Challenges in Commercialization of University Inventions and How to Tackle Them
Wednesday, February 5, 2020
By Tanu Chatterji, PhD., Assistant Director, Licensing, University of Houston
Innovation is defined as the introduction of something new, and commercialization is defined as the process of developing innovations into commercial products. A balance between both of these is critical for effective development of new technologies that may help solve the current health challenges faced by our world. NIH is supporting this by investing more than 30 billion dollars in research funding every year to ignite the process . The expected outcome from this investment is to develop drugs and medical devices that satisfy the unmet need in healthcare. For this to happen, the basic science funding needs to have scholarly output not only in the form of peer-reviewed research articles, but also patents. The reason being that patents are the foundation of any business that is trying to commercialize a new drug or medical device. However, alarming data from a recent study indicate that only 10% of NIH grants produce scholarly output in the form of patents  and even worse, only 2% of the filed patents generate any revenue . This is also the result of inefficient use of basic science research funding, loss of financial gain for universities and healthcare challenges not being solved. This article describes a few hurdles in the commercialization of early stage healthcare innovations and strategies to tackle these challenges.
Innovation is but commercialization isn’t required by grants
NIH reporting requirements include publications, intellectual property rights and sharing research results. According to the Bayh-Dole Act , Universities have the right to retain title to any invention conceived or first actually reduced to practice by NIH grant funds. Commercialization of the intellectual property is the responsibility of the University. Most University policies encourage commercialization activities led by individual faculty inventors, however, commercialization activities as a requirement from NIH grant funding, would definitely move the needle in the space.
Finding a solution before identifying the problem
The beauty of academic research is the creativity that it brings. However, it is a double edged sword. Most researchers lack the understanding of market needs from consumers or industry partners. They fail to realize that the industry is looking to solve very specific problems and not always develop the next breakthrough idea. Understanding the industry and the market before developing a project plan is critical. Customer insight for a new research idea could lead to better strategies to solve a problem that the industry is trying to solve.
Lack of commercialization education and incentives in the University system
Education on commercialization to graduate students, post-docs and early career faculty is critical to successful innovation and commercialization. Most often, our graduate training programs don’t focus on communicating a value proposition of scientific discovery. It is important to understand whether there is an unmet need for this discovery in the market. It is also important to educate students and postdocs on the basics of patent law, along with institutional procedures and policies on invention disclosure, patent application filings and commercialization activities. Our training programs currently don’t reward entrepreneurial graduate students. Master’s and PhD programs can give coursework credits or stipends to encourage entrepreneurial activities. Currently, most universities don’t account for entrepreneurial activities for promotion and tenure for early-career faculty. Hence, most creative and enthusiastic early career faculty researchers have to prioritize securing grants and publishing research over starting companies, creating jobs and developing products.
Lack of Science and Business collaborations
Careers in academia are built on collaborations, so why is working in teams a concern? We have observed that some faculty entrepreneurs struggle to build a management team when they start a company. Scientific collaborations are designed to advance the knowledge of the principal investigator in a specific area with a well-defined lead in a specific project. On the flip side, a science and business collaboration to commercialize a discovery is designed with the understanding that the principal investigator does not have the required knowledge of business and would have to eventually be comfortable with the business mentor leading the business development.
Inadequate communication with the University Technology Transfer offices
University TTOs are an underutilized free resource that researchers on University campuses often fail to take advantage of. The primary role of these offices is to help faculty, postdocs and students engage in the process of IP protection and manage the University IP portfolio. The personnel working in these offices are scientists, business persons or patent law experts who can help in the commercialization of IP. Building strong relationships with the Technology Transfer offices would lead to a very collaborative and productive environment.
Funding problems and the “Valley of Death”
“Valley of Death” in a technology commercialization process is defined as the phase where there is a lack of financing during technology development between the funding cycles of public and private financing. This is a major hurdle, as technology development comes to a halt if the funding gap is not bridged in time. Universities can ease this transition by providing “bridging funds” for a short span of time, for technologies that need prototype development or scale-up. However, it should be made clear that the funding is not meant for basic science research, and should be only awarded to technologies that are being developed with companies. The milestones the funding should require are commercialization outputs and results from customer discovery exercises. The bridging funds can also help inventors access follow-on funding in the form of SBIR and STTR grants.
Not building bridges with the local innovation ecosystems
Universities are often resource limited and face challenges to bring in mentors, industry expertise and additional resources that faculty entrepreneurs need. Local accelerators and incubators can often be great free resources that universities can access, by establishing strategic collaborations and partnerships. On the other hand, for accelerators to be successful, there is a need for good early stage technology companies and strong coachable teams. This is a perfect symbiotic relationship that benefits both ecosystems. Some of these accelerators are non-profit entities and are willing to run programs at the University sites in order to get access to the most promising companies. Forming these relationships with the local programs also helps the universities build their own mentor and investor networks which could eventually lead to self-sustaining innovation ecosystems.
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