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The gap in the value creation chain

On a national level, the University of Freiburg comes out reasonably well in comparison with other universities regarding the number of patents filed and licensed. But is it enough to protect an intellectual property and sell it to a company? “No,” says Prof. Dr. Bernhard Arnolds from the Central Office of Research Funding and Technology Transfer at the University of Freiburg. “This alone does not generate money.” European governments are working hard to develop and put in place measures that close the gap in the value creation chain between the invention and the innovative end product. This is the only way that universities and industry can remain competitive on the international level.

Only one of many examples of successful biotechnology start-up companies spun off from the University of Freiburg: GeneScan Europe AG offers GMO (genetically modified organisms) tests for the food and animal feed- producing industry. © GeneScan Europe AG

"What kind of products can universities offer?" asks Prof. Dr. Bernhard Arnolds from the Central Office of Research Funding and Technology Transfer at the University of Freiburg (ZFT). "Besides excellently trained graduates and third-party financed research collaborations with industry, universities create inventions which then become the basis for the establishment of start-up companies." The University of Freiburg has an excellent record in the field of inventions: over the last ten years, 300 projects have led to the establishment of 90 companies, of which only nine no longer exist in their original form. In the same period of time, the ZFT has filed around 1200 patents, of which about 600 have been licensed to companies. The majority of these patents stem from the fields of medicine, medical technology, materials research and biotechnology, covering the area of the life sciences. "But filing patents does not make you rich," said Arnolds. "Barely playing around with patents does not get us anywhere."

A canyon and other difficulties

An example of a promising innovation: the “Vitamon” sensor implant developed at the University of Freiburg in cooperation with the Institute of Microsystems Engineering (IMTEK) is used for the permanent monitoring of important vital parameters such as pulse, pulse type, blood pressure or oxygen saturation. © IMTEK

The income generated by the University of Freiburg from the licensing of patents currently amounts to a seven-figure sum. This very probably puts the University of Freiburg ahead of other German universities and also places it fairly high on a European level. However, "Partners Healthcare", a cooperation of several Boston-based hospitals, achieves 9-figure revenues from patent licensing. Does this mean that European scientists are not as good or are less innovative than their American colleagues?  No, not at all. Arnold believes that the major reason for this discrepancy is a gap, or rather a gaping hole, in the development process of products. The invention, i.e. the idea that a researcher has, is just the starting point of the value creation chain. At the end of the chain are the companies that offer a profitable marketable application. Arnolds compares the problem with a canyon. On one side of the canyon there is a scientist on a horse, waving a flag and shouting out his idea. On the other side of the canyon, there is a representative from industry, shouting: we have the money and we are looking for something with commercial potential! But the two cannot get together because there is no bridge.

Let's take an example from cancer research: oncologists who have discovered a substance that is able to inhibit the growth of cancer, test this substance in cell cultures and in animal experiments. The substance works well in these tests and a patent is filed. If they are lucky, a company will licence their patent. This is where in the majority of cases, the progress of the potential drug comes to a standstill and only generates a limited amount of money for the university and the scientists. This is because a substance that has only been tested in cell culture and in animal experiments is of no value for pharmaceutical companies. What makes the difference is a successful pilot study involving human subjects. But human studies are extremely expensive. And what is often an even greater problem, the project in question is competing with the company's other projects. Companies will usually decide to pursue the maturest project that is the closest to entering the market. Therefore, science projects, in particular basic science projects in an early or immature stage of development, are passed over. Given that a drug takes about fifteen years from conception to marketing authorisation, the resulting profit is seen as too low when the fact that patents are protected for a period of 20 years is taken into account. The substances end up collecting dust in  company cellars.

Institutions that advance market-oriented research

“There is a major difference between Europe and America,” said Arnolds. “Here in Germany, inventions are not processed quickly enough to be able to promise rapid and secure value.” We lack product-oriented developments. European researchers believe that all that is needed is to discover a substance or develop a method. In America, this is the point at which the real work begins. Arnolds’ solution is the following: “We need institutions that work with universities to advance market-oriented research. The institutions need to bring economic know-how to the projects, which means an ability to weigh up the risks and opportunities of an invention. These institutions require state or private capital that can be used for the development of prototypes. Arnolds and his colleagues at the ZFT have now developed a concept for and have just submitted a grant proposal.

“Slowly but surely politicians are starting to think differently,” said Arnolds. “The keywords ‘translational research’ are now often heard in both European and German debates.” According to Arnolds, Europe would be well advised to get its skates on. Europe is still ahead of countries such as India and China, however there is a growing number of inventors entering the market in both India and China, inventors who are both well trained and have as many excellent ideas as their European colleagues.

Further information:
Prof. Dr. Bernhard J. Arnolds
Zentralstelle für Forschungsförderung und Technologietransfer (ZFT)
Campus Technologies Freiburg GmbH (CTF)
Stefan-Meier Str. 8
79104 Freiburg
Tel.: +49 (0)761/203 4990
Fax : +49 (0)761/203 4992
E-mail: ctf(at)zft.uni-freiburg.de

Website address: https://www.gesundheitsindustrie-bw.de/en/article/news/the-gap-in-the-value-creation-chain