8 December 1999 1

Institutional Structures and Arrangements at Public Sector

LaboratoriesLyndal Thorburn

Advance Consulting & Evaluation Pty LtdOECD Workshop on High Technology Spinoffs,

Working Group on Innovation and Technology Policy, 8 December 1999

8 December 1999 2

Public Sector Laboratories Total 194 direct spinoffs from Australian

research institutions. Of these• 92 from universities• 8 from hospitals• 14 from co-operative research centres

Remaining 82 from public sector labs• 56 from CSIRO• 11 from Medical Research Institutes• 3 from DSTO, 5 others

8 December 1999 3

CSIRO Structure & Aims

Science & Industry Research Act 1949 Conducts scientific research to assist

Australian industry Can own & control IP

• But not permitted to own a controlling interest in a co. without Ministerial approval

Also subject to FOI, Privacy, ADJR

8 December 1999 4

CSIRO Research Collaborative R&D; Contract research; Consulting; Licensing of formal intellectual property; Technical services; Research by 6,700 staff (96/97) covers

agribusiness, manufacturing, mining, environment, services

8 December 1999 5

Official Performance Indicators Sector profile External earnings Publications, reports, patents Customer satisfaction Adoption and impact of research and advice

• NOT spinoffs, but it recognises 3 types of startups: technology transfer companies (30), direct spinoffs (55), indirect spinoffs (20)

8 December 1999 6

CSIRO Commercial Outputs AUTM survey (1997)

• US universities, per 1000 “faculty”*, receive 37 disclosures, apply for 9 patents, negotiate 11 licence agreements, receive US$320,00 royalties

No Australian equivalent,but using AUTM standard in 1996/97 CSIRO should have applied for 60 patents (52) received US$2.1m royalties (US$4m) and produced 5 startups (2.5).

* Trune (1996)

8 December 1999 7

CSIRO Startups

Range of forces:• institutional• technological• profit• market

Finance rare Equity rare

8 December 1999 8

Stand-alone

CSIRO New Spinofflicence

royalties

staff

Individual shareholders

•Staff resign, redundancy, use $ for co. finance

8 December 1999 9

Joint Venture

CSIRO New Spinoff

licence

royalties

staffOne or more firms/agencies

licencestaff

royaltiesequity

equity

•CSIRO staff usually on leave without pay, funding from jv partners, CSIRO may have equity position

8 December 1999 10

Subsidiary of single existing firm

CSIRO New Spinofflicence

royalties

staff

Existing firm

staff/equity

•CSIRO staff resign or LWOP, funding from parent

8 December 1999 11

Public listing

CSIRO New Spinofflicence

royalties

staff

Public shareholdings

equity

8 December 1999 12

Medical Research Institutes (MRIs) Statute e.g. Garvan Institute of Medical

Research, Howard Florey Institute of Experimental Physiology

Company e.g.Austin Research Institute Approx 20 of these, AU$120m, 2000 staff Main aim is understanding & treatment of

disease

8 December 1999 13

MRI Commercial Outputs

No standardised performance indicators but annual reports concentrate on research activities, publications, conferences etc

Using same AUTM survey, expect 18 patent applications, $US0.64m royalties, 22 licence agreements, 1.2 startups in 96/97• no data available except known 0 startups that

year

8 December 1999 14

Wholly owned subsidiary

MRI

New Spinoff

licence

equity

royalties

Staff?

8 December 1999 15

Joint Venture

MRI New Spinoff

licence

royalties

Multiple research institutions or single firms

licencestaff

royaltiesequity

equity

•Spinoff staff are usually provided by the partner firm or are recruited directly; researchers stay within MRI•n = 1 (+2)

8 December 1999 16

Subsidiary of multiple owners

MRI New Spinofflicence

royalties

staff

VC and other private investors

equity

•Spinoff driven by finance opportunity, MRI staff p/t in firm

8 December 1999 17

Summary of Models

SA JV WOS PL SSF SMO Un-known

Total

CSIRO 30 19 0 3 3 0 0 55

MRI 0 3 6 0 0 1 1 11

TOTAL 30 22 6 3 3 1 1 66

8 December 1999 18

Issues

Spinoff rates influenced by• Basic vs applied focus• Commercial imperatives• Commercial focus• Finance

Spinoff structures influenced by • Legal status• Perceptions of risk