1. Catherine Beaudry École Polytechnique de Montréal Alliances et partenariats : un défi pour les biotech Alliances and partnerships: a challenge for biotechs CIRANO, 19 septembre 2008

2. Collaboration in Canada In 2004-2005, 52.6% of biotech firms participated to at least one collaborative alliance Large (> 150 employees): 59.6% (10% of the sample) Medium (50-150 employees): 56.6% (15% of the sample) Small (<50 employees):50.9 % (75% of the sample) What are the most common types of collaborative arrangements? With which partners do SMEs cooperate? Are SMEs different from larger firms in terms of the number of collaboration arrangements to which they participate? Do specific characteristics of a firm influence how much it collaborates?  negative binomial regressions 19 th September 20082 of 17Factors that affect collaboration of small biotech firms

3. Why collaborate? To survive! (Oliver 2004) Access to financial resources R&D: long and expensive Difficult for small firms that depend on angels, venture capital, debt, grants, alliances Access to human capital Lack of skilled labour is one of the principal reason to collaborate Access to knowledge and competences Rather than developping within the firm Learning networks are the source of innovation (Powell et al. 1996) 19 th September 20083 of 17Factors that affect collaboration of small biotech firms

4. Data Statistics Canada Biotechnology use and development surveys, 1999, 2001, 2003, 2005 Binary variable – collaboration yes/no Count variable – number of collaborative arrangement 19 th September 20084 of 17Factors that affect collaboration of small biotech firms Purpose\PartnerPrivate enterprisePublic institutionTotal Knowledgeeccpri n eccpub n ecc n Production, market, capitalecpcpri n ecpcpub n ecpc n Totalecepri n ecipub n ec n Purpose\PartnerPrivate enterprisePublic institutionTotal Knowledgeneccpri n neccpub n necc n Production, market, capitalnecpcpri n necpcpub n necpc n Totalnecepri n necipub n nec n *

5. Evolution of collaboration Percentage of firms that collaborate1999200120032005 Small56.0%58.8 %50.3 %50.9 % Medium80.0 %51.6 %49.4 %56.6 % Large81.6 %80.9 %59.0 %59.6 % All62.5 %60.3 %51.2 %52.6 % Average number of collaborations1999200120032005 Small2.84.03.24.7 Medium2.74.97.57.0 Large5.29.85.04.7 All3.15.14.15.1 19 th September 20085 of 17Factors that affect collaboration of small biotech firms Credit crunch in 2001  reduction in collaboration in 2003

6. With whom and why? Among those that collaborate1999200120032005 With other firms47.8 %61.5 %47.4 %62.3 % With public institutions73.7 %48.2 %39.8 %68.6 % For knowledge purposes96.0 %91.6 %65.7 %95.0 % For commercialisation purposes57.6 %33.0 %42.2 %35.7 % 19 th September 20086 of 17Factors that affect collaboration of small biotech firms

7. With whom and why? Proportion among all firms1999200120032005 With another firm29.8 %37.0 %24.2 %36.4 % Small25.4 %35.3 %24.6 %36.2 % Medium53.4 %35.3 %29.2 %35.8 % Large24.4 %48.2 %15.9 %38.9 % With a public institution46.2 %29.0 %20.4 %36.1 % Small38.1 %28.8 %19.0 %33.3 % Medium65.0 %18.0 %17.3 %42.6 % Large71.2 %44.8 %31.5 %47.3 % For knowledge purposes60.1 %55.2 %33.7 %50.0 % For commercialization purposes36.0 %19.9 %21.5 %18.8 % 19 th September 20087 of 17Factors that affect collaboration of small biotech firms Decrease over 4 years of collaboration with public institutions (increase in 2005)

8. With whom and why? Proportion among all firms1999200120032005 With another firm29.8 %37.0 %24.2 %36.4 % With a public institution46.2 %29.0 %20.4 %36.1 % For knowledge purposes60.1 %55.2 %33.7 %50.0 % Small52.4 %52.7 %33.4 %47.8 % Medium80.4 %49.5 %32.6 %57.2 % Large80.4 %76.7 %36.4 %55.7 % For commercialization purposes36.0 %19.9 %21.5 %18.8 % Small33.9 %22.3 %22.8 %18.2 % Medium48.8 %12.0 %16.2 %15.2 % Large30.4 %16.1 %20.9 %28.7 % 19 th September 20088 of 17Factors that affect collaboration of small biotech firms Decrease over 4 years of knowledge–related collaboration (increase in 2005)

9. With whom and why? With firms for knowledge With pub. inst. for knowledge 200120032005200120032005 Small 35.35%21.61%31.30% Small 33.79%19.21%31.86% Medium 40.24%17.76%35.75% Medium 20.50%21.14%42.57% Large 57.67%12.61%35.98% Large 47.95%28.70%47.31% All 38.95%19.88%32.47% All 33.35%20.70%35.04% With firms for commercialisation With pub. inst. for commercialisation 200120032005200120032005 Small 18.43%16.77%14.28% Small 6.16%9.55%6.55% Medium 12.04%13.68%10.44% Medium 0.00%4.68% Large 16.13%12.94%14.63% Large 0.00%13.34%14.11% All 17.09%15.81%13.72% All 4.38%9.27%7.01% 19 th September 20089 of 17Factors that affect collaboration of small biotech firms Following the credit crunch of 2001, firms decreased dramatically their alliances with other firms for knowledge purposes, but maintained their commercialization partnerships Resurgence of knowledge-related alliances in 2004-5

