December 18, 2008

Symbiosis in open biotech constructs

In Marcus’s last posting he discusses the need for a new type of market rather than trying to jam a square peg into a round hole. I couldn’t agree more, and there are some clear examples in the biotech industry where there is a lot of talk about how new biomarkers will revolutionize the market and make the proprietors rich through licensing structures, while in reality there still is a lack of IP infrastructure to value, price and leverage these intangibles with the same effectiveness as tangible goods are handled in the material value chain. It seems distant to imagine that this will ever be the case, but history tells us that the future usually has a tendency to surprise us.

My hypothesis is that effective valuation and pricing to a large extent relies on a detailed understanding of how value propositions are packaged and how the underlying assets are discovered, developed and combined. Hence, I find it very interesting to follow how technology platforms are developing in the biotechnology field as these hopefully will provide a greater understanding of how assets may be transformed into property and capital. Many of the currently existing platforms that are claiming to be ‘open’ (e.g. ‘open source’, ‘open standards’, ‘open platforms’, etc.) still seem to be more in a visionary stage than actively managed structures and systems enabling collaborative value to be created. The biotech industry has seen a whole spectrum of these as of lately, e.g. Open Wetware, Biological Open Source (BiOS), Predictive Safety Testing Consortium, SNP consortium, Human Genome Project, etc.

Open platform: IMI
Innovative Medicine Initiative (IMI) is one of the more advanced examples that I have found among the existing open platforms. The initiative, as I brought up in one of my earlier blog posts, focuses on targeting the biggest bottlenecks in the drug development process. IMI is interesting from a number of perspectives as it is driven by the founding members, EU Commission and EFPIA, to create a competitive edge for the EU industry while making the drug development market work more efficiently. The beauty, in my opinion, of the constructed platform concept is the so-called “Research Use” in their IPR Policy. At a quick glance the Research Use clause appears to be just an alternative way of using the Foreground which excludes Direct Exploitation. However, the footnoted example describes application of the generated results “as a tool for research and clinical research in the discovery, development or commercialisation of pharmaceutical products by for-profit institutions and organizations”, which I interpret as a form of intellectual creation of an ‘open standard’ for the pharmaceutical industry. The result seem to be that innovations that fall within this definition can be accessed and utilized under fair and reasonable terms on a non-exclusive basis, for both platform participants and third parties.

However, it should be mentioned, that this is made possible partly on the expense of the long-term value visions of the participating biotech firms as these, from the build-up of this construct, will not be able to offer pharmaceutical products nor diagnostic tools as value propositions. The businesses of the biotech firms therefore will have to rely on the commercialization of earlier-stage technologies such as screening- and research tools instead. Hence, biotech SMEs will need to ask themselves where they see the highest probability that the highest value will be attained (research tool versus diagnostic tool) before deciding to join as there is a huge difference in developing something risky of high value on your own as opposed to share the risk in IMI at the cost of a lower return-on-investment in the end. Moreover, the two alternatives require completely different capabilities and tools to be successfully achieved.
It is simple to be critical to created constructs such as the IMI platform, but it is extremely difficult to creatively innovate sustainable solutions that both provide incentives for the small inventive actors while keeping up attractive incentives for the large financially secure actors. So, the question remains; is it possible to create efficient biotech open innovation models where all parts work symbiotically?

Tobias Thornblad


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