1. Federal Partners in Technology Transfer Annual Meeting - Halifax How can Canada capitalize on its investments in research? Dr. Michael Raymont Acting President National Research Council June 18, 2004

2. What does the Government mean by “the commercialization of research”? "Canada is developing an environment in which ideas flowing from scientific discovery are being generated at an unprecedented rate. Now we must focus on bringing these ideas to market; to realizing their commercial potential. That is what will drive our economy forward, increasing investment and employment.” Ralph Goodale, Minister of Finance 2004 Budget Speech

3. Why is research commercialization important to Canadians ?  Commercialization necessary to realize economic and social benefits of research.  The Government has invested massively in research - $13 B since 1997.  Expects return. Creating knowledge consumes wealth. Commercializing knowledge creates wealth.

4. The commercialization imperative Market pull vs. technology push – the wrong debate? Innovation – complex, dynamic and interactive system Shared agenda – but government needs to be there Identifying opportunities and gaps/areas for improvement – Focus resources – Bring together technology, human skills, capital and other supportive infrastructure (clusters) – Building international markets – Targeting innovative SMEs, “gazelles” of Canadian industry

5. Why are SMEs important to commercialization? Canada’s economy has many strengths -- balanced budget, steady growth, strong workforce, and relatively high Per Capita GDP But it is very dependent upon the resource sector and branch plants It looks to SMEs for new jobs, products, services, productivity, and innovation Canadian SMEs must be export focused Canadian economy dominated by SMEs

6. But Canadian SMEs have always had significant innovation and R&D challenges SMEs have limited resources to invest in new and improved products, skills and technologies Canadian SMEs struggle to grow into medium- sized enterprises Survival rate for new small business averages 72% after one year, 44% after three years, 32% after five years

7. Spin-off or strategic licensing - Too many start-ups?  G-8, APEC, EU] Criteria for a successful start-up Critical mass of “platform technology” Intellectual Property (likely more than one source) Highly capable management team Sufficient financing runway Sustainable, differentiated advantage Global market opportunity and perspective

8. Start-ups Focus on fewer, top quality start-ups Benefits: –Higher survival rate –Faster growth –More impact –More economic value for Canada –Better returns (feeds the investment cycle) Best for -- Disruptive/breakthrough technologies -- No existing receptor capacity

9. Licensing/sale to strong existing receptors Existing receptors have distribution channels and customers Know the market and can define application, product, pricing, “go-to-market” strategies, etc. More immediate economic returns from knowledge creation Builds strength of existing SMEs Opportunity to create “gazelles” (RIM, Ballard, Newbridge) Canada needs more gazelles

10. OutcomeIncremental (Capitalize on what we know) Evolutionary (Build the Future) Disruptive (Create New Opportunities) Time Horizon0-3 years2-10 years5+ years Driving Force Customer - market pullMission - pull and pushCuriosity, Serendipity - push Business FocusProduction & SalesProduct & Technology Development Blue sky research Discovery - Ideas Activities Problem Solving, adaptation, testing, manufacturing, consulting Applied research, demonstrations, prototypes, standards development Basic research, applied research, proof of concept Success FactorsEfficiency, quality, costExperts, IP, managementResearch excellence Key Knowledge Markets, production processes, standards, management Competitive intelligence, science & engineering methods Basic science, research processes Level of RiskLowMediumHigh Share of Investment 60-70%20-30%5-10% Source of FundsContracts – Customers (Industry) Contracts+Equity+Grants (Government & Industry) Grants (Public) Business Return Gross MarginSocial and Economic ROIKnowledge, HQP ImpactWealth, jobsWealth, jobs, quality of lifeKnowledge, quality of life The Innovation Landscape (Adapted from ARC/I-CAN)

11. What needs to happen next … Identify research needs, and capitalize on research with commercial potential using the right vehicle  Curiosity/basic research → disruptive/breakthrough technologies → start-up  Industry needs → industry driven, applied/mission oriented research → licensed to existing receptors

12. What needs to happen next …cont’d  Improved interface and collaboration between public sector, universities and industry (cooperative, shared agenda and responsibility)  Greater access to seed and other funding  Skills and mentoring in: –Commercialization, technology transfer, raising investment capital and new venture formation  Partnerships and alliances – international

13. Links people, capital, resources and ideas Actively engaged in technology commercialization Strengths of its research institutes Partnerships, international research networks, linkages NRC-IRAP, NRC-CISTI Technology clustering $750 M budget $150 M in revenues 5000 people (incl. 300 ITAs) NRC – an engine for commercialization 20 NRC Institutes 90 IRAP Office 10 IPF Facilities

14. NRC reaches across a spectrum of technology … Astronomy Biology Chemistry Mathematics Physics Engineering Computer science Medicine Architecture Nanotechnology Genomics Photonics Biomedical Environmental Aquaculture Agriculture Oceanography Manufacturing Construction Soil remediation Bio-diagnostics Water remediation Fuel cells Software Wind tunnel Maritime testing facility Technology licensing CPRC Science Integrated Disciplines Technologies Applications Products / Services NRC has become more market relevant NRC’s evolving Technology expertise is reaching toward market from traditional research.

15. IRAP-TPC Discovery, Basic Research Pre-competitive, Strategic Research Development of Prototypes/ Proof of Concept Industrial Innovation Products in the Marketplace NRC RESEARCH UNIVERSITY RESEARCH NRC-IRAP INDUSTRIAL RESEARCH DISCOVERY TO INNOVATION TIMELINE Value for Canada NRC: Bridging the innovation gap

16. Centres for research commercialization Image of the Centre for the Commercialization of Biomedical Technology (left) and NRC-IBD (right). One possible approach - a unique collaboration with Federal Partners and other public and private sector organizations and part of the anchor to a technology clusters linked to a research centre and R&D partnerships Example - Centre for the Commercialization of Biomedical Technology at NRC-IBD in Winnipeg (under construction) Services to be offered by NRC or Partners: Technology and business analysis Market strategy assessment National and international mission and partnering support Technology law and intellectual property protection services Skills assessment and development Investment networking and advice Mentoring services Programs to be offered through the Centre: New Entrepreneurs Program Technology Acceleration The Tenant Program Access to NRC-IRAP

17. Together as a science and technology community, we all win! “Justifies” investment in knowledge creation Strengthens SME base with emphasis on accelerating growth of small to medium size Creates quality employment Major economic benefits Other social benefits Brings us together in common cause What it requires: partnering integration respect for expertise culture / drive to succeed!