There are currently two basic tech transfer business models: the blockbuster model and the generic model. However, a new model is required, one that matches evolving population, niche diseases, and a tech transfer core competency that bridges the gap between the need for frequent discovery and the need to develop capabilities for rapid transfer to commercialization.
The article "Competitive Technology Transfer in Life Science" written by Suraj Mathew, featured on www.pharmamanufacturing.com, discusses the need for a new tech transfer business model.
Business as usual? Tech Transfer as usual? Usual means $300 million to $1.2 billion development costs, a 12 to 15 years development cycle, five to eight years of patent protection, and survival of one candidate product in 10,000i. Blockbuster products are in decline.
R&D pipelines are drying up. Market share in the east increase and an economic downturn is taking its toll. All of these symptoms revolve around a need to increase the speed and effectiveness of Tech Transfers to compensate. Conditions associated with these symptoms raise three critical questions each life science business needs to answer.
Therefore, the emphasis of this article will examine these three questions with a viewpoint common to all. Each organization must then understand the impact to their unique situation and create solutions that best fit their organization’s strategy.
Root Cause for Increase in Tech Transfer Frequency
There are many reasons driving the need to increase the frequency of discovery and shorten the duration of Tech Transfer. Three specific contributors redirecting current efforts differ in business models, international competition, and knowledge transfer.
First, is the understanding of the key differences in blockbuster and generic business models. Both models require a tech transfer process; however, each model emphasizes a different core competency. The blockbuster model is no longer applicable as the primary model of success, because of the rapid decline in blockbuster drugs.
Why? Companies built around blockbuster products strengthen their core competency around discovery. Because blockbuster products have been so lucrative, the time to complete tech transfer was less significant than the discovery process. Extra costs associated with a longer transfer were offset by higher revenue once commercialization was achieved. Blockbuster models emphasize a core competency for discovery. A generic business model core competency evolved more around the tech transfer itself. Discovery is myopic, with a focus on re-engineering and creating a process for an existing product. However, discovery is less significant in a generic model.
Also, generic companies have to leverage tech transfer more quickly to capture a market share as soon as the blockbuster exclusivity rights end. Generic models emphasize a core competency of tech transfer and the gap between discovery and tech transfer is resolved in court.
The decline in blockbuster products is causing both blockbuster and generic types of business models to rethink their business strategy and is forcing both to expand their current core competency to that of the other model. For the blockbuster company, they will need to develop the skills of rapid technology transfer. For the generic company, they will need to develop the skills of discovery.
As both types of companies shift to niche disease markets, by default this means more Tech Transfers - and the companies must be simpler and faster to keep competitive. More niche discoveries are needed to be profitable, and the time before the product goes generic will shrink. As a result, both the blockbuster model and the generic model will become more alike over time – both will invest in more niche discoveries and rapid transfer of technology in an effort to get to market before others.
Second, international competition is increasing as companies around the globe main line technologies to improve the economic prospects of their individual nations.
Third, advancements in information and communications technologies (ICT), changes in protectionism with the adoption of the Agreement on Trade-Related Intellectual Property Rights (TRIPs), and the globalization of research and development activities by multinational enterprises (MNEs) contribute to the development of internationalized technology, and thus an increase in competition.
Combined, these three elements are driving the need to better understand the proper role of intellectual property in a knowledge-based economy.
The science and manufacturing base is much more global for life science than in recent years. Between 1976 and 2006 we see a significant increase in the number of scientists and scientific industries in countries such as Brazil, China, and India.
As the growth of these scientific-based industries increase, labor will move to fill the void. Professional and skilled labor becomes more globalized and free trade increases where products are produced from multiple international sources.
The effect is an increase in competition which in turn drives the need to do things differently. Business as usual and Tech Transfer as usual will no longer suffice. Third, knowledge transfer is a critical part of tech transfer.
Knowledge transfer is the thread that ties the stages of development together. A similar four stage process includes four to 10 years of discovery, three years of exploratory development, and three years of regulatory development just to launch a three year commercialization.
The long duration contributes to the potential loss of knowledge at each step of transfer. Net effect of knowledge loss over time is the need to recreate or rework to correct or capture that loss. Recreation and rework contribute significantly to the length of time required from discovery to commercialization.
One such device to manage the transfer is ISPE’s (Society for Life Science Professionals) Good Practice Guide for Technology Transfer. The guide outlines standardized processes; define minimum documentation requirements, establishes key terms, outlines time and cost for tech transfer.
