Why we fail to turn research into patents

The Australian June 25, 2013 12:00AM

AUSTRALIA has a proven ability to produce world-class research. It is among the top five countries when measuring scientific articles produced per capita – well ahead of the US and the UK – and produces three per cent of the world’s medical research publications, reinforcing Australia is a powerhouse when it comes to scientific discovery. However, Australia’s capacity to transform medical discoveries into products or services is far less impressive.

Patents are one measure of successful commercialisation, with patents surviving only when they protect a marketed product or service that will pay for their maintenance. Australia ranks 20th in the OECD in terms of patents per capita, which accounts for less than 0.8 per cent of the world’s patents.

In the global arena, three main regions accounted for 95 per cent of patent filings in 2012 – the European Patent Office accounted for the largest patent filings (37 per cent), with member state Germany (13.4 per cent) leading the way1, while more than 32 per cent originated from the biggest Asian patent countries – China (11.3 per cent), Japan (8.5 per cent) and South Korea (7.7 per cent).

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As a nation, Australia’s failure to transform discoveries into products and services has wide-ranging ramifications. It means that the nation is losing out on returns from investment in research; is not attracting private and foreign investment in product development; does not have a thriving medical products sector, which would employ scientists and provide taxation revenue; does not receive profits from the sale of products; and patients and the government do not benefit from Australia’s world-class medical research.

So what are the solutions? The Association of Australian Medical Research Institutes (AAMRI), in a submission to the Federal Government-commissioned Strategic Review of Health and Medical Research in 2012, has outlined a range of key initiatives aimed at boosting the nation’s performance in commercialisation. The challenges and initiatives broadly reflect those of Baker IDI, which played a key role in helping to develop our submission to the McKeon review.

AAMRI has proposed the establishment of ‘Iconic Research Grants’ that would provide competitive grants to a limited number of high-performing campuses and organisations of scale to undertake ‘blue-sky’ and strategic research. Importantly, it would be a condition that a proportion of the Iconic grant be used towards precinct-level proof-of-concept funds. This is not dissimilar to the European Research Council (ERC), which provides top-up funding through a ‘Proof of Concept’ scheme for researchers to bridge the gap between their research and marketable innovation. Through these grants and by funding blue-sky research, the ERC aims to open up new interfaces between research and industry, making Europe even more competitive in this sector.

Another AAMRI initiative aimed at enhancing Australia’s capacity to translate findings into commercial outcomes is to build small numbers of centres with critical mass in commercialisation expertise. It is widely recognised that commercialisation skills in Australia are thinly spread across the 39 universities, 42 Medical Research Institutes (MRIs) and over 100 hospitals where medical research is performed.

Many of those employed in the field lack the necessary specialist capabilities, experience and resources needed to identify projects, capture and manage IP, help bring products through development, develop investment proposals and secure investment. To address this, AAMRI recommends bringing together those individuals with commercialisation expertise in MRIs, universities and hospitals across Australia into larger, more viable commercialisation teams.

Internationally, countries such as France – which had the second highest patent filing rate in the European patent system in 20122 – are putting in place strategic reforms to address similar issues. In France, they are working to set up ‘big size’ tech transfer organisations to bring value to academic innovations and boost the translation of discoveries for the benefit of the public. In line with achieving greater efficiencies and becoming more globally competitive, these new organisations also aim to develop strong intellectual property (IP) management and reach a critical mass of technology transfer professionals.

Another initiative outlined in the AAMRI submission involves expanding specialist seed funding to provide financial support after a potential product has passed through the proof-of-concept stage. This funding, which must be guided by specialist medical commercialisation expertise, has the potential to attract later-stage venture capital funding when promising progress in product development is achieved. AAMRI recommends that a further two seed funds be created based on existing models in Australia established by the Medical Research Commercialisation Fund and Uniseed.

These funds are generally thought to be effective, with clear benefits including the aggregation of expertise in the analysis and creation of investable projects, and the creation of enough deals sourced from a reasonably large catchment of research to raise the interest of the superannuation industry and other potential investors in the biotech sector.

Another critical issue highlighted in the AAMRI submission is the need to align academic research culture with commercial values and insights. Involvement in the commercialisation of research in Australia is neither encouraged nor supported in the professional recognition and advancement processes within which academic researchers work.

Academic promotion and the award of grant or fellowship funding are almost exclusively based on publication record and related traditional academic metrics. There are also limited opportunities for professional linkages between the academic and commercial sectors, so the cultures remain separate.

In 2011, the NHMRC awarded just four Industry Career Development Fellowships (allowing researchers to spend one to two years in an industry placement) and no equivalent schemes exist for early-career researchers or PhD students. AAMRI recommends that appropriate metrics of commercialisation success be included in NHMRC grant and fellowship schemes and that they be weighted equally with traditional academic metrics. It also recommends that universities, MRIs and hospitals be required to include a commercialisation component of their PhD programs.

Some institutions in Australia have already embarked on this path – the University of Queensland, for example, runs a mandatory commercialisation boot camp for all medical research PhD students while the Walter and Eliza Hall Institute of Medical Research runs a highly successful business development internship program for early career researchers.

However, such internships are rare in Australia unlike in the US and Europe where they are commonplace. Leading US universities offer tailored approaches for students and recent graduates such as Stanford’s Biodesign program, which offers courses and fellowships to help produce leaders in medical technology. The program offers valuable industry experience such as working with the US Food and Drug Administration, as well as global international experience in India or Singapore.

AAMRI advocates that optimising the regulatory environment and maintaining existing government support programs is also key to boosting Australia’s track record in commercialisation. The Federal Government has an important role to play in removing unnecessary regulatory barriers to commercial translation and creating a favourable tax environment for investment in research and commercialisation. AMMRI recommends that the Federal Government remove unnecessary regulatory barriers to commercial translation.

While Australia has a high ranking on the Index of Economic Freedom, published by The Wall Street Journal and The Heritage Foundation, it could still learn more from its Asian competitors, Hong Kong and Singapore, who have held the top two spots on this Index for the past 19 years.

Singapore has invested heavily in its biomedical sciences sector during the past decade, including developing a supportive business and regulatory environment, which, although early days, seems to be paying dividends. The manufacturing output for biomedical sciences in Singapore increased from SGD$6.3 billion in 2000 to SGD$19 billion in 2008, the number of jobs more than doubled in this sector during this period while private/public R&D investment grew from SGD$1.70 to SGD$2.30 in this eight-year period.

Australia now stands at major crossroads when it comes to the commercialisation of medical research. The fundamentals are sound but with the McKeon submission before the Federal Government in an election year, action on these key recommendations is not guaranteed. What is clear is that if we do nothing, Australia’s already poor performance in translating scientific findings into commercial outcomes will fall even further behind its international counterparts.

This will have a devastating impact on the country’s health and medical research sector, and more broadly, will impact the nation’s economy and the health and wellbeing of our communities.

Dr Guy Krippner is Executive General Manager, Commercialisation & Contracts and David Lloyd, Deputy Director, at Baker IDI Heart and Diabetes Institute. This article first appeared in Baker IDI Perspectives.

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