Institutional Structures and Arrangements at Public Sector Laboratories

1. Institutional Structures and Arrangements at Public Sector Laboratories Lyndal Thorburn Advance Consulting & Evaluation Pty Ltd OECD Workshop on High Technology Spinoffs, Working Group on Innovation and Technology Policy, 8 December 1999

2. 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 fromDSTO, 5 others Public Sector Laboratories

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

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

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)

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)

7. CSIRO Startups • Range of forces: • institutional • technological • profit • market • Finance rare • Equity rare

8. Stand-alone Individual shareholders licence CSIRO New Spinoff staff royalties • Staff resign, redundancy, use $ for co. finance

9. CSIRO licence New Spinoff licence One or more firms/agencies staff staff equity equity royalties royalties Joint Venture • CSIRO staff usually on leave without pay, funding from jv partners, CSIRO may have equity position

10. Existing firm staff/equity licence CSIRO New Spinoff staff royalties Subsidiary of single existing firm • CSIRO staff resign or LWOP, funding from parent

11. Public shareholdings equity licence CSIRO New Spinoff staff royalties Public listing

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

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

14. MRI licence equity royalties Staff? New Spinoff Wholly owned subsidiary

15. MRI licence New Spinoff licence Multiple research institutions or single firms staff equity equity royalties royalties Joint Venture • Spinoff staff are usually provided by the partner firm or • are recruited directly; researchers stay within MRI • n = 1 (+2)

16. VC and other private investors equity licence MRI New Spinoff staff royalties Subsidiary of multiple owners • Spinoff driven by finance opportunity, MRI staff p/t in firm

17. Summary of Models

18. Issues • Spinoff rates influenced by • Basic vs applied focus • Commercial imperatives • Commercial focus • Finance • Spinoff structures influenced by • Legal status • Perceptions of risk