Although this guide emphasizes active ingredient pharmaceuticals, the same principles can be applied to other life science endeavors and emphasize the need for an improved tech transfer structure to be competitive.
Making Tech Transfer Competitive
The effectiveness of tech transfer is complicated and difficult to define. An article published in 2000 by the School of Public Policy, at Georgia Tech, states, “Anyone studying technology transfer understands just how complicated it can be. First, putting a boundary on ‘‘the technology’’ is not so easy. Second, outlining the technology transfer process is virtually impossible because there are so many concurrent processes. Third, measuring the impacts of transferred technology challenges scholars and evaluators, requiring them to reach deep down into their research technique kit bagix.”.
The three definitions of difficulty do create a focus on the essential requirements for successful tech transfer:
First, it is difficult to set a boundary on the technology, because current tech development and transfer processes practices are laden with rework loops. A critical requirement, then, is a methodology that can capture both knowledge and technology, eliminate the need for redevelopment and rework, and provide a robust method to successfully handoff knowledge and technology step by step.
The second difficulty is outlining a tech transfer process where concurrent processes are not integral to single defined system. The next significant requirement is a clear understanding of ownership and the critical interactions between the concurrent processes. A common approach includes basic project management items such as timing, cost, and expected results. An integrated system, however, must be much more and include factors such as “value added” (eliminating non-value added activities), cross-function teaming, crisis avoidance, conflict resolution and escalation, simplified records, and others.
The third difficulty is measuring the impact of tech transfer which requires the transfer process to be structured in such a way to drive consistency and discipline into the organization, yet encourages calculated risk taking to solve problems in new and different ways. Consistency in transfer praxis is a powerful enabler that provides flexibility within structure, eliminates unexpected variables, and shortens the overall transfer time.
Combined, these increase the potential of discovery and tech transfer. Given three key requirements, what does a common system look like that effectively captures knowledge and technology for handoff, synergistically integrates multiple concurrent activities, and creates the level of consistency and discipline in an organization that enables the next generation life science company?
Define a structured tech transfer process flow to capture the knowledge and technology:
Establish an organizational infrastructure consisting of a single team of management and cross-functional members that govern the structured process:
Implement a sustaining system to ensure that consistency and discipline development:
Some organizations find a system as described counter-intuitive. Based on the traditional way of doing tech transfer, they would be correct. However, the next level of tech transfer finds that a structured system creates an environment with a high potential for productivity. The path to the next level of tech transfer does require significant planning, work, and a commitment to redevelop the organization, but it is worth the effort.
In closing, let’s take a short look at what the future may hold. Three key prospects (Population, Cost, and Risk Aversion) sum the effect on the business of Tech Transfer and the need for an increase in frequency and shorter tech transfer life cycles. Population.
Between 2009 and 2050 the World Health Organization expects a 30% increase in the population, to 9 billion, increasing the demand for drugs and devices. These drugs and devices also increase life expectancy, which in turn increases the number of elderly requiring drugs, devices, and services. This cycle drives the need for more frequent and shorter tech transfers to meet the needs of a changing population and niche diseases.
Western life science companies must reduce the cost of goods or risk an increased loss of market share. They are forced to continuously improve. This correlation can contribute to fine tuning a structured model for life-science conversion above.
Analysis of transition in other industries can identify the do’s and don’ts learned to streamline the tech transfer process from the current blockbuster / generic model to a lean six sigma model which is much more robust and responsive to customer demands and niche market changes.
“It’s clear that FDA regulations slow the process of getting a product to the marketplace. Manufacturers know this but seem largely unwilling to take the risk of proposing novel technologies that may ultimately meet with FDA compliance. This level of risk aversion is counter-intuitive when a mere percentage increase in production capacity could result in millions of dollars in added revenues that could more than cover the costs of novel technology development.”. Clearly, it is time to overcome risk aversion and create innovative solutions that are compliant with FDA requirements.
Future progress will come as the old gives way to the new. There are currently two basic business models; the blockbuster model and the generic model.
A new model is required, that matches evolving population, niche diseases, and a tech transfer core competency that bridges the gap between the need for frequent discovery and the need to develop capabilities for rapid transfer to commercialization. Experience and lessons learned in other industries can be used to refine this new model. A basic common tech transfer life science model can then be modified to fit individual company and regional variations in business strategy.