SBIR: GOOD FOR THE ECONOMY; GOOD FOR PATIENTS David Connell Centre for Business Research, Cambridge Judge Business School
Member NHS England SBRI Management Board
6th April 2016 IMSTA Annual Conference, Dublin
© David Connell
HOW SCIENCE AND TECHNOLOGY BUSINESSES START: THE CONVENTIONAL WISDOM
© David Connell
HOW SCIENCE AND TECHNOLOGY BUSINESSES START: THE CONVENTIONAL WISDOM
• Define product idea
© David Connell
HOW SCIENCE AND TECHNOLOGY BUSINESSES START: THE CONVENTIONAL WISDOM
• Define product idea • Write business plan
© David Connell
HOW SCIENCE AND TECHNOLOGY BUSINESSES START: THE CONVENTIONAL WISDOM
• Define product idea • Write business plan
• Raise venture capital
© David Connell
HOW SCIENCE AND TECHNOLOGY BUSINESSES START: THE CONVENTIONAL WISDOM
• Define product idea • Write business plan
• Raise venture capital • Develop and market product
© David Connell
HOW SCIENCE AND TECHNOLOGY BUSINESSES START: THE CONVENTIONAL WISDOM
• Define product idea • Write business plan
• Raise venture capital • Develop and market product 12
CUMULATIVE10 CASH FLOW 8
6 4 2
0 -2
YEARS 1
2
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-4 -6 -8
£m MANY © David Connell
9
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HOW SCIENCE AND TECHNOLOGY BUSINESSES START: THE CONVENTIONAL WISDOM
• Define product idea • Write business plan
• Raise venture capital • Develop and market product 12
CUMULATIVE10 CASH FLOW 8
6 4 2
0 -2
YEARS 1
2
3
4
5
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THE ‘HARD START UP’ OR ‘SILICON VALLEY’ MODEL
-4 -6 -8
£m MANY © David Connell
RESEARCH ON ROLE OF SOFT COMPANIES AND R&D CONTRACTS IN THE CAMBRIDGE CLUSTER
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Europe’s leading science and technology clusters
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University has had 92 Nobel Prize winners – more than any other university in the world
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Other research labs include – Microsoft, Intel, Hitachi, Toshiba, Rolls Royce, Pfizer, GSK, Unilever, Philips GSK and the Wellcome Trust Sanger Institute
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1500 hi-tech firms; 53,000 employees © David Connell
RESEARCH ON ROLE OF SOFT COMPANIES AND R&D CONTRACTS IN THE CAMBRIDGE CLUSTER
•
Europe’s leading science and technology clusters
•
University has had 92 Nobel Prize winners – more than any other university in the world
•
Other research labs include – Microsoft, Intel, Hitachi, Toshiba, Rolls Royce, Pfizer, GSK, Unilever, Philips GSK and the Wellcome Trust Sanger Institute
•
1500 hi-tech firms; 53,000 employees © David Connell
MYTHS OF UK INNOVATION POLICY
© David Connell
MYTHS OF UK INNOVATION POLICY MYTH 1: Academic IP is the key source of ideas for successful science and technology start-ups
© David Connell
MYTHS OF UK INNOVATION POLICY MYTH 1: Academic IP is the key source of ideas for successful science and technology start-ups
© David Connell
MYTHS OF UK INNOVATION POLICY MYTH 1: Academic IP is the key source of ideas for successful science and technology start-ups MYTH 2: The key funding model for successful science and technology companies is Silicon Valley style venture capital
© David Connell
MYTHS OF UK INNOVATION POLICY MYTH 1: Academic IP is the key source of ideas for successful science and technology start-ups MYTH 2: The key funding model for successful science and technology companies is Silicon Valley style venture capital
© David Connell
MYTHS OF UK INNOVATION POLICY MYTH 1: Academic IP is the key source of ideas for successful science and technology start-ups MYTH 2: The key funding model for successful science and technology companies is Silicon Valley style venture capital THE KEY DRIVER OF INNOVATION IS SOLVING CUSTOMER PROBLEMS THOUGH R&D CONTRACTS IN A BUSINESS ENVIRONMENT
© David Connell
THE ALTERNATIVE “SOFT START-UP” MODEL 12
CUMULATIVE 10 CASH FLOW8 6 4
2
YEARS
0 -2
1
2
3
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-4 -6 -8
£m MANY
© David Connell
9
10
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12
THE ALTERNATIVE “SOFT START-UP” MODEL 12
CUMULATIVE 10 CASH FLOW8 6 4
2
YEARS
0 -2
1
2
3
4
5
6
7
8
9
10
11
12
-4 -6 -8
£m MANY
