In this second article in our ‘How to…’ series, we reflect on what we learned from Mugdha Joshi, IP & Licensing expert at Kings College London, in her training session on Intellectual Property.
What is Intellectual Property?
Intellectual Property (IP) is a term that refers to the ‘creations of the mind’ such as inventions, works of art and symbols, names and images used in commerce.
Types of IP
Patents - Works to prevent another person from being able to use the same invention. They cover how inventions work, how they do it, what they are made of and how they are made. A patent lasts for 20 years and it must be renewed on its fourth anniversary. It then must be renewed every year. After 20 years the patent is given to the public. To qualify for a patent, the invention needs to meet the following criteria:
- The invention needs to be undisclosed and not in the public domain before the date of filing. However, any disclosure under a non-disclosure agreement is fine.
- Your idea needs an inventive step that is not obvious to someone with knowledge of the subject.
- It must be a solution to a problem.
- It must be something that can be made and not just speculative.
Copyrights – Protects work created by their author. It must be the author’s own intellectual creation and not have been copied from somewhere else.
Designs – This refers to the aesthetic aspects of an article. It protects 3D objects, or the designs applied to them.
Trademarks – A distinctive sign that identifies certain goods or properties provided by an individual or a company.
Commercialisation of IP
The commercialisation process involves:
- Market analysis - What does your product solve? Why is it better than your competition? Who wants it and why? What are its limitations? What is the development time? (Click here for more on marketing).
- Due Diligence - In-depth research of your company and invention and will include schedules of patents, copyrights and trademarks
- IP protection - Prior art search and patent attorney. You must ensure there is no evidence of your idea already being known.
- Proof of concept fund
- Marketing - Reaching out to companies and sending non-confidential flyers
- Licensing - What’s down the pipeline? Exclusive or non-exclusive licence? What obligations are there, e.g. development milestones?
- Spit-out creation - What do venture capitalists look for? They will want to see all your documentation that demonstrates that you meet various requirements. They will want to see your granted patents. It is a good idea to have a portfolio with multiple aspects of the product covered. They want to see that your product and company is professionally managed and that there are no issues of contested ownership or opposition.
The Bright SCIdea Challenge 2020 Final
SCI are unable to protect any intellectual property submitted as part of the competition. It is in your best interest to not disclose any information that could give away key aspects of your innovation for others to reproduce.
On 6 December 2019 SCI held its entrepreneurial training day for this year’s Bright SCIdea Challenge. The first article in our How to series will take a look at what we learned from Neil Simpson, R&D Director at Borchers, in his training session on how to market and brand your idea.
In order to successfully promote a product or service, it is essential to understand the customer and the market. It is important to be more effective than your competitors in creating, delivering and communicating your idea.
Segmentation, Targeting and Positioning (STP) is a useful tool to help you to define your product and customer base.
When segmenting your customer base, consider the demographics including age, income and gender, as well as their geographical location and behavioural traits.
Once you have segmented your customer base, you will be able to identify which groups are the most suited for your product.
After you have considered which segments to target, you need to take into consideration what your product solves for these people – what is your unique selling point?
The 4 Ps – Marketing Mix
Once you have used the STP framework to define your product and customer base, you can use the 4 Ps Marketing Mix to develop a strategy to bring your product to the market.
Product – This can be a tangible product, for example clothing, or a service. You should consider: What does your product stand for? What needs does it satisfy? How does it differ to your competitors?
Price – It is vital to think carefully about the pricing of your product. Do you compete on price or quality? Consider the perceived value of your product, along with supply costs and competitors’ prices. Pricing your product too high or too low could harm your sales and reputation.
Place – Where is the best location to provide your product to your customer base, and how do you distribute it to them? If you understand your customer base, you will be able to answer important questions such as: Where do your target customers shop? Do they buy online, or in high street shops?
Promotion – What is the most effective way to market your product and which channels should you use? Will you run a social media and email campaign? Would you benefit from attending conferences and exhibitions?
