom-up approach can be complemented by a top-down approach being taken by the National Science Foundation to promote global co-development partnerships. One such NSF program is a third-generation Engineering Research Center, which is developing revolutionary metallic biomaterials, led by North Carolina A&T, a historically black institution. The University of Pittsburgh and the University of Cincinnati are other institutional co-leaders of this consortium.

In this program, NSF has guided the core consortium to partner with international clinical and academic institutions. The Hannover Medical College in Germany is a core partner, as is the Indian Institute of Technology of Chennai.  While co-development and co-education are not easy, it is definitely enhanced by today’s communication and networking technologies. However, the critical success factor, as always, remains the collaborative interaction between, and inclination and openness of, participating individuals. Such collaboration has been taking place for three-plus years now.  Early results are promising, with the development of devices and technologies by this team, which, if restricted only to U.S. development partners, would have resulted in much greater resource expenses and a less competitive position and output. To improve the potential for program success, each medical device project’s technical leadership funded by the program is complemented by a practicing clinical champion as well as by a business expert.

A similar approach is advocated by the Wallace H. Coulter Foundation through its Translational Research Partners Program that funds concurrent innovation and commercialization at leading biomedical engineering programs in the United States. The University of Pittsburgh has been recently funded, along with five other universities, to implement this five-year program: promising projects that are the result of active collaboration among a clinician, bioengineer and commercialization manager are annually funded to achieve translational milestones of licensing, and venture and/or angel funding via spin-off companies. The previous nine schools funded by the first phase of this focused program have raised $300 million of follow-on funding with $40 million of foundation support, a capital multiplier of 7.5. These results have earned the praise of, and recognition by, the White House.

Such innovative “local” approaches are increasing the number of early stage global innovation commercialization partnerships and the capacity and capability of the U.S. R&D ecosystem to continue to be attractive as “global” partners.

Global challenges facing today’s hyper-connected and resource-constrained world may be best served with solutions developed by early stage global collaborators that use the strengths and complement the weaknesses of each partner.