Transport affects every one of us every day, even if we stay at home. Better (more convenient, faster/more efficient, more reliable, more comfortable…) transport systems improve lives, communities and industries, but there are many challenges to overcome to make it happen.
On one hand we have disruption and constant evolution in passenger transport. With the stream of new entrants into this space comes a raft of questions for traditional transport service providers, particularly state and local governments.
On the other hand we have the fragmented, low-margin world of freight, which desperately needs to collaborate to improve, but is subject to significant commercial sensitivities that impede willingness to go down that path.
Ten years is a necessary amount of time to conduct significant R&D, but also a challenging timeframe in a fast-changing transport environment.
We are pleased to be delivering some things years before we anticipated — in particular, the momentum that has built around Mobility as a Service (MaaS) — but we can also reference the growth in number and capability of journey-planning apps for mobile phones. Our research into MaaS has already expanded from an initial investigation into consumer attitudes, to a real-world trial happening in Sydney delivering valuable insights.
It is research that pushes us closer to fully integrated transport services in our increasingly crowded cities, enabling people to reduce their dependence on single-occupant vehicles.
Some research areas remain worthy of ongoing investigation and trial, but are proving to be further off than previously anticipated, such as automated vehicles. They were once a frenzy of media commentary and speculation, yet the complexities of getting a computer to mimic a human driver and the challenge of winning community acceptance of this technology are now much clearer.
Queensland is particularly active in Australia’s research into the benefits and challenges of vehicle connectivity and the safety and efficacy of highly automated vehicles.
There is also some movement in collaboration to improve freight, albeit of a much less disruptive nature. Last year, we completed the well-received Freight Data Requirements Study on behalf of the Federal Department of Infrastructure to assist them with their development of the National Freight and Supply Chain Strategy. The department is now drawing on that study to inform their development of the National Freight Data Hub. We believe supply chains will greatly benefit from improved visibility, and this is supported by a suite of projects — currently information — that will devise practical and realistic ways to achieve this.
Another way our partners are looking to deliver better transport is by being more holistic. Integration of our transport and land planning is not a new concept, but it is one that deserves renewed attention for its potential to achieve simultaneously favourable social, environmental and economic outcomes.
There is already much diversity in the 39 projects in the iMOVE portfolio, and every day brings new opportunities.
Trends are emerging in what we have learnt and how we can build on this for future activities.
Transport needs to continue widening its collaborations and embrace national coordination to ensure the benefits are shared as we all progress towards a better transport future — whether we choose to leave the house or not!
Leaders from both academia and business agree that the best way to foster innovation in science and technology is by getting researchers, business and startups working together.
We’ve prepared this two-part Relationship Guide to canvass the issues and promote the assistance and support available to researchers who want to interact more closely with industry. Read Part 1 here.
Businesses look to universities and research institutes for new knowledge that can help them scale up and innovate their products and services. By accessing the latest research findings, businesses of all kinds can improve their efficiency and profit. At the same time, researchers can create sustainable jobs, novel solutions and global pathways for their knowledge. While there’s robust support available to facilitate research-business relationships, it can be hard for a business to find the knowledge they need. Cultural differences and misunderstandings can also get in the way.
Get out of your bubble!
The best way for researchers to find new opportunities is by networking, knocking on doors and telling others about their discoveries. There will be no collaborative opportunities for those that can’t be found and the new commercial engagement KPIs attached to federal research funding provide strong incentives for all academic researchers to widely communicate the value and potential of their work.
It’s all in the timing
Academics might resist the faster timeframes imposed by businesses seeking knowledge input in order to take a product to market, but unless researchers are prepared to respond to commercial timeframes and develop a sense of urgency, there’s a chance that opportunities will pass them by. No matter how closely a research project aligns with a commercial product, the early bird will get the worm.
Universities are increasingly supporting students and academics to acquire the skills they need to explore commercial opportunities, with assistance provided by way of incubators, accelerators, short courses and government support. Learn more about some of the initiatives that help facilitate and accelerate research-business partnerships: Tech Connect, AMSI Intern, CSIRO’s ON, Cicada Innovations and Data 61’s Ribit and Expert Connect platforms.
Don’t rely on government support
While a broad range of government support is available to help researchers get started, Appen founder Dr Julie Vonwiller warns that to succeed, a product must be able to stand alone on its own merit in a marketplace without the need for ongoing subsidies.
Publish or perish?
There’s often a tension between publishing and protecting knowledge with IP, but patent attorney Dr Gavin Recchia says it’s all about getting the timing right.
It’s a team sport
Business owners Dr Alan Taylor and Dr Julie Vonwiller say the entrepreneurial journey requires a vast array of skills and talents and innovation all the way along as a business evolves.
Leaders from both academia and business agree that the best way to foster innovation in science and technology is by getting researchers, business and startups working together.
We’ve prepared this two-part Relationship Guide to canvass the issues and promote the assistance and support available to researchers who want to interact more closely with industry.
As part of the 2017 Spark Festival, Inspiring Australia NSW hosted a forum to explore what it would take to create more value from publicly funded knowledge.
Participants discussed what needs to change in universities to better prepare researchers for the future.
The 2017 Global Innovation Index ranks Australia 23rd in the world, behind China, New Zealand, Hong Kong and Singapore. While Australia is placed 10th in terms of “knowledge workers” it scores a low 52nd for innovation linkages and 48th for knowledge absorption. This is despite our ranking in the top 10 worldwide for innovation input – infrastructure, human capital, market sophistication and education.
So what’s not working in our research-business relationships and how can we fix it?
Changing the culture
With the next generation of STEM researchers often being trained by academics who lack the expertise, training and knowledge to commercialise research knowledge, there’s a pressing need for universities to think more innovatively about education and industry engagement. Even when an opportunity does not exactly align with a researcher’s particular interests, there may still be collaborative partnerships to explore.
Moving between academia and industry
When microbiologist Dr Dharmica Mistry left academia to enter industry, she felt like she was jumping to the dark side and abandoning a research career forever. The founder and Chief Scientist at BCAL Diagnostics, a biotech company commercialising a blood test for breast cancer screening, would like academics to be able to move more freely between the academic and commercial worlds.
Communicating is not a hobby
Dr Noushin Nasiri develops novel sensors that can detect disease in human breath. When the post doctorate researcher began talking publicly about her research and its application as an affordable, nanoscale diagnostic device, four industry partners made contact to explore commercial opportunities. But communicating research, she says, is still seen as a hobby.
A shared vision
Professor Veena Sahajwalla says that in order to develop commercialisation outcomes, it is critical for researchers to be able to both articulate the value and potential application of their work and also to understand the needs of the industry partner and their vision for the future.
Business can access research knowledge
AusIndustry Innovation Facilitator Gary Colquhoun helps Australian businesses identify opportunities for research collaboration to address their knowledge gaps in all kinds of ways, driving business innovation and creating a positive impact on the economy.
Shelley Copsey leads New Ventures and Commercialisation at Data61 and is working with research startups to help them develop the sustainability and longevity they need to build a product pipeline. She says that to successfully commercialise knowledge, researchers must develop the skills to build solid relationships with multiple research organisations as well as in-house R&D capability.
– Jackie Randles
Click here for Research and industry – A relationships guide (Part 2).
Featured image: Australian Minister for Industry, Innovation and Science, the Hon Arthur Sinodinos, addresses the National Press Club at Science meets Parliament 2017
The Minister for Industry, Innovation and Science, the Hon Arthur Sinodinas, highlighted collaboration and ensuring all Australians understood the benefits of science as key areas of focus for the Government’s science ‘vision’ in an address to the National Press Club.
The Hon Sinodinas is the fourth Minister for Science in four years. This was his inaugural address to what Australia’s Chief Scientist Alan Finkel termed the ‘network of nerds’, a gathering of over 200 of Australia’s most senior scientists at Science meets Parliament.
