News published on: April 23, 2019
Being inserted in an ecosystem of innovation that boosts and meets specific businesses needs in biotechnology might be the alternative to survive “The Valley of Death” and to promote the innovation in the sector.
It’s commonly accepted that Innovation is one of the main competitiveness factors among companies nowadays. In order to differentiate significantly from their competitors, companies seek developing innovative products and services. According to CBInsights’s1 data, 84,9% of major enterprises from many segments recognize the importance of innovation to their competitiveness. However, 78% of these companies’ portfolios are allocated in the process of continuous innovation, in other words, incremental innovation instead of the disruptive one, which decrease the possibility of generation of new products and processes. The same is seen for the Life Science area. According to data from PWC’s report2, 58% of CEOs from major pharmaceutical companies consider the innovation process needed to promote competitiveness.
Among a number of processes and ways to innovate, a trend to adopt an open innovation model is seen. Popularized by Henry Chesbrough, the Open Innovation expression refers to the broad concepts of leveraging external sources of technology and innovation to boost internal growth. Despite having different definitions and developed models through these 16 years after its conception, Open Innovation is an outcome of a complex set of relations between different actor, including companies, universities and research institute.
The Open Innovation Model becomes especially important when we think of business based on hard-science in the life science sector, which involves technology and scientific solutions of bigger technical complexity and risks, but with large potential impact though. The future is increasingly directed by the developing of biotechnology. Large corporations and investors, coming from many business areas, have already started moving to this direction, that in 2016 the total investment in biotechnology was around US$7.9 billion comparing to 2013 when it was US$1.7 billion3. Organizations that used to be “purely” digital, based on information technology and communication, are now reformulating their innovation strategies in order to invest in biotechnology solutions. Enterprises such as Google, Amazon, IBM, Facebook, and many others have already several initiatives and strategic partnerships aiming to act in the sector. Despite this movement, we know that there are several challenges to innovate in the Life Science sector, both to emerging companies – university spin-offs and startups – and to big ones, especially in the current Brazilian context.
Innovation gaps in scientific business
According to the World Economic Forum’s data4 , in 2017-2018, the World Competitiveness Yearbook shows that Brazil had performed a slight improvement and its biggest progress originated from the Innovation pillar. It’s evident, therefore, a performance boost in its innovation capacity, a larger collaboration between universities and enterprises, bigger scientific research quality and labor composed of scientists and engineers. On the other hand, we have been facing the agile methodology “movement”, coming from the digital startup’s world, which has revolutionized the way we create, try and scale business and also, clearly, have impacted the development of biotechnology solutions.
Although the context is relatively encouraging, businesses based on hard-science have their peculiarities and their own challenges, requiring also specific methodologies and approaches. First of all, they are businesses that require a strong scientific basis, consisting of human resources with specific skills and knowledge. Also, it’s necessary to hold a complex infrastructure and a longer time of solutions development, which means that along path must be covered until arriving in the market. Moreover, the escalation process and reproducibility of these solutions is a critical issue which might represent “The Valley of Death” for these technologies and startups, especially when the needed financial resources are high and scarce.
For big companies, innovating is also a challenge since they face the dilemma between the efficiencies of exploring their resources at the most and creating new products and innovative services in the shortest possible time to keep up the competitiveness. Moreover, all the internal organization matters might be added, such as culture, bureaucracy, slowness and some other factors that make the whole process even more difficult.
Given this scenario, establishing partnerships may relieve some difficulties and enabling the path for these businesses towards innovation and success. Among the ways of collaborations, it’s included so many types of existing engagement between big companies and startups that may combine their strengths to fill gaps and to create value.
The power of connections
The exchange of technology and information between people, companies, and institutions is one of the key drivers to consider if a process is innovative or not, especially in the biotechnology sector. Thus, it’s common to hear about the importance of being inserted in an innovation ecosystem. The ecosystem is a popular term among those involved with entrepreneurship, with different definitions and meanings depending on the purpose and the used context. The ecosystems may be understood as “nets” which have as main factor the connections between their agents and elements. The effective connection between those creates a propitious environment to foment and to leverage the innovation and entrepreneurship process.
A well-structured innovation ecosystem with high performance gathers various components that make the process of business development easier. One of those components is the gathering and attraction of talents, in other words, people with many skills and experiences, promoting diversity the working environment, a crucial component to the innovation. It’s also worth highlighting the density that arises in these environments through the creation of hubs that link startups and companies, shaping a network of mentors and investors. Another crucial component is the availability of resources, either financial, technologic or business know-how and also the availability of infrastructure. Besides, these ecosystems offer culture and their own politics where failure and mistakes are part of the learning process, promoting and encouraging innovation.
There are several ecosystems of innovation, either with a bigger or smaller magnitude and impact, ready to leverage the development of new business. In this context, it’s impossible not talking about the famous and successful Silicon Valley. However, part of this ecosystem success has been built due to the availability of venture capital in order to finance, mostly, businesses based of digital products that involve technologies relatively simpler, cheaper and faster to be developed. Nevertheless, it’s different when we think about the business of biotechnology. The majority of the investment funds are not ready to face the risk of technology which is inherent to these businesses. Therefore, it’s crucial seeking the ecosystem that will better meet the specificity of each enterprise.
It cannot be neglected the wide existing difference between the scientific discovering performed in the laboratory and the moment when it generates value within the market. An effort is then, required to fill a gap and, one of the possible ways is creating an ecosystem of innovation developed to commercialize this sort of science. Moreover, being able to collaborate and to establish partnerships effectively results in a competitive advantage of crucial importance, enabling to leverage disruptive scientific innovations and bringing benefits for both already consolidated corporations and startups in the life science field.
Author: Sabrina Feliciano Oliveira, Scientific Consultant in Innovation at Biominas Brasil.
1- State of Innovation, 2018. CB Insights. https://www.cbinsights.com/research-state-of-innovation-report
2-Global Innovation Survey, 2013. PwC
3-Financing in Biotechnology,” CB Insights. https://www.cbinsights.com/search/
4-The Global Competitiveness Report 2017–2018, World Economic Forum.