Open Innovation primer - OI pharma partners workshop

pharma partnersopen innovation in bioscience

OPEN INNOVATION – a primer

An interactive workshop bringing insights from the life science and IT sectors

Jackie Hunter, Elisabeth Goodman, Michael Barnes - OI Pharma Partners

Granta Park, Cambridge, 11 Nov 2011 (#OICambs11Nov)

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Goals for today

1. Dispel some of the hype that surrounds open innovation

2. Explore key themes – Take a practical approach – Mix of presentations, break-out exercises, case

studies and discussion

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A little background on OI Pharma Partners

• Founded in 2010 by Dr Jackie Hunter • Focus on adding value to Healthcare industries by

realising the power of Open Innovation – Working with life science and healthcare companies on OI

strategy and implementation – Developing OI in Healthcare strategy with EU Cyprus presidency – Member of OI consortia

• What we offer*: – Strategy – diagnosis, and development – Implementation – accessing networks / partners, best practices

in collaborative project management – Intermediary – IP brokering, novel ideas / technologies Combined with scientific expertise..

*see flyer for more details 3


Topics for today (broad timings)

09:30 – 09:45 Introduction (Louise Rushworth, Elisabeth Goodman)

09:45 – 10:15 What is meant by Open Innovation (Mike Barnes)

10:15 – 10:45 What Open Innovation can mean for you (Jackie Hunter)

10:45 – 11:30 How OI differs between large and small organisations, providers and consumers: barriers & enablers (Jackie Hunter)

11:30 – 12:00 The ideal OI Ecosystem (Mike Barnes)

12:00 – 13:00 Discussions over lunch: What participants might do as next steps within / outside their organisations to implement OI as a strategy to create more value

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1. What is meant by OI? What are the key principles?

(Mike) • Do we have the same understanding?

Flip chart exercise

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“The lab is my world”

“The world is my lab”

A mindset based on trust

Dare to share future profits (or losses)

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The Innovation Continuum

Internal R&D

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More than one model for Open Innovation

PRE-COMPETITIVE: Open Access Model

COMPETITIVE: IP Model

OPEN INNOVATION

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IP strategies used in Healthcare

IP Strategy Description Examples

Open Data Access Rapid release of data into public databases; sometimes with an embargo period

Human Genome; Open Access journals, Chembl, Arch2POCM

Non-exclusive License Non-exclusive, royalty-free licenses; Not commercially exploitable.

Open BioSystems; Biomarkers Consortium

Creative Commons License

licenses that enable researchers to keep their copyright but allow others to copy and distribute the work provided that credit is assigned in accordance with specified pre-conditions.

International Molecular Exchange Consortium

Biological Open Source License

Right of use on conditions encouraging cooperation and further development, instead of royalties or other conditions that discourage creation of products. BiOS

Patent Pool

Researchers from various organizations controlling critical patents agree to the formation of a patent pool. Knockout Mouse Project

Geographic-based License Geographic-based restrictions with respect to patenting and licensing. MalariaGEN

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Understanding the continuum between open access and OI

OPEN ACCESS

OPEN INNOVATION

Burden of support On IP holder

Transactional collaboration: Give to Receive

Controlled by IP holder

Fair pricing model

Organisation led

Community driven

OS entities have legs !

Free

Burden of support on Community (=no support?)

Off-limits in some IT organisations

Success dependent on Open collaboration and sharing

Altruistic?

Potentially chaotic

Agreed standards essential Quality

essential

Community needs A shared goal

Lead needs Clear vision

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A Note on IP Management • The greatest open innovation success stories

are non-exclusively licensed – ARM holdings (Open Innovation)

• 98% of mobile phones use at least one ARM processor

– Android smartphone OS (Open source) • Jan 2011 – 300,000 Android handsets activated daily

• OI is about proactive IP management – Strategy depends on your competitive viewpoint

• Create and control strategic know-how and IP • Make available non-strategic know-how and IP

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2. What Open Innovation can mean for you (Jackie)

• Case studies– 10 mins • Personal reflection – 10 mins • Feedback and discussion – 10 mins

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Open innovation can have measurable impact