Finally, a useful tool to analyse your current position is the SWOT model. SWOT stands for Strengths, Weaknesses, Opportunities and Threats.
Strengths – How are you perceived by your customer base? What separates you from your competitors?
Weaknesses – What do others see as your weaknesses? What do your competitors do better than you?
Opportunities – What are current market trends? Are there any funding opportunities you could apply for? Are there any gaps in the market?
Threats – Are there any emerging competitors? Do you have any negative media or press coverage?
Using STP, the 4 Ps, and SWOT will be invaluable when it comes to completing your business plan. The more you understand your product, your customer base, where you sell it, and how you sell it, the more successful you will be!
Often, the pharmaceutical industry is characterised as the ‘bad guy’ of equality in healthcare. This is particularly evident in the United States, with cases such as Martin Shkreli, whose company Turing Pharmaceuticals infamously increased its leading HIV and malaria drug by over 50 times its value overnight, and a lack of regulation in advertising. The latter is accused of influencing prescriptions of certain brands based on consumer demand, which could lead to unnecessary treatment and addiction.
With stories like these dominating the media, it is no wonder the public if often found to harbour a negative view towards ‘Big Pharma’. However, the actions and motives of this industry are rarely fully understood. Here are five facts about pharmaceutical manufacturing you might not know:
1. Out of 5,000-10,000 compounds tested at the pre-clinical stages, only one drug will make it to market
The drug discovery and development process explained. Video: Novartis
This may seem like slim odds, but there are many stages that come before drug approval to make sure the most effective and reliable product can be used to treat patients.
There are four major phases: discovery and development; pre-clinical research, including mandatory animal testing; clinical research on people/patients to ensure safety; and review, where all submitted evidence is analysed by the appropriate body in hopes of approval.
2. If discovered today, aspirin might not pass current FDA or EMA rules
Some older drugs on the market would not get approval due to safety issues. Image: Public Domain Pictures
Problems with side effects – aspirin is known to cause painful gastrointestinal problems with daily use – mean that some older drugs that remain available might not have gained approval for widespread use today. Both the US Food and Drug Administration (FDA) and European Medicines Agency (EMA) run programmes that monitor adverse side effects in users to keep consumers up-to-date.
Tighter regulation and increased competition mean that the medicines we take today are arguably more effective and safer than ever.
3. The average cost of drug development has increased by a factor of 15 in 40 years
Back in the 1970s, the cost to produce a drug from discovery to market was $179 million. Today, drug companies shell out $2.6 billion for the same process – a 1,352% increase! Even considering inflation rates, this number is significantly higher.
With the average length of time needed to develop a drug now 12 years, time is an obvious reason for the high costs. However, the difficulty of finding suitable candidates at the discovery stage is also to blame. Pre-clinical stages can be resource-intensive and time-consuming, making pharmaceutical companies look towards other methods, such as the use of big data.
4. The US accounts for nearly half of pharmaceutical sales
The Statue of Liberty. Over 40% of worldwide medicines sales are made by US companies. Image: Wikimedia Commons
The US is the world-leader in pharmaceutical sales, adding $1.2 trillion to the economic output of the US in 2014 and supporting 4.7 million jobs. The country is also home to the top 10 performing pharmaceutical companies, which include Merck, Pfizer, and Johnson & Johnson.
While the EU’s current share is worth 13.5%, this is expected to fall by 2020 with emerging research countries, such as China, projected to edge closer to the US with a share of 25%.
5. Income from blockbuster drugs drives research into rare diseases
Rare diseases are less likely to receive investment for pharmaceutical research. Image: Pixabay
Diseases that affect a large proportion of the worldwide population, such as cancer, diabetes, or depression, are able to produce the biggest revenue for pharmaceutical companies due to the sheer volume of demand. But rarer diseases are not forgotten, as research into these illnesses is likely funded by income from widespread use of the aforementioned medicines.
Rare – or ‘orphan’ – diseases are those that affect a small number of the population, or diseases that are more prevalent in the developing world. With the increasing cost of producing a drug, it becomes risky for pharmaceutical companies to create a fairly-priced drug for a small fraction of patients.