10. Collaboration in general (negative binomial regressions) SmallSMEs Number of collaborative arrangements9901030599010305 Number of employees (size)++ % of biotech employees++ Age--- Spinoff+++ Products / Processes/+ +/ Number of products and processes++++++ Patents / Numbers/-/-/++/ Contracts out/in+//++//++/ Number of contracts out /in+/ % biotech revenue / % biotech exports+/-/-/- Success raising capital / government funds/++//++/ 19 th September 200810 of 17Factors that affect collaboration of small biotech firms

11. Collaboration by type SMEs (small)For knowledgeFor commercialization Nb. collaborative arrangements010305010305 Number of employees (size)+(+)+ % of biotech employees+ Age(-) -(-) Spinoff+(+)+(+) Products / Processes/+ /-(-)/+(+) Number of products and processes+(+) (+)+(+)+ Patents / Numbers/(+)/(-)+(+)//-(-) Contracts out/in+/+++//+(+) Number of contracts out /in(+)/+(+)+/-/-(-) R&D$ / % biotech R&D+//+(+)/+/-(-)/+(+) % biotech revenue / % bio exports/-(-) /+(+)+(+)/-(-)/ Success K raising / gov’t funds/+(+)+/-(-)+(+)/+(+)/+/+(+) 19 th September 200811 of 17Factors that affect collaboration of small biotech firms

12. Collaboration by partner SMEs (small)With firmsPublic Institutions Nb. collaborative arrangements010305010305 Number of employees (size)-(-)+ % of biotech employees+(+) Age-(-)(-)+ (+) Spinoff++(+) Products / Processes/(+)-(-)/+(+)//+/+(+) Number of products and processes+(+) Patents / Numbers/(+)+(+)//(-)/(+)/(-) Contracts out/in/+(+) (+)/+(+)/ Number of contracts out /in/-/-+(+)/-(-)(+)/-/+(+) R&D$ / % biotech R&D/-(-)(+)/ % biotech revenue / % bio exports+(+)//-(-) +/ Success K raising / gov’t funds+(+)/+//+(+) 19 th September 200812 of 17Factors that affect collaboration of small biotech firms

13. Collaboration for knowledge SMEs (small)With firmsPublic Institutions Nb. collaborative arrangements010305010305 Number of employees (size)(+)-(-)+ % of biotech employees+(+)+(-)+(+) Age(-) + (+) Spinoff++(+) Products / Processes+(+)/(+)/+/+ Number of products and processes(+)+(+)+ Patents / Numbers/(+)(+)//(-)/(+)/(-) Contracts out/in/+(+)+(+)/+(+)/+(+)+/+(+)/- Number of contracts out /in-/--/-+(+)/-(-)(+)/-/+(+) R&D$ / % biotech R&D+/(+)/-(-)(+)/ % biotech revenue / % bio exports/-(-) Success K raising / gov’t funds+(+)/-/+(+)+/-(-)/(+) 19 th September 200813 of 17Factors that affect collaboration of small biotech firms

14. Collaboration for commercialization SMEs (small) With firmsPublic Institutions Nb. collaborative arrangements010305010305 Number of employees (size)(-) % of biotech employees+(+) Age-(-)+(+) Spinoff+(+) (+) Products / Processes/-(-)/++(+)/ /(+) Number of products and processes(+)+(+) Patents / Numbers++(+)//(-) Contracts out/in/+(+) +(+)/-(-) Number of contracts out /in(+)/-/-(-)+/(+)/- R&D$ / % biotech R&D-(-)/+(+)/-/(+)/+(+) % biotech revenue / % bio exports/(+)+/-(-)/+(+)-(-)/+ Success K raising / gov’t funds+(+)/ /+(+)(+)/(+)/+(+) 19 th September 200814 of 17Factors that affect collaboration of small biotech firms

15. Conclusions Younger firms collaborate in a greater number of alliances Spinoffs in general are more likely to have a greater number of collaborative arrangements The number of products and processes has a strong and positive influence on the extent of collaboration Patents needed for commercialization but not for other types of alliances (not in terms of numbers) Contracting out is no substitute for alliances Contracting in makes use of the lab space that would otherwise be used for collaboration Firms with more export revenues are further along the market path and require less to collaborate 19 th September 200815 of 17Factors that affect collaboration of small biotech firms

16. Further research Follow the firms over the years Linked database at Statistics Canada (4 linked surveys) Find out which firms survive and which firms disappear Discover what are the success factors for firm survival and success Link the databases with the science-base network Find the influence of the geographical and technological space on industrial innovation 19 th September 200816 of 17Factors that affect collaboration of small biotech firms

17. Thank you Questions? Here is some of the work being done at École Polytechnique de Montréal 20 th June 200817 of 17Factors that affect collaboration of small biotech firms Hairy roots of the Madagascar periwinkle (Catharanthus roseus)