17.40 There is a danger of repeating outdated perceptions of Australia’s ability to commercialise research, including genetic research, when considering potential impediments to technology transfer. The DEST Report described this view as a ‘myth’, pointing out that:
The data available demonstrate that the best-performing Australian universities are achieving research commercialisation outcomes broadly comparable with the best in the US and Europe, and way above their average … Australian universities have significantly strengthened their research commercialisation capacities and performance in the past five years.
17.41 In 2002, the Prime Minister’s Science, Engineering and Innovation Council (PMSEIC), the National Health and Medical Research Council (NHMRC), the ARC and the Commonwealth Scientific and Industrial Research Organisation (CSIRO) released a study into the performance of Australian universities and other research institutions in commercialising their research. The study suggested that Australia performed better than both Canada and the United States in commercialising its research, measured in terms of income generated from licences and start-up company formation relative to research expenditure and the size of the national economy. However, Australia lags behind both countries in terms of the number of licences executed and behind the United States in terms of the number of patents issued.
17.42 Despite the improvement in Australia’s capacity to commercialise its research, a number of potential impediments to transfer of genetic technology for commercialisation remain. These are discussed below and include:
lack of commercial experience;
lack of institutional support for commercialisation;
decision making structures and attitudes;
researcher attitudes and experience;
difficulty in finding industry receptors; and
lack of resources.
Lack of commercial experience
17.43 Effective commercialisation is promoted where research groups have developed business skills and experience with intellectual property. These groups are then more able to produce sound business plans, appreciate patenting laws, establish workable commercial structures for spin-off companies and negotiate agreements.
17.44 Lack of experience in managing intellectual property and dealing with the biotechnology industry may be an impediment to the effective transfer of technology from research organisations. The Report of the Health and Medical Research Strategic Review Committee (Wills Report) suggested that:
professional business development management within the research enterprise is crucial and generally lacking in Australia. Together with increased investment in fundamental research … it is probably the most important initiative for developing a dynamic industry sector. Commercialisation success depends on an intimate knowledge of the industry, intense commitment to researchers and the research, and high-level management skills that can match the research to a commercialisation strategy and negotiate a favourable agreement.
17.45 Similar concerns were voiced more recently in submissions to the DEST Collaboration Review. The Review reported that many submissions stated that the level of entrepreneurial management skills available in Australia was a barrier to commercialisation in Australia. In particular, they highlighted ‘the need to develop and maintain a critical mass of experienced commercialisation managers to assist [publicly funded research agencies], universities and industry’.
17.46 Lack of experience may occur in part because technology transfer within an organisation is dealt with by one central office covering all areas of research, which may not have the experience to deal with issues particular to individual areas of research, such as the commercialisation of genetic research. As might be expected, it appears that smaller organisations are more likely to lack transfer and commercialisation expertise. The DEST Report noted that there is a relationship between the productivity of technology transfer offices and scale, with large organisations generating greater returns.
17.47 Inexperience in technology transfer offices might also stem from a failure to employ people with adequate or appropriate skills. For example, the DEST Report noted that employing staff with business and entrepreneurial skills, rather than legal skills, appears to promote new business formation.
17.48 Lack of appropriate skills and experience with gene patenting and technology transfer may result in a variety of problems, including inefficient management of patents, failure to add sufficient value to technology before licensing and inappropriate business strategies. The ALRC received suggestions that technology transfer offices can actually hinder the process of commercialisation where they lack the appropriate expertise.
Lack of institutional support
17.49 Research may fail to be commercialised where organisations choose not to pursue commercialisation but do not assign the patented technology elsewhere to enable others to do so. This may also create a disincentive for researchers to work with commercialisation offices in future if the organisations are unreceptive to potential commercialisation.
17.50 Effective technology transfer requires an integrated approach, with transfer office staff working closely with researchers to identify, protect and develop technology. Lack of institutional support, either due to lack of funding to provide sufficient staff and facilities, or lack of support for integrative programs, may prevent this interaction from occurring. As the DEST Report has commented:
What emerges strongly from experience is that if the research commercialisation function is set up without strong links with, and support from, the institution, it will be marginalised and, in all probability, fail. Research commercialisation is not simply an ‘add-on’ function; it requires a reworking of strategy and resource allocation to make it an integral part of the university’s objectives and operations.
Decision making structures and attitudes
17.51 Negotiations for technology transfer between research organisations and commercial organisations may be slow due to the sometimes complex decision making structures within research organisations. Research organisations may also be risk-averse, which may lead them to be overly cautious in making decisions about the transfer and commercialisation of patented research.