Sinodinas said innovation has become a buzzword that “excites socially mobile, inner-city types; but for other Australians, creates anxiety – about job losses and insecurity.”
However Australians need to be prepared for disruption as “the new constant”, he warned.
“We need to manage the transition from the resources boom to more balanced, broad-based growth.
“This is against the backdrop of heightened uncertainty and slower economic growth, and a yearning for more protectionist measures.”
Sinodinas went on to quote Atlassian co-founder and highly successful tech entrepreneur Mike Canon-Brookes, who recently questioned if the government was “dodging the question of job losses as a result of innovative change.”
“The Government has started a conversation with the Australian people to address just that question. We’re about helping your business to respond to disruption and stay viable in the future. We want to create a culture of innovation across the board.”
Australia’s climate science and energy future
Overall, the mood at Science meets Parliament, which brings 200 science, technology, engineering and maths professionals and researchers to Canberra to pitch their programs to politicians – about a third of whom volunteer their time – was positive and researchers were happy to be heard.
“Science meets Parliament is a great event. It is about recognising the contribution of scientists. Scientists and politicians should be natural communicators,” said Sinodinas.
He also addressed criticisms of the Government’s commitment to climate change science at the National Press Club address.
“We haven’t turn our back on climate science, we made sure it is properly looked after and protected and that will provide its own insight into climate science information. We are also trying to deal with this issue at the same time as we deal with the affordability and reliability of energy.”
Science at the forefront of the next election
Last night both the Minister and Opposition Leader the Hon Bill Shorten presented their vision of science at a gala dinner. Sinodinas extolled Australia’s national research infrastructure, including the Australian Synchrotron and the Square Kilometre Array, a 3000-dish radio antennae that will offer an unique glimpse into the universe’s early history. He also emphasised we need to “nail collaboration”.
“As a country, if we want to have control over our economic destiny, we want to have world class companies operating out of Australia. To do that we need to nail collaboration.
“Finding the money for the next stage of the research infrastructure is a challenge.”
Shorten also highlighted collaboration as an essential goal, and reiterated the Opposition’s goal to invest 3% of GDP in science R&D by 2030.
“Science research and innovation are not niche areas. They should be frontline for all of us.
“The issues that scientists deal with are political and there needs to be this engagement,” said Shorten.
“Science research and innovation are economic, environmental and practical issues that are vital to adapting to technological change and will allow us to compete in the Asian market. It shapes the way that we learn and teach.”
He also emphasized the need for job security for postgraduate researchers, a sentiment widely echoed by scientists attending the Science meets Parliament event.
“For all of those postdoc researchers who spend years, we owe you certainty in terms of support,” said Shorten.
“We can’t complain about fake news when the facts don’t suit the stories. We see you as essential to the future. Science will be at the forefront of the next election.”
Australia produces great research. But despite this, we somehow still manage to rank last in the OECD for collaboration between research and business.
It’s a disconnect that is well documented: a 2014 Department of Education report noted a low proportion of researchers working in business and academic industry research publications. A report by the Australian Academy of Technology and Engineering revealed a distinct lack of university research collaboration with industry and other end users. And the recently released Innovation and Science Australia report declared Australian industry unable to commercialise research.
Though the naysayers may abound, all hope is certainly not lost. There are steps that Australian research institutions and the startups that represent the future of business can take to overcome the disconnect and engage in effective research collaboration.
1. Establish a direct link between research institutions and startups
Working in research and industry silos will always present a challenge to collaboration. So, the first step to bridging the research collaboration gap is to create a direct line of access between universities and startups.
The easiest way to reach the largest number of startups is to create direct lines to innovation hubs, such as technology-focused incubators that work with startups and scale-ups that could benefit from accessing the research capabilities that are nurtured within Australian universities.
This could take the form of a mutually-beneficial partnership, such as an industry secondment program for PhD students. Students would benefit from industry experience, while industry gains access to cutting-edge research capabilities and a potential talent pool for recruitment.
Whatever the partnership might look like in practice, by finding mutually beneficial solutions and cementing them within a concrete program, collaboration will likely be a natural outcome.
2. Understand and account for your differences
In any collaboration, working together requires working around the limitations of the other party.
As an example, the open nature of academic science can at times conflict with industry needs to protect the technologies they use. Academic research often moves more slowly due to its long-term focus, compared to industrial R&D that is driven by commercial deadlines and time-sensitive product development.
Understanding these differences upfront will allow collaborative measures and hedges to be set in place when forming a research collaboration to ensure neither party’s prerogatives are being infringed upon.
3. Identify and work towards common ground in your research collaboration
Once links have been created and differences understood and catered for, common ground can be identified, interests aligned and goals established.
Research could listen to the pain points of industry and formulate research that addresses the pain points, rather than trying to pitch a predefined project.
Conversely, industry might consider involving university research throughout the lifecycle of a project, rather than in an ad hoc fashion, to create a long-term culture of interdisciplinary collaboration and give greater meaning to research projects.
Regular interaction in the form of formal and informal meetings will ensure the research collaboration stays on track to meeting the objectives of both parties – particularly as they are likely to evolve.
By implementing all the above, our startups may have some chance of tapping into the brains of our prized research institutions to achieve sustainable and accelerated growth in the future.
Featured image above: Industry engagement expert Natalie Chapman and the Secondary Ion Mass Spectrometer (SIMS) at ANSTO
The Australian Government is making changes to universities’ funding that will compel researchers to cross the border from Academia into Industryland, to meet and trade with the natives, under the banner of ‘industry engagement’. This is inspiring for some researchers, but nerve-wracking for others.
I empathise with those who feel nervous, because when I was a new researcher, I was sent on a commercialisation mission into Industryland.
Fifteen years ago, I started in a role at ANSTO where I was tasked with operating a SIMS surface science instrument (Secondary Ion Mass Spectrometer) on behalf of clients (researchers from around Australia) and conducting research, as well as being expected to create a spin-off business by finding new clients from research and industry.
This was an ambitious and daunting project. Not only did I have to learn how to operate an extremely complex piece of scientific equipment (it took me six months to achieve competency), but I also had to provide a highly reliable service to existing clients, while finding enough new customers to support the annual operating expenditure.
I had no background in semiconductors (the field of R&D for which the instrument was ideally suited), no knowledge of which research groups or companies (Australian or international) were strong in this field, and no clue how to create a commercial relationship with them. It was a tad overwhelming.
But my scientific training had at least equipped me with problem solving skills, so I took a deep breath and mapped a logical sequence of steps to take to make the task manageable.
Seven key steps towards industry engagement
1. Use the Internet to identify key locals and learn their language
First, I found out how semiconductors worked. Next, I found relevant conferences in Australia and Singapore (the semiconductor capital of South-East Asia). Before attending the conferences, I searched the programs for both research and industry contacts and analysed their use of semiconductors, to make a ‘hit list’ of useful people to connect with.
2. Attend conferencesand network as if your funding depends on it
I attended semiconductor and advanced materials workshops and conferences to learn more about these fields and to meet people. I asked lots of questions of everyone I met and explained the capabilities of ANSTO’s instrument to them.
3. Create some industry friendly marketing material
I wrote some simple information which addressed the problems experienced by potential customers and explained how the SIMS could help them. It’s a long walk from authoring a scientific paper to wordsmithing a marketing flier, so if you’re not up for it, use a professional writer. These days everything is visual so if you can use photos, video or animation to help describe complex concepts you’ll have better engagement.
4. Make some cold calls to relevant locals and ask for meetings
I found a semiconductor company (the only one in Australia) located in Homebush and arranged to meet with them. Then I discovered a solar cell manufacturer two doors down and introduced myself to them as well. I contacted wafer fabrication manufacturers in Singapore to learn about that market, what their needs were and how we could assist them.