Use development and consulting contracts to: •
generate early revenues
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build credibility and expertise
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clarify real user needs
•
•
secure lead customer
reduce early financing requirements
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retain entrepreneurial control
© David Connell
SUCCESES SIGNIFICANTLY BASED ON R&D CONTRACTS/LEAD CUSTOMERS
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All of the Cambridge cluster’s five largest companies: (Arm, Domino Printing Sciences, Cambridge Silicon Radio, Autonomy, Aveva)
© David Connell
SUCCESES SIGNIFICANTLY BASED ON R&D CONTRACTS/LEAD CUSTOMERS
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All of the Cambridge cluster’s five largest companies: (Arm, Domino Printing Sciences, Cambridge Silicon Radio, Autonomy, Aveva)
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Cambridge Antibody Technology
© David Connell
SUCCESES SIGNIFICANTLY BASED ON R&D CONTRACTS/LEAD CUSTOMERS
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All of the Cambridge cluster’s five largest companies: (Arm, Domino Printing Sciences, Cambridge Silicon Radio, Autonomy, Aveva)
•
Cambridge Antibody Technology
•
Wolfson Microelectronics
© David Connell
SUCCESES SIGNIFICANTLY BASED ON R&D CONTRACTS/LEAD CUSTOMERS
•
All of the Cambridge cluster’s five largest companies: (Arm, Domino Printing Sciences, Cambridge Silicon Radio, Autonomy, Aveva)
•
Cambridge Antibody Technology
•
Wolfson Microelectronics
•
Dyson Ltd, Vodafone (spin out from Racal)
© David Connell
SUCCESES SIGNIFICANTLY BASED ON R&D CONTRACTS/LEAD CUSTOMERS
•
All of the Cambridge cluster’s five largest companies: (Arm, Domino Printing Sciences, Cambridge Silicon Radio, Autonomy, Aveva)
•
Cambridge Antibody Technology
•
Wolfson Microelectronics
•
Dyson Ltd, Vodafone (spin out from Racal)
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Microsoft, Intel, Porsche, SAP
© David Connell
IN CONTRAST……..
© David Connell
Plastic Logic (Cavendish Lab) •
Over $500m raised since 2000
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2013 revenues £1m; pre tax loss £70m
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2015 German “factory” hived off; Cambridge business relaunched as Flexenable with “softer” strategy
© David Connell
Plastic Logic (Cavendish Lab) •
Over $500m raised since 2000
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2013 revenues £1m; pre tax loss £70m
•
2015 German “factory” hived off
Solexa (UC Dept of Chemistry) •
$70m raised since 1999
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Sold for $650m to Illumina in 2007
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170 research staff in Cambridge; underpins US based company with $2 billion revenues and 4000 employees worldwide
© David Connell
Plastic Logic (Cavendish Lab) •
Over $500m raised since 2000
•
2013 revenues £1m; pre tax loss £70m
•
2015 German “factory” hived off
Solexa (UC Dept of Chemistry) •
$70m raised since 1999
•
Sold for $650m to Illumina in 2007
•
170 research staff in Cambridge; underpins US based company with $2 billion revenues and 4000 employees worldwide
Astex (UC Depts of Chem and Biochem) • $80m raised since 1999 • Sold to Otsuka for $900m in 2013
• 100 research staff remaining in Cambridge © David Connell
US GOVERNMENT ‘PROCUREMENT BASED’ INNOVATION POLICIES
• Small Business Innovation Research (SBIR) $2.5 billion per annum : • $150k for Phase I
• $1m for Phase II
• Contracts: 100% funding; part up-front • Companies get IP
© David Connell
US GOVERNMENT ‘PROCUREMENT BASED’ INNOVATION POLICIES
• Small Business Innovation Research (SBIR) $2.5 billion per annum : • $150k for Phase I
• $1m for Phase II
• Contracts: 100% funding; part up-front • Companies get IP
• Substantial additional Federal R&D contracts for companies inc SMEs
• DARPA - $3 billion per annum © David Connell
UK SBRI LEGAL STATUS •
A contract, not a grant. Competitions and awards under EU PreCommercial Procurement Rules
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100% funding, up-front stage payments
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Companies keep IP
