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Reaping returns from A*Star research

Realised commercial value of IP to exceed $60m for 12 months to March
The Business Times - November 27, 2012
By: Chen Huifen
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Reaping returns from A*Star research

IT MAY have taken a while, but returns from public research orchestrated here are beginning to see some results.

Intellectual property (IP) developed at A*Star research institutes is projected to garner more than $60 million in realised commercial value for the 12 months ending in March.

The figure is a projection by A*Star's technology transfer arm, Exploit Technologies Pte Ltd (ETPL).

Set up about a decade ago with the mandate to commercialise technologies from A*Star, ETPL tracks realised imputed commercial value (RICV), the proxy measure of the economic activities generated as a result of the licensing of A*Star technologies; RICV is imputed based on the licensing fees received.

About a third of the RICV for the current year is likely to come from new deals. When RICV hits $60 million, it would represent a 41.5 per cent jump from last year's $42.4 million, which itself was a four-fold increase from the $9.8 million posted the year before. The RICV registered by ETPL in previous years was always in the single-digit millions.

ETPL CEO Philip Lim credited the significantly improved performance of the last two years to active selection of IP projects that would receive funding.

He said: "During this period, we started to reap the results of a deliberate initiative, started in late FY2006, to incubate technologies to enhance their commercial value."

This scheme, called Gap Funding, invests in the technology through testing, clinical trials, proof-of-scaling and prototype development.

Most of these technologies were licensed between FY2009 and FY2011. They were also complemented by the better performance by past licensees.

Companies in biotech, infocomm technology (ICT), and manufacturing were the main contributors to the surge. New deals by local small- and medium- sized enterprises (SMEs) such as HistoIndex, PJI and Acexon and multinationals such as Huawei made up a third of the RICV in this period.

The Gap Funding scheme is especially important in reaching out to the SMEs, many of which have neither the resources nor the facilities for research and development (R&D) to exploit A*Star technologies on their own or to bring discoveries closer to the prototype stage.

The scheme enables researchers to demonstrate the commercial relevance of the technologies and make them more easily adoptable.

Overall, about 70 per cent of the licensing deals executed so far have been with SMEs. In the last five to six years, companies that contributed most to the licensing deal flow were from the ICT, biomedical, precision engineering, manufacturing and specialised materials sectors.

ICT technologies such as software and apps usually take two to three years to bring to market; discoveries in the biomedical sectors, especially in therapeutics, take longer than a decade.

Although ETPL does not seek to take equity in companies, it is open to taking equity in lieu of upfront licensing payments to allow cash-strapped start-ups to take on a licence.

Mr Lim said: "Our licensing terms are very enterprise-friendly. ETPL customises licensing terms to individual licensees based on factors such as resources, budget and softer aspects such as the availability of in-house capabilities."

Examples are back-loading royalties and sliding royalties based on sales.

In executing the terms, ETPL is conscious of the need to balance getting a reasonable return on investment for public investment in R&D on the one hand, and facilitating technology translation on the other, he said.

The licensing fees received by ETPL, of which the first $100,000 would go to the relevant researchers, are a fraction of the RICV. It can range from 0.5 per cent of the RICV in a fast-moving consumer goods market to a double-digit percentage if the technology is used in the biomedical market.

Other than licensing deals, technologies from A*Star also flow to the market through research collaborations inked directly between research institutes and companies. ETPL is involved when the agreements include a licensing element.

Mr Lim said: "Our ultimate interest is not so much (about) revenue or numbers. The whole purpose of doing research is so that we can generate a whole string of economic activities at the higher end.

"So if I were to give you a licensing transaction and you go on to manufacture something and make, say, $10 million, the $10 million revenue also reflects a lot of other economic activities - you could have a new line in manufacturing, employ new workers, outsource certain things, have support, delivery, warehousing and all these other things.

"So these are all the knock-on effects that we would like to see: all because we started innovating, we have our own product that has its own value proposition and market in the world."

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