5. Follow up meetings by sending your marketing materials and invite them to free trial the service
Using the SIMS instrument, I ran free test samples for potential customers so they could see the type of information it was possible to garner from their own samples and lowered the barrier to them buying.
6. Collaborate and cross-promote
I partnered my project with other ANSTO capabilities and experts to offer a packaged solution to clients. This was better value and of interest to clients rather than a small, isolated piece of analysis, which didn’t solve their problem or provide them with advice on how to fix it.
7. Approach the competition and propose a mutually beneficial relationship
After a bit of background research on the competition I approached the largest competitor Evans Analytical Labs (a US based company), to discuss the possibility of partnering with them as their South-east Asian hub, providing services to Singapore and the region.
Did I succeed in establishing an ANSTO colony in Industryland?
Sort of. I certainly found new customers for ANSTO. But the proposed spin-off company was not viable, because the Australian market was simply too small, and to succeed in South-east Asia, we needed a back-up instrument to offer 100% reliable service.
Nonetheless, I returned from my expedition with a new mindset, a new industry engagement skill set and new confidence in my ability to engage with the inhabitants of Industryland, while remaining true to my values and my first love, Science.
‘It’s not me, it’s you’, is the message from universities to industry in terms of success in partnering and commercialisation of research and development.
Dr Leanna Read, Chief Scientist of South Australia and the founder and former CEO of TGR BioSciences, says universities are unfairly “bagged” for not pulling their weight in collaborating with industry and in fostering the development of research commercialisation partnerships.
“Our surveys have shown there is a strong interest in commercialisation and a willingness [in university research] to engage with industry,” she told the Australian Financial Review’s Innovation Summit in Sydney today.
“One of the issues is the nature of our industry sector. We are dominated by small to medium enterprises and we tend to be low in the level of innovation happening at this level. We have a problem here where research has all the will in the world to knock on doors of industry – the trouble is they’re not going to get a terribly good reception,” she says.
“We need to grow an innovative culture in these companies.”
TGR BioSciences focuses on drug discovery assay technologies and applies its core skills in cell biology to the development of new biodetection technologies.
Universities willing to engage
Emeritus Professor Jim Piper AM, President of Science and Technology Australia, and previously from Macquarie University, says there is a “high awareness” in universities to “encourage commercialisation”.
“There are impediments, however.
“One of the issues is the silo-isation of research which has been aided and abetted by the funding mechanism of universities.”
Many people forget that the university system is a service industry driven by international reputation, Piper points out. International students choose universities based on their impact factor and international reputation, and Australian universities rely heavily on liquidity from international students.
Shifting to a focus towards research commercialisation-based funding, or key performance indicators based on partnership success, the so-called ‘partner or perish’ is a massive shift in this context, he says – but one that universities are willing to make.
“One thing you can say about university researchers is they really chase the money. If that is in collaboration, then that is where they will chase it.
“One of the issues with unis is that, in most cases, commercialisation officers don’t have critical mass and there are challenges.”
For example, there are challenges in sharing and applying intellectual property (IP), he says.
“At Macquarie University, students at the start are invited to assign their intellectual property rights to the university so the uni can negotiate on their part. Often [in other universities] students keep their IP and this can be very complicated,” he told the summit.
Practice makes perfect
The problem may lie in experience in negotiations, says Professor Ian Frazer AC, Chair of the Medical Research Future Fund and inventor of the cervical cancer vaccine.
“We probably aren’t experienced enough at this negotiation [between academia and industry],” says Frazer. “There are excellent examples of industry-uni partnerships working, but there needs to be a lot of talk to make this happen.
“We’ve got to change both sides of the equation, for industries and universities. For example, the health sector relies on unis to provide input to research. We need to ensure that there is engagement between health researchers and industry, but industry needs to realise that research is critical to what it does,” he says.
Dr Steve Jones, global head of research and development at Australian R&D spin off cancer company Sirtex – a medical device company providing a radioactive treatment for inoperable liver cancer – agrees that universities have “had a rough ride” to make dramatic changes to the way they incentivise research to promote collaboration and research commercialisation.
Sirtex has approached universities to work on research but found that it worked best when they had an identifiable problem to take to the researchers, he told Science Meets Business.
Unis have work to do too
Read acknowledges that universities also have work to do, with funding for projects traditionally focussed on research project grants rather than looking to the issues faced by customers, the business approach controversially emphasised by CSIRO CEO Dr Larry Marshall, who also spoke at the summit.
“We need more of a ‘what is the problem and how do I solve it’ approach – this is what Cooperative Research Centres do well and we need more of that kind of research,” says Read.
More pull less push towards research commercialisation
Chief Defence Scientist Dr Alex Zelinksy says any successful negotiation “needs to be win-win” for both university and industry.
“There is a push and a pull element. There is a pioneering spirit (do it yourself) rather than an entrepreneurial spirit in terms of business and commercialisation of research. We need everyone to come together.”
He agrees that one of the barrier is around intellectual property. “Access to IP needs to be on fair and commercial terms.”
The Australian National University and the University of Western Australia have become the first research institutions in Australasia to join IN-PART, a global university-industry collaboration platform.
Researchers at these universities will have access to a growing community of 2000+ R&D professionals from over 600 businesses in Europe, Oceania, the UK, and the USA, who use IN-PART to collaborate with universities in the commercialisation of academic research.
“The potential of the output from world leading research at Australian institutions is huge, but the limited industrial base means that it is essential we partner with corporate world leaders to realise that potential”, said Professor Michael Cardew-Hall, Pro Vice-Chancellor of Innovation at The Australian National University.
“The ANU has strong links with many partner research institutions worldwide and strategic partnerships with major corporations. However, developing new partnerships that are mutually beneficial is a key strategy for the University”.
The Australian National University (ANU) and the University of Western Australia (UWA) will join 70 universities from the UK, USA, Japan, and Europe — including Cambridge, Cornell, and King’s College London — who currently use IN-PART to publish innovation and expertise from academics who are actively looking to interact with industry.
“We’re very excited about being able to profile our projects to targeted people in relevant industries, and to show people that UWA and Australia are the home of some amazing innovations. Just as our researchers rely on collaborating locally and internationally, tech transfer offices need to look further afield for development partners with particular expertise and routes to market”, said Simon Handford, Associate Director of Innovation at the University of Western Australia.
“Hopefully, IN-PART can help us meet future R&D partners and give more projects the chance of being translated into something that can be put to use”.
Launched in January 2014, IN-PART has facilitated the first point of contact for a range of university-industry collaborations that include licensing deals, co-development projects with joint funding, academic secondments, and long-term research partnerships.
This information was first shared by IN-PART on 11 August 2016.
The Australian Government just announced that it will invest $22.6 million in new research funding for 11 CRC-Projects (CRC-Ps), with funding to start from July 2016. The Department of Industry, Innovation and Science received ninety-one applications in the first round for CRC-Ps, speaking volumes to the level of interest by business as well as the highly competitive nature of the bid process.
CRC-Ps were developed by the government in response to the Miles Review handed down last year. David Miles recommended that three rounds be held every year. The next CRC-P round is expected to open in August 2016 with outcomes announced in November and funding from January 2017. The schedule for anticipated CRC and CRC-P funding rounds can be found here.
“Improving collaboration between researchers and industry to cultivate a more innovative and entrepreneurial economy is a key pillar of the Government’s National Innovation and Science Agenda,” said the Minister for Industry, Innovation and Science, The Hon Christopher Pyne.
“We’ve placed industry at the front and centre of the CRC Programme so we can build on our strengths in high quality research to improve the competitiveness, productivity and sustainability of Australian industries.”
Successful CRC-P 1st Selection Round Projects can be found here.