Procter & Gamble –

Connect + Develop

“It was clear to us that our invent-it-ourselves model was not capable of sustaining high levels of top-line growth” – P&G CEO AG Lafley • 50% of initiatives in product

development have key elements discovered or developed externally

• R&D productivity increased 60% • Innovation success rate doubled

BT – Open Innovation Principles

“[We will] use external sources to multiply our own innovation efforts, deliver growth, reduce costs and get to market faster” – BT’s ambition statement • 17 people are actively licensing

BT technology to external companies, promoted on BT.com

• 5-10 technology scouts claim to have contributed £500 million to BT business plans through innovative products and services since 2002

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Open Innovation can happen anywhere along the value chain

Mix

Problem solving

Problem solving

Internal

External

‘Beta testing’ and getting feedback

‘Beta testing’ and getting feedback

Spin-Offs / Licensing

Corporate investment fund

Intrapreneurship program

Partnership program with start-ups and entrepreneurs

external ecosystem: start-ups, universities, customers, suppliers…

Crowd sourcing/ idea generation

Crowd sourcing/ idea generation

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Android: an open innovation success In the Red

Corner ANDROID: Open Source Open Innovation

In the Blue Corner

iPHONE: Closed Innovation


iPhone V Android : Share of Smartphone Internet Usage (Apr 08 - Feb 10)

JAN 2011 – 300,000 Android handsets activated daily 16


Lego reinvents itself

Mindstorms Architecture Bricks and paper Cuusoo

1. p lace: Shinkai 2. p lace: Piano 3. p lace: Pop-band

Votes: 1182 Votes: 342 Votes: 178

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Philips Innovation and business ecosystem: High Tech Campus

Research institutes

Universities

Network organizations

Venture funds

Technical services

Business support

Corporate innovators

Start-up companies

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Philips seen as a leader in OI • Best practice in Inside–Out OI

– in making IP work harder for Philips & others – in incubation, venturing, attracting investment – in creating High Tech Campus Eindhoven, NL

• Extensive network of academic and clinical research relationships • Long-lasting engagement in public/private partnerships • Promising examples of Outside-In OI

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Unilever’s open innovation University/ Contract Research

Supplier Networks

JV’s Alliances

Science Parks

Entrepreneurs

Scouting Networks

Unilever Corporate Ventures

NGO’s

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DSM is another OI advocate

• Interesting business option recognised by DSM

• Not fit within internal business strategy

• Founded in 2008 with DSM IP and external funding

• Reduced risk by available know-how and people

• Fast market introduction • Delivering colour and flavouring to

food and beverage customers

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GSK Consumer Health • Embraces OI across the pipeline • See growth arising from a number

of areas: – Ingredients – Products – Packs – Processes – Claims – Routes to market – Regulatory compliance

• Publicising what they need and want • Maclaren Alliance

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GSK Consumer: ENIGMA launch event (Sept 2007)

ENIGMA: External networking and innovation groups for market advantage 75 external organisations

– Ingredient & packaging suppliers – Research associations & institutes – Development organisations – Process equipment manufacturers – Environmental companies – Academic institutions – Consultants & inventors – Competitors & industry representatives

Q & A session, networking, mingling, conversations

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ENIGMA Think Tank 2009

• 2 key technical challenges identified by brand/R&D teams • Brought together scientific experts to creatively explore

issues • 24 organisations attended – academia & industry contacts • Plus innovation experts from OUTSIDE food & drink • 6 GSK facilitators from R&D, Marketing & Procurement • Brainstorming type activities to stimulate creative

thinking • Several potential areas identified for further

investigation

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Questions for reflection

– How could OI be relevant to my business?

– What are the barriers?

– What are the potential next steps for implementing OI?

