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Commercialization and development

roadmap for healthcare biotech products


Bio Malaysia 2011, Nov. 22nd
Dr. med. Dirk Probst, MD,PhD
D2 Bio Solutions Sdn Bhd

Key question for smaller


healthcare companies

Technology development ?
or
Technology commercialization ?

Answer
Biotech companies are specialists in
Technology development
Big Pharma or Big Medical Device companies
are specialists in technology
commercialization (Marketing & Sales)
Biotechnology is the technology driver , but
every New Technology must create additional
value

Commercialization
stages
500
450
400
350
300
250
200
150
100
50
0

deal price
Investment

II

III

IV

The more advanced the product the higher the


purchase price and your profit, but

Commercialization
stages
10
9
8
7
6
risk for purchaser

risk for seller

4
3
2
1
0
1

The risk of development and failure is also increasingOnly 12% of compounds entering the clinical phase
will make it to the market

Key success factors


for commercialization

Valid IP
Proper Product development
Early Business development
Regulatory check
Cooperate versus compete decision
Deal structure

IP Management
Build up strong IP
The freedom to operate (make, use or
sell products)
The provision of a "technology fence"
Controlled access to a market niche
Licensing opportunities

IP
The power of licensing
Quickly capitalize on new technologies
Using technology for competitive advantage
Global business participation
Maximizing profits from deals

From R&D to
Commercialization:

clinical
phase
IV

commercialization

registration
/approval

IP patents,
etc.

Idea

clinic
chemical preclinical phase I
synthesis

clinical
phase III
clinic
phase II

Parallel Commercialization
Pathway
Who is translating R&D results to
commercialization ?

Invention

Market

How does the


Inventor bridge
the gap?

What is the
market?

Commercialization
roadmap
IP
Scientific product development
Business Development
You can start to commercialize at every
timepoint in product development, If you take
into account the critical components for
commercialization success

The 4 driving forces


the product being assessed
compared to existing
technologies, including
the medical or
market need for
Technology
your product

& IP

Management
what management
capabilities are
available and what
will be needed

what is the future


market potential
for your product,
regulatory hurdles

Market

Financials

what expenses are


expected during the
whole process of
development and
commercialization,
what financial resources
are available,
how can the ROI be
calculated

Critical components for


commercialization success
What are the precondition for marketing a
healthcare product ?
Regulations all healthcare products are
regulated in terms of market access. Are you
aware of them ?
Regulatory Requirements what are the
specific requirements for your product ? Do
you meet them ?

Critical components for


commercialization success
Regulatory Approval
All product development plans have to reflect
the regulatory requirements
Making expensive mistakes in the beginning,
that turn out to be dead ends in product
development cannot be corrected at the time
of application for product approval.
Talk to regulatory experts or officials before
you start !

Commercialization
Roadmap
Do you have strong IP ?
Where are you in product development ?
What are the market needs ? competition ?
other innovators ? Business Development
Timelines for development
What are the regulatory requirements ?

Critical components for


commercialization success
R&D
Development
plan

IP protection

Manpower

Manufacturing

Market
research

Business
Development

License
Agreements

Technology &
Science

Market

Management

Financials

Regulatory
Approval

Timelines

Strategic or
distribution
partners

Fundraising

Company
valuation

Commercialization
Options
Compete or cooperate
Distribution vs. licensing out

Compete or cooperate
Return on investment tends to be higher for a
cooperation strategy than a competition
strategy when one or more of three
conditions exists for the start-up company.
These conditions are the following:
The firm has a high degree of control over
its intellectual property rights
The firm enjoys low deal transaction costs
There is a high sunk cost requirement for
the firm to compete in its industry

Compete or cooperate
Start-ups benefit more from cooperation strategies
than compete strategies when they:
possess strong intellectual property rights,
utilize brokers to facilitate trade,
leverage the assets of established firms to
commercialize their innovation.
In these situations, a start-up can earn higher returns
by acting as an upstream supplier of innovation rather
than as a horizontal innovation-oriented competitor. In
other words, by participating in the market for ideas
rather than in the market for products, new companies
can make the best use of their innovations.

Distribution vs. licensing


and other options
Decision base:
Capital requirements
Manpower requirements
Time Needed to Access the Marketplace
Accessibility to Worldwide Markets
Liability & Exposure to Risk

Licensing-out
How Much - Setting the Royalty Rate
There is no such thing as a typical or standard royalty rate.
Licensor : 20% of the total benefits , licensee: 80% of the
profits
Royalty result: 2% to 10% of gross sales.
Major factors include:
The inherent quality of the technology,
The market potential of the technology,
The fit with the licensee's business,
The ability to assure the licensee protection for unauthorized
use of the technology
The risk involved in the agreement (technology, business etc.).

Commercialization &
Development Roadmap
Build strong IP
Start proper product development planning
Execute product development based on
market needs
regulatory requirements

Start Business Development at an early stage


Commercialize at the earliest possible stage