The future integrated driver monitoring solution for heavy vehicles
Hydrocarbon fuel technology for hypersonic air breathing vehicles
Printed solar films for value-added building products for Australia
Translational R&D to accelerate sustainable omega-3 production
CRC-P for Innovative Prefabricated Building Systems
An antibody based in vitro diagnostic for metastatic cancer
High performance optical telemetry system for ocean monitoring
Combined carbon capture from flue gas streams and mineral carbonation
Strengthening Australia’s radiopharmaceutical development capabilities
Innovation in Advanced Multi-Storey Housing Manufacture
Future Oysters CRC-P
Outcomes of stage one of the 18th selection round of CRCs are expected in July and applications will open for those invited to Stage Two. Final outcomes are expected to be known by the end of the year.
This article was first published by the CRC Association on 22 June 2016. Read the original article here.
1. Make sure there is a viable, readily accessible market that is sufficiently large to support a spin-off company.
2. The actual invention is only the trigger to start a company – you are establishing a company that will need to innovate on an ongoing basis if it wants to be successful. Make sure that innovation capability and desire exists and thrives in the spin-off.
3. Identify competent board and management capability to direct the business and generate revenue for the company. Most often the management capability is not the same people who carried out the research, but sometimes it can be. Without the right people running the show, the spin-off will not be successful.
4. Make sure you have sufficient funding available to get the company through to a viable revenue stream, and ideally flexible funding arrangements. Unexpected things will happen and you need capability to accommodate those changes.“
“Most start-ups are focused on development plans that contain binary events and marginal financing. This makes them vulnerable to unforeseen delays and additional development steps that require additional funding.
I believe that we should be looking to generate portfolios of innovation under experienced management teams that give our projects the best chance of success – and adequate funding to reach proof of concept in whatever market we are targeting – but at the same time help to spread risk.“
“Ensuring a strong board, CEO, and a quality management team will be critical to success. The availability of funds for programs is an often-discussed barrier to rapid progress. Underfunded companies and poorly thought-out product concepts or technologies are more likely to fail early.“
“1. For biotechnology R&D spin-off start-ups in Australia, major hurdles are the dearth of seed capital as well as access to large follow-on venture funds that are needed to build successful biotechnology companies.
2. There is a mismatch between the 10-year life span of a venture capital fund in Australia and the 15+ years needed to translate research findings into a novel drug or biologic product for improving human health.
3. Hence, these systemic issues are major impediments to building successful biotechnology companies in Australia and these issues need to be addressed.”
– Professor Maree Smith, Executive Director of the Centre for Integrated Preclinical Drug Development and Head of the Pain Research Group at The University of Queensland
There are two potential ‘valleys of death’ for R&D spin-off companies. One is in translating their research concepts into prototype products. The other is in maturing from prototype to full commercialisation.
“Taking the prototype through to full commercialisation was probably more difficult for us due to the complexities involved.
This included high-tech scale-up manufacturing, which we do at our bio-manufacturing facility in Malaga. Today, we have the ability to expand production as necessary, as well as refine and develop our processes in-house to accommodate new products and product improvements.
There was also a focus on generating sales once CardioCel was commercialised. Just because a product is approved doesn’t necessarily mean that it will be used straight away by the intended customers.
We’ve focused on educating the market about the benefits of CardioCel, such as its biocompatibility and lack of calcification (hardening) at the site of surgery. We’ve also built a strong global sales and marketing team who work closely with our customers to understand their needs.
As a result, we’ve seen continued quarter-on-quarter growth in CardioCel sales, and the product is now used in over 135 heart centres globally.“
“For pharmaceuticals the so called ‘second valley of death’ is by far the most significant.
Lack of funding often prevents companies from attempting to cross this valley and causes them to license their technology at an earlier stage and to realise rewards as the licensor takes their innovation to market.
For a small company with limited resources, the key to success here is to understand the commercialisation risks, link the higher-risk projects with partners and try to make that step themselves for markets with lower entry costs and higher clinical need.
If done well, they should end up with a portfolio approach with the risks mitigated but still significant opportunity for value appreciation.”
“SmartCap Technologies had substantial industry support to develop the prototype products, however even with this it was a very challenging process to deliver working prototypes.
SmartCap was exceedingly fortunate in that CRCMining provided substantially more financial support for SmartCap than originally envisaged, enabling it to finally deploy the prototype products. Those prototypes were sufficiently effective to generate commercial interest from some large mining companies.
So despite having robust plans in place, it always helps to have access to further funding, via investors or other stakeholders with a high level of commitment as well as deep pockets, to overcome unforeseen eventualities.”
“The biggest hurdle may be the combination of the two – translating research concepts (i.e. technical information associated with the technology) following commercialisation into an immature market.
Catapult‘s technology is not a consumer product and therefore is very high touch in terms of its service and client support. Due to the perceived complexity of the information obtained from the technology, part of the trick is to simplify the underlying research concepts to new markets that need a low touch product.”
“I would argue that you should have a prototype – before any spin-off. That way you can at least prove technical viability of your concept. Ideally you would also have done some level of customer validation.
The next step of full commercialisation is definitely the hardest.
In our case it was a matter of finding early customers that were willing to spend time assessing the product and its benefits – even though it was too early to commit to a purchase and full roll-out. This phase was key to understanding the market and adjusting our path.”
“The first phase is the most difficult – a poor prototype will show its deficiencies later in development. A prototype needs to demonstrate a safe and efficacious profile, and that it will meet the need you have defined in the target market.”
“We are in the middle of our valley of death translating our platform into the clinic and we have not yet overcome it. Data is key, but one needs the funds to produce the results! So, we are seeking investors wherever we can find them and buddying up to big pharmaceuticals who have the muscle to progress our technology.”
– Dr Jennifer Macdiarmid, pictured above with Dr. Himanshu Brahmbhatt, joint Chief Executive Officers and Directors
“An excellent intellectual property position is a key starting point. This is in addition to having a proven concept or great technology. A quality team to back up project execution is paramount. Understanding and being able to explain where your commercialised projects will fit into a market segment in terms of the need they will meet is also important.”
“SmartCap Technologies is a spinoff from CRCMining. CRCMining carries out industry directed research, which ensured that the research into fatigue management technologies was a high priority for the mining industry at the project’s inception.
In SmartCap’s case, the industry support was sufficiently high that Anglo American, one of the world’s largest mining companies, in conjunction with CRCMining, co-funded the development of the prototype commercial SmartCap products.
This ‘incubation’ of the SmartCap technology by a significant end user was extremely important to advancing from research into prototype products.
The prototype products performed sufficiently well for SmartCap to be selected by two other large mining companies for large supply contracts for fatigue monitoring technology.
So the support of significant end users, along with the commercial contracts the company had in place at that time, provided potential investors with the confidence to invest in SmartCap Technologies.”
“Pharmaxis has been restructured following a regulatory setback for our lead product. Rebuilding investor confidence has been critical to our longer term success. To do this we focused on three things:
1. transparency – explaining the business model and being clear about the risks as well as the opportunity;
2. building in meaningful milestones which marked development steps that significantly reduced risk and provided opportunities to realise value;
3. hitting milestones and delivering realistic objectives.”
“I think there are a number of reasons investors are drawn to our business: Admedus has two technology platforms which diversifies the risk for investors; we have a product on market; and we are generating revenue.
The first of the two platforms is our regenerative tissue platform, where we use our proprietary ADAPT tissue engineering process to turn xenograft tissue into collagen bio-scaffolds for soft tissue repair. The second is our Immunotherapies platform, where we work with renowned scientist Professor Ian Frazer and his team to develop therapeutic vaccines for the treatment and prevention of infectious diseases and cancers.
Our lead regenerative tissue product CardioCel, which is used to repair and reconstruct congenital heart deformities and more complex heart defects, has made the journey from prototype to commercial product and is on the market in the USA, Europe and parts of Asia.
Frazer’s previous success with the human papillomavirus vaccine (HPV) program that lead to the USD$2 billion product, Gardasil, is well-recognised and gives investors further confidence in our immunotherapy work.