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3. Different perspectives on OI (Jackie)

• How OI differs between large and small companies

• OI from the perspectives of both the innovation provider and consumer

• Barriers and enablers

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Large vs small

Large company • People - more

conservative; less risk taking

• Medium time horizons • Decision making by

committee • Financially secure • Portfolio of projects

and collaborations • Standard process for

partnering

Small company • Entrepreneurial, risk

takers

• Short term • Rapid decision making

• Financial urgency • Focus on single

projects • Flexible processes

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Large vs small

Large company • Usually lot of support

eg IP, legal, alliance management

• Lot of experience in partnering

• Range of capabilities in house

• Broad range of IP

Small company • Little or no support

internally for collaborations

• Limited experience in partnering

• Limited capabilities in house

• Limited IP

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Need to recognise different perspectives

• Balance between separate and shared interests

• Maximise outcome and value creation for each party whilst minimising risk 29


Collaboration Exercise

One half of room • Work in pairs

– First half of session pair member 1 is large corporate partner and member 2 is academic/SME

– Reverse roles for second half

– Present what you offer, how is it perceived, what are the expectations and barriers for each party

• Plenary discussion on lessons learned

Other half of room • Work in pairs

– First half of session pair member 1 is innovation provider and member 2 is consumer

– Reverse roles for second half

– Present what you offer, how is it perceived, what are the expectations and barriers for each party

• Plenary discussion on lessons learned

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4. The Ideal OI Ecosystem (Mike)

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The Selfish Scientist

“A biologist would rather share their toothbrush than their (gene) names”

Michael Ashburner Professor Genetics

University of Cambridge UK

Why should scientists cooperate?

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The Prisoner’s Dilemma

Each prisoners’ best strategy regardless of the others’ is dominant.

The dominant strategy is to defect Prisoners could do better by both staying silent

but once collusion sets in, each prisoner has an incentive to cheat!

The logical strategy is not always best

Prisoner B

Silent (Cooperate) Confess (Defect)

Prisoner A

Silent (Cooperate) Each get 1 years A gets 15 yrs B goes free

Confess (Defect) A goes free B gets 15 yrs

Each get 3 years

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THE R&D Game: A Dominant Strategy • The Nappy Industry Oligopoly

– A perfect fit for the prisoners dilemma

Proctor & Gamble Kimberley-Clark

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THE R&D Game: A Dominant Strategy Dominant strategy for both firms is to undertake the R&D. If one defects the other will lose market share But both firms spending on R&D may yield a lower total return than if both firms resist the temptation Factors other than profits are also important

Proctor & Gamble

R&D investment No R&D Investment

Kimberly-Clark

R&D Investment (+$5m, +$45m) (+$85m, -$10m)

No R&D Investment

(-$10m, +£85m)) (+$30m, +$70m) What about Open Access R&D?

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Reaching Equilibrium: Open Access R&D

Closed R&D

Open Access R&D

Altruism, etc

High Predicted Revenues

Low hanging fruit

Strong R&D budgets

That Was Then..... 36


Reaching Equilibrium: Open Access R&D

Closed R&D

Open Access R&D

Perceived Risk

Payer pressure

Lack of disease Understanding

Uncertain revenues

Weak R&D Budgets

Is this now?....

Cultural Change

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An Open Innovation Ecosystem

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Players in the OI Ecosystem Tertiary Innovator • Innovation super-consumer • Industry and large SME • Multidisciplinary • Highly networked • Tech-transfer and In-licensing • May seek exclusivity • Change agent • Outlicensing

Secondary Innovator • Translational powerhouse • Industry, SME • May be resistant to change • Domain expert • Good network • Makes tech transfer work • Publicises needs (Crowdsourcing) • Partner with 1° Innovator

Primary Innovator • Innovation powerhouse • Academia, SME • Specialist • Close partnership with 2° innovator • Avoid exclusive licensing • Needs good understanding of business reqs. of 2° & 3° Innovators

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An Open Innovation Ecosystem

Many Partners Open Sharing

Open Access

Open Innovation (Under CDA,

shared IP etc)

Closed Innovation

Open Standards

Public Domain Data Generation

Single/Few Partner Relationships

Exclusively Internal IP & Knowledge

Proprietary research is key: but needs

to be highly strategic

These are the foundation but require

cultural change

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Discussion over lunch (Mike)

• What might you do as next steps within / outside your organisations to implement OI as a strategy to create more value

• Slides from today available on our website

http://www.oipharmapartners.com [email protected] Tel. +44 (0) 7879 694 253

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http://www.oipharmapartners.com

mailto:[email protected]

Open Innovation primer - OI pharma partners workshop

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