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Open to all EU organisations
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UK based SMEs overwhelmingly dominant; not suitable for universities or collaborative R&D
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Contractual relationship with provider; subcontractors at their discretion
© David Connell
UK SBRI LEGAL STATUS •
A contract, not a grant. Competitions and awards under EU PreCommercial Procurement Rules
•
100% funding, up-front stage payments
•
Companies keep IP
•
Open to all EU organisations
•
UK based SMEs overwhelmingly dominant; not suitable for universities or collaborative R&D
•
Contractual relationship with provider; subcontractors at their discretion
© David Connell
NHS ENGLAND SBRI PROCESS •
Competition themes around well defined NHS needs (NHS customer use or for policy reasons) – led by AHSN’s in rotation
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Paper submissions and shortlisting
•
Dragons Den interviews (panel covers clinical, technology and business perspectives)
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Winners receive 6 month Phase 1 contracts (£50-100k)
•
Report and longer Dragons Den interviews
•
Winners receive 18-24 month Phase 2 contracts (£250k - £1m)
•
Pilot Stage 3
© David Connell
NHS ENGLAND SBRI PROCESS •
Competition themes around well defined NHS needs (NHS customer use or for policy reasons) – led by AHSN’s in rotation
•
Paper submissions and shortlisting
•
Dragons Den interviews (panel covers clinical, technology and business perspectives)
•
Winners receive 6 month Phase 1 contracts (£50-100k)
•
Report and longer Dragons Den interviews
•
Winners receive 18-24 month Phase 2 contracts (£250k - £1m)
•
Pilot Stage 3
© David Connell
NHS ENGLAND SBRI PROCESS •
Competition themes around well defined NHS needs (NHS customer use or for policy reasons) – led by AHSN’s in rotation
•
Paper submissions and shortlisting
•
Dragons Den interviews (panel covers clinical, technology and business perspectives)
•
Winners receive 6 month Phase 1 contracts (£50-100k)
•
Report and longer Dragons Den interviews
•
Winners receive 18-24 month Phase 2 contracts (£250k - £1m)
•
Pilot Stage 3
© David Connell
SBRI HEALTHCARE 2009/10 TO 2014/15 •
£42m awarded, 107 Phase 1s, 37 Phase 2s
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£32m additional funds leveraged
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£1.5 billion per annum potential NHS savings
•
17 products on the market
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£20m budget in 2014/15 and 2015/16; less in 2016/17
© David Connell
SBRI HEALTHCARE 2009/10 TO 2014/15 •
£42m awarded, 107 Phase 1s, 37 Phase 2s
•
£32m additional funds leveraged
•
£1.5 billion per annum potential NHS savings
•
17 products on the market
•
£20m budget in 2014/15 and 2015/16; less in 2016/17
© David Connell
RECENT THEMES INCLUDE……. •
Brain injury
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Medical imaging
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Diabetic foot ulcer care
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Reducing pressure on emergency and urgent care
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Improving outpatient services through remote management of health and wellbeing
© David Connell
SOME AWARD WINNERS
Light therapy for macular eye disease
Estimated savings to NHS £1billion p.a .
© David Connell
SOME AWARD WINNERS
Light therapy for macular eye disease
Estimated savings to NHS £1billion p.a .
CBT based pain management service app Estimated savings to NHS £20m p.a.
© David Connell
SOME AWARD WINNERS
Nitric oxide releasing dressing for chronic diabetic leg ulcers
© David Connell
SOME AWARD WINNERS
Nitric oxide releasing dressing for chronic diabetic leg ulcers
Electronic nose for early detection of lung cancer Estimated savings to NHS £245m p.a. © David Connell
THANK YOU SOURCE REPORT: Creating Markets for Things that Don’t Exist David Connell Published November 2014 by :
Centre for Business Research Centre for Science and Policy Cambridge Network
OTHER KEY SOURCE MATERIAL AT: www.davidconnell.org www.sbrihealthcare.co.uk
© David Connell