As a result, Admedus has a good balance of validated science via approved products and an exciting product pipeline working with successful scientists. This balance, along with our diversified program portfolio, gives investors confidence in our business. “
Because the technology was engineered to take elite athlete monitoring from the laboratory to the field, value was seen in the data immediately as there was no precedent for this type of information. A new product category had been formed and Australian Olympians were now able to train in their performance sweet spot without getting injured because their coaches had objective data to guide their lead up to big events.
So this combination of pioneering a new industry in a popular space (elite sport), with the ability to create immediate value, certainly helped with the initial funding.”
“Neuropathic pain is a large unmet medical need because the currently available drug treatments either lack efficacy and/or have dose-limiting side-effects.
Due to this, my patent-protected angiotensin II type 2 (AT2) receptor antagonist technology – encompassing a potentially first-in-class novel analgesic for the treatment of often intractable neuropathic pain conditions – attracted initial seed capital investment from the Symbiosis Group, GBS Ventures and Uniseed Pty Ltd. In total $3.25M was raised and in mid-2005 the spin-out company, Spinifex Pharmaceuticals was formed by UniQuest Pty Ltd, the main commercialisation company of The University of Queensland.
The raison d’etre for Spinifex Pharmaceuticals at that time was to develop AT2 receptor antagonists as efficacious, well-tolerated first-in-class novel analgesics for relief of neuropathic pain.
In 2006, I discovered that AT2 receptor antagonists also alleviated chronic inflammatory pain in a rat model. This was quite unexpected as clinically available drug treatments for neuropathic pain, such as tricyclic antidepressants and newer work-alikes as well as gabapentin and pregabalin, do not alleviate chronic inflammatory pain conditions such as osteoarthritis. Thus the potential for small molecule AT2 receptor antagonists to alleviate chronic inflammatory pain conditions was patent protected by UniQuest Pty Ltd in 2006 and subsequently in-licensed to Spinifex Pharmaceuticals for commercialisation.
As both neuropathic pain and chronic inflammatory pain are large unmet medical needs, Spinifex Pharmaceuticals was able to raise additional venture capital from the initial investors as well as from Brandon Capital to fund Investigational New Drug (IND)-enabling Good Laboratory Practice (GLP) toxicology and safety pharmacology studies, as well as early phase human clinical trials. “
– Professor Maree Smith, Executive Director of the Centre for Integrated Preclinical Drug Development and Head of the Pain Research Group at The University of Queensland
“Investors understood that the intellectual property would be generated in-house and there was no “stacking” from the beginning.
We were fortunate at the outset to meet two venture capitalists and a number of high net worth individuals who saw the potential upside in our business plan, had already had some success with investing in biotech – e.g. Biota – and did not ask ‘who else is in?’.
That being said, we had very limited time and money to show proof of concept, and only after that and our first patent, did we convince those investors that we had something viable.”
– Dr Jennifer Macdiarmid, pictured above with Dr. Himanshu Brahmbhatt, joint Chief Executive Officers and Directors
For a country that makes up just 0.3% of the world’s population, Australia packs a heavyweight punch in science – generating 3.9% of the world’s research publications. However taking that research to market has proved a broader challenge.
Fostering the commercialisation of research success and encouraging collaboration between industry and researchers is at the forefront of the government’s renewed focus on scientific innovation, with over $1.1 billion earmarked to kickstart the “ideas boom” as part of the National Innovation and Science Agenda.
Fibrotech develops novel drug candidates to treat fibrosis (tissue scarring) associated with chronic conditions such as heart failure, kidney and pulmonary disease, and arthritis. The company spun out of research by Professor Darren Kelly at the University of Melbourne in 2006, and its principal asset is a molecule, FT011, which helps prevent kidney fibrosis associated with diabetes. In May 2014, in one of Australia’s biggest biotech deals at the time, Fibrotech was acquired by Shire, a Dublin-based pharmaceutical company, for an initial payment of US$75 million. Further payments, based on a series of milestones, will bring the total value of the sale to US$557.5 million, and the deal was awarded Australia’s best early stage venture capital deal in 2014. At the time of the sale, FT011 was in Phase 1b trials for the treatment of renal impairment in diabetics – a market worth US$4 billion annually.
SOLD FOR:acquired by Novartis for US$200 million up-front payment plus milestone payments
Spinifex Pharmaceuticals was launched in 2005 to commercialise chronic pain treatments developed by Professor Maree Smith of The University of Queensland. Pharmaceuticals giant Novartis acquired the company in 2015 for a total of US$725 million, based on the promising results in Phase 1b and Phase 2 clinical trials. Spinifex’s treatment targets nerve receptors on peripheral nerves rather than pain receptors in the brain, making it possible to treat the pain from causes such as shingles, chemotherapy, diabetes and osteoarthritis without central nervous system side-effects such as tiredness and dizziness.
Admedus is a diversified healthcare company with interests in vaccines, regenerative medicine, and the sale and distribution of medical devices and consumables. Currently, the company is developing vaccines for herpes simplex virus and human papillomavirus based on Professor Ian Frazer’s groundbreaking vaccine technology. In the regenerative medicine field, Admedus is the vendor of CardioCel®, an innovative single-ply bio-scaffold that can be used in the treatment of congenital heart deformities and complex heart defects.
For more than 25 years, ResMed has been a pioneer in the treatment of sleep-disordered breathing, obstructive pulmonary disease and other chronic diseases. The company was founded in 1989 after Professor Colin Sullivan and University of Sydney colleagues developed nasal continuous positive airway pressure – the first successful, non-invasive treatment for obstructive sleep apnoea. Today, the company employs more than 4000 people in over 100 countries, delivering treatment to millions of people worldwide.
BioDiem specialises in the development and commercialisation of vaccines and therapies to treat infectious diseases. The Live Attenuated Influenza Virus vaccine technology provides a platform for developing vaccines, including one for both seasonal and pandemic influenza. BioDiem’s subsidiary, Opal Biosciences, is developing BDM-I, a compound that offers a possible avenue for the treatment of infectious diseases that resist all known drugs.
Vaxxas is pioneering a needle-free vaccine delivery system, the Nanopatch, which delivers vaccines to the abundant immunological cells just under the skin’s surface. Preclinical studies have shown that vaccines are effective with as little as one-hundredth of a conventional dose when delivered via a Nanopatch. In 2014, Vaxxas was selected by the World Economic Forum as a Technology Pioneer, based on the potential of Nanopatch to transform global health.
Biotech company Acrux was incorporated in 1998 after researchers at Monash University developed an effective new spray-on drug delivery technology that improved absorption through the skin and nails. In 2010, Acrux struck a US$335 million deal with global pharmaceutical company Eli Lilly for AxironTM, a treatment for testosterone deficiency in men. It was the largest single product licensing agreement in the history of Australian biotechnology.
With a focus on ophthalmology, Opthea’s main product is OPT-302 – a treatment for wet age-related macular degeneration – which is currently in a Phase 1/2a clinical trial. Wet macular degeneration is the leading cause of blindness in the Western world. Opthea was formerly known as Circadian Technologies, acting as a biotechnology investment fund before transitioning to developing drugs in 2008.
Benitec Biopharma’s leading product is DNA-directed RNA interference (ddRNAi) – a platform for silencing unwanted genes as a treatment for a wide range of genetic conditions. ddRNAi has broad applications, and can assist with conditions as diverse as neurological, infectious and autoimmune diseases, as well as cancers. The company’s current focus inludes hepatitis B and C, wet age-related macular degeneration and lung cancer.
Using a wearable electroencephalograph (EEG), SmartCap monitors driver fatigue by measuring changes in brain activity without significant discomfort or inconvenience. It notifies users when they are fatigued and what time of day they’re most at risk. SmartCap was formally EdanSafe, a CRCMining spin-off company.
Founded by the CSIRO in 2007 to commercialise the UltraBattery, Ecoult was acquired by the East Penn Manufacturing Company in 2010. The UltraBattery makes it possible to smooth out the peaks and troughs in renewable power, functioning efficiently in a state of partial charge for extended periods.
