The Benefits of Technology Transfer in Today’s Marketplace

5 Feb

By Alejandro Zamorano, VP of Business Development, LSN

Every successful business starts with an idea that is commercialized and brought to the marketplace.

At the core of an academic researcher’s role is to be unbiased arbitrator of the natural world. As a result, academic institutions often prevent academic researchers from taking financial positions in their discoveries within the confines of the institutions.

Consequently, few academic researchers take a lead role in actively commercializing their discoveries. Since lead investigators lack the incentive to commercialize their discoveries, this responsibility of commercializing assets is assumed by an institution’s tech transfer office.

Tech transfer offices play a major role in the industry by providing a marketplace for these emerging technologies. The most active bidders for technologies have been emerging biotech companies and sophisticated private equity firms that have been busy compiling assets in anticipation of big pharma’s patent cliff. By giving the assets to third party developers, it liberates the institution conflict of interest while still retaining a vehicle that enables financial rewards. These licensing agreements usually come in the form low upfront payment, a 1-3% downstream royalty, and a buyout option.

For example, by taking a look at the NIH – which has had one of the most prolific tech transfer offices in the past two decades – one can gain insight into the inner workings of traditionally obscure sectors of the industry. In 2011, the NIH generated $97m in payments from commercialized technology that NIH had out licensed. This revenue was generated from 411 technologies, with the top 20 technologies representing around 73% of the total revenue. In that same year, the NIH executed 197 licensing agreements with 82% US companies of which 52% were considered small business. In addition, of technologies out licensed by the NIH in 2011 22% were companies that were in-licensing technology from the NIH for the first time. Issuance for first-time recipients has been trending upwards for the past five years indicating a shift over the past several decades.

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Despite the success of a few tech transfer offices in the industry, the majority of tech transfer offices suffer the lack of a centralized database to sort through academic assets. The inability to easily search through technologies is hampering the growth of the life sciences industry by limiting visibility to interested bidders. As a result, interested bidders usually obtain their technologies by leveraging their personal contacts, which tend to be regionally focused.

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