Researcher attitudes and experience
17.52 The Wills Report suggested in 1999 that Australian researchers had a relatively low rate of involvement in research commercialisation in comparison with other countries. Consequently, Australia’s failure to commercialise its intellectual property was in part attributed to a lack of researcher involvement in new business ventures to exploit technology. Researchers may resist commercialisation and hence not facilitate transfer or work in cooperation with technology transfer offices. The need to publish may also be a disincentive for researchers to participate in commercialisation if the requirements of a patent application mean publication must be delayed.
17.53 However, the Australian research community’s attitude to patenting and commercialisation appears to be changing, with researchers becoming more receptive to the need to patent and commercially develop the results of genetic research.
Difficulty in finding industry receptors
17.54 As noted in Chapter 16, the Australian biotechnology industry is small, and consists largely of upstream companies that license their patented technology to larger international companies for further development. The industry is also quite fragmented and characterised by relatively low research and development spending by international standards.
17.55 The DEST Report concluded that, consequently, Australian industry has a fairly poor capacity to absorb technology generated within universities. As a result, research organisations may sometimes face a lack of industry receptors to which they can transfer technology. This may make it difficult for organisations to establish working partnerships with industry, and may require them to negotiate with overseas firms. The ARC has expressed concern about this shortage of industry receptors for Australian research, suggesting that some of the benefits of Australia’s public investment in genetic research might consequently be lost overseas. Research organisations also report difficulty in identifying appropriate commercial partners.
Lack of resources
17.56 Some organisations may lack the funds to support a patent application. The Nicol–Nielsen Study reported that ‘although quality research may be performed in Australian research institutions, there are insufficient resources to support large scale patenting’. This may be generally attributed to the cost of applying for and maintaining a patent and, in many cases, a research organisation may choose not to support an application beyond the provisional stage without external financial support. An inability to obtain appropriate patent protection may prevent organisations from transferring technology.
17.57 Successful technology transfer rests in part on technology transfer offices having staff with the appropriate skills and experience. Lack of resources may prevent technology transfer offices from employing staff with the expertise to deal with gene patenting and negotiations with the biotechnology industry.
 Department of Education Science and Training, Best Practice Processes for University Research Commercialisation (2002), vi.
 Prime Minister’s Science Engineering and Innovation Council, University–Industry Linked Research in Australia (1998).
 Australian Research Council, Commonwealth Scientific and Industrial Research Organisation and National Health and Medical Research Council, National Survey of Research Commercialisation (2002), 43–44.
 Prime Minister’s Science Engineering and Innovation Council, Profiting from the Biotechnology Revolution (1998), 5.
 Health and Medical Research Strategic Review Committee, The Virtuous Cycle: Working Together for Health and Medical Research (1998), 128.
 Department of Education Science and Training, Review of Closer Collaboration between Universities and Major Publicly Funded Research Agencies (2004), 33–34.
 Department of Education Science and Training, Best Practice Processes for University Research Commercialisation (2002), 35.
 Ibid, 35.
 Queensland Biotechnology Advisory Council, Consultation, Brisbane, 2 October 2003; Bio Innovation SA, Consultation, Adelaide, 16 September 2003; Western Australian Department of Health and others (research issues), Consultation, Perth, 17 September 2003.
 Bio Innovation SA, Consultation, Adelaide, 16 September 2003.
 Department of Education Science and Training, Best Practice Processes for University Research Commercialisation (2002), 52.
 UniQuest, Consultation, Brisbane, 3 October 2003.
 Health and Medical Research Strategic Review Committee, The Virtuous Cycle: Working Together for Health and Medical Research (1998), 121, 123. Lack of venture capital to support new companies and low levels of industry investment in research and development were also cited as barriers to commercial development of biotechnology research. See Ch 19.
 See, eg, Department of Education Science and Training, Review of Closer Collaboration between Universities and Major Publicly Funded Research Agencies (2004), 33.
 See further Ch 14.
 Department of Education Science and Training, Best Practice Processes for University Research Commercialisation (2002), vii. See also Science and Innovation Mapping Taskforce, Mapping Australian Science and Innovation (2003), 318.
 Department of Education Science and Training, Best Practice Processes for University Research Commercialisation (2002), vii.
 Australian Research Council, Research in the National Interest: Commercialising University Research in Australia (2000), 18.
 D Nicol and J Nielsen, Patents and Medical Biotechnology: An Empirical Analysis of Issues Facing the Australian Industry (2003) Centre for Law and Genetics Occasional Paper No 6, 106.
 Bio Innovation SA, Consultation, Adelaide, 16 September 2003.
 D Nicol and J Nielsen, Patents and Medical Biotechnology: An Empirical Analysis of Issues Facing the Australian Industry (2003) Centre for Law and Genetics Occasional Paper No 6, 78.
 UniQuest, Consultation, Brisbane, 3 October 2003.