Neil Domigan: KiwiNet needed to help spur business-linked research

Ruth Richardson of KiwiNet. Photo / Glenn Jeffrey

Opinion

Spending on science with a clear focus needs to grow, writes Dr Neil Domigan, a director of Cranleigh Merchant Bankers.

The formation of KiwiNet by some universities and Crown research institutes to help with the commercialisation of science and technology research is a long overdue step in the right direction.

However, if the Government is to increase its research and development spend to be more in line with the average spend by OECD countries - around 0.8 per cent of GDP - processes need to be established to ensure value for money.

As KiwiNet chairwoman Ruth Richardson says, New Zealand's level of commercialisation from the research institutes and universities has been "too low and too slow".

There are four key reasons why the publicly funded R&D spend has not created real value, despite the fact that scientists here are world class and have produced excellent research.

First, too much "blue sky" research goes on without any capability assessment. Instead of being market- driven, projects are often investigator- driven and often without a business case being done first. The philosophy behind early business case assessment is that success can be achieved through a series of fast failures.

Discipline is required to "kill off" projects that do not prove to have worthwhile benefit, as they go on too long, wasting money.

Second, as the KiwiNet members chaired by Ruth Richardson have acknowledged, more focus is required to co-ordinate the business and science communities. Private sector partners can assist with efficient business case modelling and also provide a natural conduit for technology commercialisation. The Government's setting up of the Primary Growth Partnership should also help in this direction. Third, business needs to look at its own R&D spend. OECD statistics show the average ratio of business to government spend by member countries is 2.3:1, whereas the business:government spend in New Zealand is less than half of this at around 1:1.

There are lots of reasons for that, including some OECD countries skewing the data through the large R&D spends by pharmaceutical companies, or big defence budgets. However, crunching the available data shows that 35 per cent of the $1 billion R&D investment made by private companies in this country was by the top 100 technology companies. New Zealand companies across the board have traditionally had a low spend and some have even reduced R&D.

An expert report by Cranleigh for the Government's select Committee on clinical trials showed, for example, that clinical trials have decreased from around $100 million a year in 2000 to around $40 million today.

Finally, the Ministry of Science and Innovation's opinion that more CRIs and universities could benefit from greater commercial expertise is correct. The culture gap between public and private must be bridged and expertise on how to scale R&D results and commercialise them in realistic timeframes should be embraced. Business can also provide intelligence on international investment networks.

The Government's move to create one-stop shops should be extended to establish a single Bioscience CRI such as Israel's Volcani Institute for agrochemicals.

If, for example, AgResearch, Scion and Plant and Food Research were rolled into one entity, with a board that had strong business representation, it could attract (or attract back) world- class personnel, create a world-class commercialisation service, leverage Government funding to generate increased revenue streams and attract international investment.

A combined, large intellectual property portfolio under one entity may attract investor interest, which may be interested and participate in a subsequent intellectual property development fund.

Another idea worth considering could be the deliberate cycling of people between government, business and science. Over time, the degree of internal collaboration needed for the results of R&D to be as good as possible would improve.

Dr Neil Domigan, a director of Cranleigh Merchant Bankers, specialises in the life sciences sector. He has co-founded three life sciences companies and during the 1990s worked as a scientist at the biotechnology unit of the Pasteur Institute in Paris.