However, this seems to be changing. Researchers from Bangor University, UK, found that pharmaceutical companies that market rare disease medicines are five times more profitable than those who do not, and have up to 15% higher market value, which could finally provide a financial incentive for necessary research.
In March 2017, the world’s largest coatings producer, Pennsylvania-based PPG – which three years ago announced it had budgeted $4bn for major acquisitions but still has nothing to show for it – laid siege to Amsterdam-based rival AkzoNobel. More recently, US hedge funds have drawn Basel-based Clariant into their sights.
While the motives of industrial investors and hedge funds differ, the tactics of forcing a company to make strategic changes that seemingly will generate more value suit both. Pursued for some time by private equity, and aware that other would-be suitors were hot on its trail, Akzo earlier in 2017 announced plans to hive off its speciality chemicals business into a standalone company. The same concerns were central to Clariant in its decision to merge with Huntsman. As it appears, neither tactic has deterred or deferred activist action.
Binnenhof, The Hague, Netherlands. The Dutch government assisted Akzo in avoiding the attempted takeover. Image: Wikimedia Commons
At Akzo, PPG wielded the battering ram into June, with even the lure of a €26bn deal making no impression. With moral support from the Dutch government, the European coatings market leader parried the thrust. Nevertheless, financial markets have it that the US rival, with support from activist investor Elliott Advisers – which owns 9.5% of the Dutch player’s share capital – will return to fight another day.
Elliott continues to stir the waters with legal challenges. It has lost two cases so far, but the tentative truce sought by the courts until Akzo holds an extraordinary general meeting in September appears shaky. Already, the defence effort has taken a toll on the Amsterdam company, which owns the assets sloughed off some years ago by erstwhile chemical industry heavyweight ICI.
Swiss chemical company Clariant, whose interests vary from transport to beauty, are also under siege from US opponents.
Down the road in Switzerland, Clariant is being pummelled by White Tale, an acquisition vehicle for US hedge funds Corvex and 40 North, which have meanwhile acquired 10% of its share capital. The funds are seeing to torpedo the merger with Huntsman, contending that the combination lacks strategic rationale and undermines the Swiss group’s strategy of becoming a pure-play specialty chemicals company.
Because of the family’s interest, the New York vulture capitalists can’t get their hands completely around the Huntsman jugular, but making the leaders of the family-led business uncomfortable about the impact on its business may generate some degree of satisfaction. The US firm has already reacted to pressure by spinning off its pigments business.
Clariant CEO Harriolf Kottmann. Image: PressReleaseFinder@Flickr
Also under obvious pressure, Clariant CEO Harriolf Kottmann, in presenting semi-annual financial results in July, announced that management was amenable to selling about a quarter of assets to appease the markets. This, he suggested, could include the divestment of the speciality chemicals group’s lower-margin Plastics & Coatings division.
The Swiss player’s largest business unit, spun off last year, which manufactures masterbatches and pigments for colouring plastics, accounts for 40% of group sales. With the proceeds from the asset sale, the investors reason, Clariant could pay a special dividend and make them more willing to stay the course without a merger.
The chemical industry sector is undergoing some huge changes worldwide. Video: PWC’s Strategy&
At least openly, no activist ‘invader’ has yet been spotted trying to overcome the well-fortified ramparts of Deutschland AG or been coldly brushed off by the Ecole Nationale-trained leaders of France’s chemical producers. However, if the raiders’ recent forays into the Netherlands and Switzerland eventually succeed and find imitators, the picture could change – especially as acquisition-hungry companies and the so-called vulture capital funds that took a wrecking ball to Dow and DuPont seem to have joined forces.
Meanwhile, there may be some relief on the horizon for CEOs currently struggling through sleepless nights. Even with deal fever still simmering, some M&A watchers believe takeovers or mergers worldwide may have reached their zenith. Not least, as global economic recovery gathers strength, rising interest rates will cool the enthusiasm for more expensive transactions, the argument goes.