Composite materials company Quickstep was founded in 2001 to commercialise their patented manufacturing process. Working with the aerospace, automotive and defence industries, Quickstep supplies advanced carbon fibre composite panels for high technology vehicles. In 2015, the company increased its manufacturing capacity, establishing an automotive production site in Victoria in addition to their aerospace production site in NSW.
The EDV is a nanocell mechanism for delivering drugs and functional nucleic acids and can target tumours without coming into contact with normal cells, greatly reducing toxicity. Above all, the EDV therapeutic stimulates the adaptive immune response, thereby enhancing anti-tumour efficacy. More than 260 patents support the technology, developed entirely by EnGeneIC, giving the company control over its application.
Snap’s FMx is a unique approach to video surveillance that forms cameras into a network based on artificial intelligence that learns relationships between what the cameras can see. It enables advanced real-time tracking and easier compilation of video evidence. Developed at the University of Adelaide’s Australian Centre for Visual Technologies, the system is operational at customer sites in Australia, Europe and North America.
Orthocell develops innovative technologies for treating tendon, cartilage and soft tissue injuries. Its Ortho-ATI™ and Ortho-ACI™ therapies, for damaged tendons and cartilage, use the patient’s cells to assist treatments. Its latest product, CelGro™, is a collagen scaffold for soft tissue and bone regeneration.
As the demand for effective energy storage grows, RedFlow’s zinc-bromide flow batteries are gaining attention. RedFlow has outsourced its manufacturing to North America to keep up with demand, while the company’s research and development continues in Brisbane.
Since 2002, precision engineering company MiniFAB has completed more than 900 projects for customers across the globe. MiniFAB provides a complete design and manufacturing service, and has developed polymer microfluidic and microengineered devices for medical and diagnostic products, environmental monitoring, food packaging and aerospace.
RayGen’s power generation method involves an ultra high efficiency array of photovoltaic cells, which receive focused solar energy from heliostats (mirrors) that track the sun, resulting in high performance at low cost. In December 2014, RayGen and the University of New South Wales (UNSW) collaborated to produce the highest ever efficiency for the conversion of sunlight into electricity. The independently verified result of 40.4% efficiency for the advanced system is a game changer, now rivalling the performance of conventional fossil power generation.
CSL is Australia’s largest biotechnology company, employing over 14,000 people across 30 countries. The company began in 1916, when the Commonwealth Serum Laboratories was founded in Melbourne. It was incorporated in 1991, and listed on the ASX in 1994. Since that time, CSL has acquired established plasma protein maker CSL Behring, and Novartis’ influenza vaccine business, and has become a global leader in the research, manufacture and marketing of biotherapies.
Dyesol Limited (ASX: DYE) is a renewable energy supplier and leader in Perovskite Solar Cell (PSC) technology – 3rd Generation photovoltaic technology. The company’s vision is to create a viable low-cost source of electricity with the potential to disrupt the global energy supply chain and energy balance.
EvoGenix began as a startup in 2001 to commercialise EvoGene™, a powerful method of improving proteins, developed by the CSIRO and the CRC for Diagnostics. It acquired US company Absalus Inc in 2005, then merged with Australian biotechnology company Peptech in 2007, to form Arana Therapeutics. In 2009, Cephalon Inc bought the company for $207 million.
With a vision to create sustainable energy through renewable biofuels, Muradel is a joint venture between the University of Adelaide, Murdoch University and SQC Pty Ltd. Their $10.7 million Demonstration Plant converts algae and biosolids into green crude oil. Muradel has plans for upgrades to enable the sustainable production of up to 125,000 L of crude oil, and to construct a commercial plant capable of supplying over 50 megalitres of biocrude from renewable feedstocks.
iCetana’s ‘iMotionFocus’ technology employs machine learning to determine what is the ‘normal’ activity viewed by each camera in a surveillance system and alerts operators when ‘abnormal’ events occur. This enables fewer operators to monitor more cameras with greater efficiency.
Phylogica is a drug discovery service, and the owner of Phylomer® Libraries, the largest and most structurally diverse suite of natural peptides. It has worked with some of the world’s largest drug companies, including Pfizer and Roche, to uncover drug candidates.
The research compiled by Refraction was judged by a panel comprising of: Dr Peter Riddles, biotechnology expert and director on many start-up enterprises; Dr Anna Lavelle, CEO and Executive Director of AusBiotech; and Tony Peacock, Chief Executive of the Cooperative Research Centres Association. The panel considered the following: total market value, annual turnover, patents awarded and cited, funding and investment, growth year-on-year, social value, overseas expansion and major partnerships.
Bookshelves in offices around Australia groan under the weight of unimplemented reports of research findings. Likewise, the world of technology is littered with software and gadgetry that has failed to gain adoption, for example 3D television and the Apple Newton. But it doesn’t have to be this way.
The best are not always adopted. To change that, says Brown, developers need to know how their research solutions will be received and how to adapt them so people actually want them.
“Physical scientists, for example, benefit from understanding the political, social and economic frameworks they’re operating in, to position the science for real-world application,” she says.
The big-picture questions around knowledge and power, disadvantage and information access, political decision-making, community needs and aspirations, policy contexts and how values are economised – these are the domains of the social sciences. When social science expertise is combined with that of the physical sciences, for example, the research solutions they produce can have a huge impact. In the case of the CRC for Water Sensitive Cities, such solutions have influenced policy, strategy and regulations for the management of urban stormwater run-off, for example. Brown and her colleagues have found it takes a special set of conditions to cultivate this kind of powerful collaborative research partnership.
The CRC for Water Sensitive Cities has seen considerable growth. It started in 2005 as a $4.5 million interdisciplinary research facility with 20 Monash University researchers and PhD students from civil engineering, ecology and sociology. The facility grew over seven years to become a $120 million CRC with more than 85 organisations, including 13 research institutes and other organisations such as state governments, water utilities, local councils, education companies and sustainability consultancies. It has more than 230 researchers and PhD students, and its work has been the basis for strategy, policy, planning and technology in Australia, Singapore, China and Israel.
In a 2015 Nature special issue, Brown and Monash University colleagues Ana Deletic and Tony Wong, project leader and CEO respectively of the CRC for Water Sensitive Cities, shared their ‘secret sauce’ on bridging the gap between the social and biophysical sciences, which allowed them to develop a partnership blueprint for implementing urban water research.
8 tips to successful collaboration
Cultivating interdisciplinary dialogue and forming productive partnerships takes time and effort, skill, support and patience. Brown and her colleagues suggest the following:
1 Forge a shared mission to provide a compelling account of the collaboration’s overall goal and to maintain a sense of purpose for all the time and effort needed to make it work;
2 Ensure senior researchers are role models, contributing depth in their discipline and demonstrating the skills needed for constructive dialogue;
3 Create a leadership team composed of people from multiple disciplines;
4 Put incentives in place for interdisciplinary research such as special funding, promotion and recognition;
5 Encourage researchers to put their best ideas forward, even if unfinished, while being open to alternative perspectives;
6 Develop constructive dialogue skills by providing training and platforms for experts from diverse disciplines and industry partners to workshop an industry challenge and find solutions together;
7 Support colleagues as they move from being I-shaped to T-shaped researchers, prioritising depth early on and embracing breadth by building relationships with those from other fields;
8 Run special issues of single-discipline journals that focus on interdisciplinary research and create new interdisciplinary journals with T-shaped editors, peer-reviewers or boards.
A recent Stanford University study found almost 75% of cross-functional teams within a single business fail. Magnify that with PhD research and careers deeply invested in niche areas and ask people to work with other niche areas across other organisations, and it all sounds impossible. Working against resistance to collaborate requires time and effort.
