Overview & Comments

This qualitative study of early stage biotech companies, universities and medical research institutions sought insights into the the critical success factors that they believe need to be in place for further development of this emerging industry sector and the barriers to successful commercialisation of biotechnology research. 

The barriers identified by these participants focused on three key areas - government support, organisational capability and access to capital funds.  Vitale found that despite the government's efforts to develop the sector, it had failed to appreciate what was needed to do so, and had in fact created policies which  hampered the sector's development.  For example, the government policy encouraged early stage company formation for commercialisation when research was not sufficiently trialled beyond concept stage.  This lead companies to focus on and apply resources to building the company structure and processes, and managing the company compliance needs, and diverting these funds away from the necessary applied research (trialling and testing research).  Institutions did not help themselves in this critical phase by failing to devote sufficient resources to commercialisation within the institition and failing to understand and value the intellectual property.

This early company formation also focuses companies on establishing the organisational capability to manage the resources and operational needs of the company, as well as to seek additional sources of funding to further the commercialisation process.  A critical factor to success at developing the organisational capability is leadership and a key barrier identified in this research is the sourcing the senior leadership skills required either in Australia or from overseas.  In this age of skills shortages in key areas, and without tax incentives to attract Australians working in these sectors overseas to return home, it seems that capability building in this area will remain a barrier to growth.

 The flow on effect from this diversion of funds, early company formation and constrained organisational capability have made the sector reportedly less attractive to venture capital companies, despite their response that there was plenty of money to invest, but a lack of worthy investment propositions.  Whether or not investors are unrealistic about the expected returns, the fact remains that funds are required to carry the companies or research bodies through the critical applied research phase.  The lack of substantial additional sources of funds in Australia for this stage, in particular philanthropic funds, or institution specific research funds exposes most of these early stage companies to a funding gap which stalls and often stops the commercialisation process.

Recommendations for change in government policy focus on rethinking whether or not company formation is the only way to deal with the commercialisation phase and looking at tax incentives to attract biotech leaders in this global market for talent.  Recommendations for research bodies include rethinking their policy on commercialisation by holding back from early company formation and seeking appropriate expert opinion to value intellectual property.

Your Comments