From Science to Business – How Firms Create Value by Partnering with Universities

By: Georges Haour

In today’s “knowledge-based” society, it is becoming increasingly imperative for companies to “mine” knowledge and technology generated by universities. Why? Because the outcome of such industry-university collaborations help companies create new activities and jobs.

Companies tap into the new knowledge and technology generated by universities in various ways, from hiring graduates to giving endowments and commissioning contract research. Only a small fraction of universities in Europe and the US carry out collaborative research with companies. According to a AUTM report, in the most active cases, the amount funded by the private sector represents only about 6% of the total research budget of these universities: the lion’s share of research funding comes from the public sector, with a very small number of universities capturing the bulk of private sector funding.

When it comes to patent-based licensing and/or selling intellectual property (IP), most universities do not generate enough income to cover the expenses of their technology licensing office. A noted exception is Northwestern University, which received more than $480 million in licensing income and royalties in 2008 from Pfizer.

Industry and academia must team up to move our world towards a more sustainable future.

The third vehicle for commercialization is the creation of start ups. This is a complex path and universities usually do not have the business sense required to follow it, as they rightly concentrate on excellence in teaching. Typically, they work with external partners for this task. The pharmaceuticals and biotech sectors are examples of companies that engage in such science-to-business process.

Partnerships between companies and universities are particularly critical as we face mounting issues around energy, water, food and climate, as well as demographics and healthcare. Never before have non-business issues been so relevant to business.

Industry and academia must team up to move our world towards a more sustainable future. Only China, Germany and Japan have made substantial commitments in this area. And never before have non-technical innovations been so critical to business success – innovations such as novel business models or managerial practices that are often enabled by information and communication technologies.

The changing landscape for universities and industry

Universities worldwide are confronted with diminishing growth in public funding (e.g. Japan is decreasing by 1% per year), and they are being forced to adapt by raising funds from private sources. But, as the above figures indicate, they probably can’t count on a commercialization bonanza in the foreseeable future. However, they must take steps to make the difficult transition by changing their academic mindsets and moving towards becoming more firm friendly and solutions-oriented.

Industry is also changing its approach to innovation. With ever-increasing pressure to focus internal R&D activities on short-term payoffs, many companies are beginning to pursue their long-term strategies through collaborations with universities. As a result, new partnerships are emerging that will ultimately change the roles of both.

A growing number of companies are thus making changes in the ways they do their current business or plan their business development activities, as a result of inputs from universities. Following are examples of some of the activities that companies are pursuing:

Match your objectives with the appropriate institution

Once a company has defined its business development objectives, it must identify those institutions with which it should engage. It is important for firms to make sure China and India are on their radar screens, as universities in these countries are emerging as strong contributors. Firms must have the wisdom to take advantage of what these, and other universities, have to offer.

Leverage graduate students

Every year, the 40-staff start-up, HiFiCom (disguised name) in Copenhagen, welcomes 20 graduate students from a local engineering school. Managers from the company also do sessions for the Master’s course, which enables them to spot good candidates to work with the company on their Master’s thesis. A few of these students are hired, and as a result of the constant flow of fresh talent and their ideas for new commercial offerings, the company has been growing steadily.

Participate in collaborative research

HP has more than 100 collaborations with universities worldwide. Many of these are with leading Chinese universities, such as the U. of Beijing and Tsinghua. Collaborative research is often focused on difficult issues, often related to long-term research. Even though the projects are often peripheral to HP’s business, they frequently result in the modification of the business development plans of specific business units.

Buy licence or IP

NovImmune, a Geneva-based company active in the area of therapeutic monoclonal antibodies to treat patients suffering from immune-related disorders, was founded in 1998 after obtaining a licence from the University of Geneva. With 70 staff, it is now profitable and relies on an array of collaborations for innovative discoveries to further develop its core activity of producing therapeutic monoclonal antibodies.

Create spin out companies

The University of Cambridge, which had five start-ups in 2009, has had several successful spin outs, including Metalysis, which has commercialized a technological process to produce high-value, specialist metals and alloys used in the electronics, medical, marine, aerospace, chemical and defense sectors. The technology facilitates cheaper production with a significantly lower environmental footprint.

Beyond the financial returns, there are may other benefits of knowledge transfer for universities, businesses and society as a whole. For example, collaboration will help universities focus their research on the wider needs of society and industry. And it has socio-economic impacts in the form of new jobs, new companies and new products such as pharmaceuticals. Our future largely depends on it!

By Georges Haour & Laurent Miéville