Yet as research partnerships blossom, so do business partnerships. “Businesses don’t think of science in terms of disciplines as scientists do,” says Brown. “Researchers need to be able to tackle complex problems from a range of perspectives.”
Part of the solution lies in the ‘shape’ of the researchers: more collaborative interdisciplinary researchers are known as ‘T-shaped’ because they have the necessary depth of knowledge within their field (the vertical bar of the T), as well as the breadth (the horizontal bar) to look beyond it as useful collaborators – engaging with different ways of working.
Some scholars, says Brown, tend to view their own discipline as having the answer to every problem and see other disciplines as being less valuable. In some ways that’s not surprising given the lack of exposure they may have had to other disciplines and the depth of expertise they have gained in their own.
“At the first meeting of an interdisciplinary team, they might try to take charge, for example talk but not listen to others or understand their contribution. But in subsequent meetings, they begin to see the value the other disciplines bring – which sometimes leaves them spellbound.
“It’s very productive once people reach the next stage in a partnership where they develop the skills for interdisciplinary work and there’s constructive dialogue and respect,” says Brown.
In a recent article in The Australian, CSIRO chief executive and laser physicist Dr Larry Marshall describes Australians as great inventors but he emphasises that innovation is a team sport and we need to do better at collaboration. He points out that Australia has the lowest research collaboration rates in the Organization for Economic Cooperation and Development (OECD), and attributes this fact to two things – insufficient collaboration with business and scientists competing against each other.
“Overall, our innovation dilemma – fed by our lack of collaboration – is a critical national challenge, and we must do better,” he says.
Brown agrees, saying sustainability challenges like those addressed by the CRC for Water Sensitive Cities are “grand and global challenges”.
“They’re the kind of ‘wicked problem’ that no single agency or discipline, on its own, could possibly hope to resolve.”
The answer, it seems, is interdisciplinary.
There’s a wealth of great advice that CRCs can tap into. For example the Antarctic Climate & Ecosystems CRC approached statistical consultant Dr Nick Fisher at ValueMetrics Australia, an R&D consultancy specialising in performance management, to find the main drivers of the CRC’s value as perceived by its research partners, so the CRC could learn what was working well and what needed to change.
Fisher says this kind of analysis can benefit CRCs at their formation, and can be used for monitoring and in the wind-up phase for final evaluation.
When it comes to creating world-class researchers who are T-shaped and prepped for research partnerships, Alison Mitchell, a director of Vitae, a UK-based international program dedicated to professional and career development for researchers, is an expert. She describes the Vitae Researcher Development Framework (RDF), which is a structured model with four domains covering the knowledge, behaviour and attributes of researchers, as a significant approach that’s making a difference to research careers worldwide.
The RDF framework uses four ‘lenses’ – knowledge exchange, innovation, intrapreneurship [the act of behaving like an entrepreneur while working with a large organisation] and entrepreneurship – to focus on developing competencies that are part and parcel of a next generation research career. These include skills for working with academic research partners and industry.
Stories of ‘unicorn’ Initial Public Offerings and billionaires in their 30s are great. But it’s the creation of quality jobs that truly makes innovation a national priority.
A recent report from the Office of the Chief Economist showed Australia added about one million jobs from 2006–11. Start-up companies added 1.4 million jobs, whereas older companies shed 400,000 jobs over the same period. But it’s not any start-up that matters; only 3.2% of start-ups take off in a dramatic fashion, providing nearly 80% of those new jobs. While Australia has a relatively high rate of companies starting up, the key seems to be getting more of them into high-growth mode.
When Israel faced a massive influx of immigrants after the collapse of the Soviet Union in 1990, it turned to innovation as a means of providing jobs. Given the country’s lack of natural resources, they didn’t have a choice. A population of four million people taking in one million more meant Israel had to become an innovative economy.
They grew their investment in research and development dramatically – to the point where Israel is now one of only two countries consistently spending more than 4% of GDP on R&D.
Israel has translated that spending into high-tech export success. Now, multinational technology company Intel employs over 10,000 Israelis. The Israeli Government is hands-on in its approach to de-risking early stage companies. But this is not achieved through government spending alone. In fact, the Israeli Government’s share of total R&D spending is just one-third of that of Australia, and its higher education sector is just one half. Business carries the lion’s share of R&D spending in Israel, making up 80% of the total, compared with 60% in Australia.
If we want jobs, we need innovation. We are in a unique period when there seems to be complete political agreement on this point. If we want innovation, we should take lessons from wherever we can learn them to develop the Australian system. A lesson from Israel is to use government spending more effectively at the early stages of company development to shift more start-ups into high-growth mode. If we could double the current 3.2% of today’s start-ups that become high-growth companies, we could provide more rewarding jobs for Australia’s future.
Israel concentrates almost 100% of its government innovation support for business on small and medium-sized enterprises. The comparable figure for Australia is 50% – a big hint for what we could do differently to fire up our start-up sector.
Innovation works something like this. A research scientist has a brilliant idea. It’s developed into a product and commercialised. The general public love it and buy lots. The developers become wealthy. Many lives are greatly improved.
Sorry, let’s try again.
A research scientist has a brilliant idea. An arduous process follows to develop a product. Once it’s finally on the market, the public are afraid/suspicious of the underlying technology. Commercialisation fails. Few lives are improved.
Reality lies somewhere in between. Why? Let’s begin with a simple definition: innovation is doing clever stuff in a smarter way for a good outcome. It can be about a product, process or service. The impact can be grand or incremental.
To some, innovation means certain economic growth and social betterment. Examples of brilliant science leading to great products with huge consumer demand are smartphones, WiFi, organic light emitting diode televisions, robotics.
Planet-wide changes, such as population and climate, create unique challenges needing new solutions. Science, coupled with innovation, has the potential to create such solutions… if we get the innovation side right.
Unfortunately for Australia, 21st century innovation isn’t based on the good fortunes of geography, geology and climate. We’ve long relied on digging up resources and selling them overseas, or on fattening sheep and exporting them.
Now as Professor Ian Chubb, Australia’s Chief Scientist, articulates: “There’s no question that at some point our economy is going to have to shift and become substantially different from what it is now and be based on innovation.”
There is a clear and growing chasm between where we are and need to be. Australia’s challenge is to bridge that gap and move towards a sustainable economy less vulnerable than the one to which we are sentimentally attached that’s previously yielded the nation’s prosperity.
Australia does good science and is, sometimes, creative. But we have a poor record of commercialising good science and understanding innovation. The 2012 Innovation System Report points to a shortage of management education and innovative culture and highlights an imbalance between government versus private R&D spending. There’s a lack of: R&D growth in key areas; business access to publicly funded research expertise; mobility of researchers between academia and business; and a concerted national science, technology and innovation strategy.
Increasingly, research highlights the importance of incorporating consumer needs into successful innovation strategies to ensure acceptance of new products or services. There are examples – such as genetically modified (GM) crops as an agricultural productivity solution – in which developers provide answers where few people saw a problem. Alternatively, members of the public may believe research wrongly crosses an ethical divide – embryonic stem cell research is an example. Public rejection also occurs with solutions such as nanotechnologies, where misinformation about risks dominates information flow about the science.
It’s not just about selling products harder or better explaining the science. I’ve spent years in discussions with people opposed to GM, nanotechnology and vaccinations and their issues are rarely with the science. It’s more about personal values: from concerns about messing with nature and ethical fears over genetic information misuse; to opposition against monopolising agri-conglomerates. Align a product with public values and it has a better chance of a dream run. Clash with those values and there could be trouble.
It makes sense to ask end-users what they want. If the public had been consulted about GM science back in the mid-1990s, for example, we may not have seen agricultural firms using the technology to develop herbicide- or pesticide-resistant broadacre crops, but perhaps non-food crops that produce pharmaceuticals or healthier foods, with more public support.
More contentious and innovative research is currently underway in Australia. The potential benefits are enormous. But their applications will need strong institutional support and community endorsement, skilled developers and sufficient funds for commercialisation. A lot of very clever people will need to cooperate in new ways to share old wisdom and new ways of thinking.
This is an edited version of an article from The Curious Country, ANU Press, 2013
When it comes to fostering innovation and the commercialisation of world class research, there is something the United States has that we lack. We ought to learn from the successes of the US in this area, and emulate one program they have pioneered to give our own innovative industries a much needed kickstart.
For dozens of Australian researchers returning to the country after working in the US, the lack of an equivalent to the US’s Small Business Innovation Research (SBIR) scheme here reflects a major hole in our innovation ecosystem.
Charles Wessner, Professor at Georgetown University and Director of the Global Innovation Policy unit, says the SBIR scheme triggered a fundamental shift in attitudes in American universities when it was introduced in 1982.
According to Wessner, before SBIR, the Dean of a faculty would ask young academics how many publications were going to come out of their latest piece of research.
Thirty years on, the Dean is now asking whether the research can be converted into a product or service, and whether they should spin it out of the university to access SBIR funding. It has been a profound change of mindset, says Wessner.
Simple but effective
The SBIR scheme is a fairly simple design that hasn’t changed much since its introduction. US government agencies, which undertake more than US$100 million worth of R&D outside the agency, are required to allocate 2.8% of their R&D budget to these programs. Currently, eleven federal agencies participate in the program.
Each agency takes an active role in calling for R&D – “solicitations” is the term used in the US, and with a completely straight face – for areas of concern to them. For example, the US Department of Agriculture this year is calling for projects in 10 areas. They are unsurprising fields, like “aquaculture” and “biofuels and biobased products”, but with a bit more specificity under them.
Any small business (1–500 employees) can then bid to undertake projects against those solicitations. The US Department of Agriculture issues solicitations once a year, receives about 500 applications for “Phase 1” projects (those up to US$100,000 over up to eight months) and funds about 15–20% of them. If a project is success at Phase 1, they can apply for a Phase II award, which can be up to US$500,000 over two years. Some departments have further, larger Phase III stages, although the USDA doesn’t.
For the Department of Defense (DoD), 2.8% of its extramural R&D spend is a very large amount of money indeed. Moreover, if the Department of Defense is soliciting proposals for new work, it is very likely it’ll become the first customer of that small business if the project is successful.
The DoD already has a stake in the product, and is thinking about how it might work in its own ecosystem. Given the extreme complexity of military procurement procedures, having the DoD already staked in your product is a major advantage to a new company.
Carry on Phase II and then Phase III funding, sometimes in multiple series, are available in much larger amounts from the bigger agencies, and can run to tens of millions of dollars.
Don’t imagine that means all SBIR projects are short-term or lack scientific challenges. The US Navy uses about 1.4 billion tonnes of fuel annually, and the head of its energy program, Captain Jim Goudreau, said climate change transcends politics when you are talking about that much fuel.
He pointed out that the US military is already affected by climate change in many practical ways, like having less available live fire practice days each year in California. And as he said at the TechConnect World audience in Washington last week, the Navy is contracting for materiel to be delivered in 2040, which needs to be effective into the 2070s and 2080s. So it needs to cope with a changing climate.
Pull and push
At the TechConnect meeting in Washington last week, there were literally dozens of US federal groups talking to the science and business community about their innovation needs. Big departments, like defence and energy, are represented by many specialised teams seeking out companies to work for them.
It is “customer pull” in its rawest form. The science community is here in big numbers offering new technologies to the market. When “science push” and “customer pull” mix, then the chances of successful innovation rise to a new level.
At the same time in Philadelphia, the gigantic annual biotechnology conference, BIO, was underway with more than 15,000 participants from across the globe. The two big US science funding agencies – the National Science Foundation (NSF) and the National Institutes of Health (NIH) were there in force helping their SBIR companies meet up with big pharma and other collaborators to bring technologies to market.
It’s like a science festival writ large, but also in extreme detail, as companies search for new opportunities from the vast American research community.
Could it work in Australia?
The recent joint paper from Ian Macfarlane and Christopher Pyne, “Boosting Commercialisation of Research”, floated the idea that Australia needs an “SBIR-like” scheme. The Academy of Technological Sciences and Engineering (ATSE) has often pointed out that the lack of such a scheme is a gaping hole in the Australian innovation ecosystem.
We do have some “customer pull” oriented schemes, though. The Rural R&D Corporations definitely fall into this category, as do many of the Cooperative Research Centres (CRCs).
The government’s response to the recent “Miles Review” of the CRC program was to push CRCs to be even more industry-led.
But none of these schemes are aimed at boosting innovation from small businesses. Or at least, not exclusively so. They are often encouraged to do so, and make sporadic attempts to improve their small business engagement, but it is clearly a weak spot in the Australian innovation context.
Small businesses that are trying to expand with innovative technologies constantly struggle to raise funds at early stages of development.
Bridging the gap
SBIR is not of itself a scheme for collaboration; the small businesses involved can undertake all the R&D themselves. But the experience in the US is that SBIR fosters collaboration as high technology start-ups seek to source expertise from universities and other research agencies.
Universities immediately increased their rate of spinning out companies on implementation of the scheme in 1982. The SBIR funding attracts further seed and venture capital funding, bridging that “valley of death” between early research funding and the business becoming self-sustaining.
Ultimately, many of the small businesses get bought out by large companies, particularly in the defense and pharmaceutical areas, where massive ongoing investment is needed to introduce new products.
There’s no doubt that an SBIR scheme would fill a major innovation gap in Australia, and no doubt we could make the necessary administrative arrangements. But for an SBIR scheme to truly succeed in Australia, there would be a few hurdles that I’d suggest must be overcome before we spent the first dollar. I call these the “Fair Dinkumness” tests to ensure an Australian flavour.
Fair Dinkumness test 1
Would there be true political support?
Unless a scheme enjoyed bipartisan support, there would be no point in introducing one. With one of the shortest electoral cycles in the world, Australia is at a major disadvantage in terms of stable policy in relation to innovation.
If the political support is there, then an SBIR scheme would need a significant investment of new money. Scrounging money off another under-funded program would simply be setting both up to fail. It takes some time for industry to become confident with new schemes and start to invest in a meaningful way. We’d need a real commitment.
Fair Dinkumness test 2
Would there be true bureaucratic support?
SBIR in the US works because it is a procurement scheme as well as an R&D scheme. The bureaucracy would need to seriously commit to using the scheme to improve its own departmental knowledge or services.
That means a solicited report to the Department of Environment on management of an endangered species would need to be implemented, not just sent to the library. That means the Army would need to buy the better boots from an Australian small business.
This is perhaps a bigger mindset change than either the politicians or the business community, and would need to be monitored closely, even if there was initial high level support.
For a small country such as Australia, it is often easiest to take the pathway of least risk – so Senate Estimates would need to cut bureaucrats some slack for backing Australian inventiveness too.
Fair Dinkumness test 3
Would Australian business truly back it?
If small businesses are formed just to access SBIR money, and want to survive on providing some research to government, then we are no better off. If peak industry bodies view the money as simply an entitlement for their members, then nothing new will happen.
The whole point of giving a big innovative boost to small businesses is to turn them into high-growth businesses. Existing bigger businesses would need to accept that they won’t be able to access the scheme, and they might even be faced with competition from those that do become successful innovators. An SBIR scheme by its very nature involves giving a leg-up to the new players in town, and the incumbent players need to accept that situation.
If the federal government did undertake to create an SBIR-like scheme in Australia, it would easily be the biggest reform of the innovation ecosystem in the country since the Hawke government’s raft of “Clever Country” policies.
It may not be the size of the Medical Research Future Fund as that scheme grows, but it is significantly more complex to implement. There is no doubt the government wants business and research agencies to come together much more closely. An SBIR scheme would be a massive step in that direction.