1 IFISE - Workpackage 6 Italian Start-ups and potential entrepreneurs interviewing Electromedical industry Pavia,14 October 2001

2 Characteristics of the Electromedical Industry 1 ANIE (Italian Federation of Electrochnical and Electronic Industries) counts some 700 companies. The companies belonging to the electromedical branch represented by ANIE are some 40 and the total employees are some 2000.

3 Characteristics of the Electromedical Industry 2 Industry counts a few large companies and numerous very small companies. The companies can be classified in: Companies producing/distributing hospital equipment Companies providing technological services Companies producing small electromedical devices ANIE represents approximately 80% of the first two categories, while the companies producing small electromedical devices do not have an industry organisation, and official figures do not exist. Altogether ANIE represents approximately 70% of the Italian electromedical industry.

4 Characteristics of the Electromedical Industry 3 Companies producing/distributing hospital equipment Some 30 companies. The main actors are represented by global companies such as Philips, Siemens, General Electrics, Agilent, Toshiba. In Italy they only have a marketing/distribution branch. No R&D department. Most Italian companies only distribute products. A few of them have also production plants: Esaote, Gilardoni, General Medical Merate, Elettronica Trentina, Imetec.

5 Characteristics of the Electromedical Industry 4 Companies producing/distributing hospital equipment 80% of the demand comes from the public sector or private clinics operating within the National Health Service (ANIE/Assobiomedica estimations). This particular area of industry has very high barriers to entry: 260 days average payment time High production costs (expensive equipment and long product development cycle) Public procurement rules Furthermore the general trend is that National Health System cut its budget. Even if this cost containment policy probably doesn’t have a direct effect on expenditures related to electromedical equipment, it is perceived as discouraging investments in innovation.

6 Characteristics of the Electromedical Industry 5 Companies producing/distributing hospital equipment Source: Assobiomedica 2000

7 Characteristics of the Electromedical Industry 6 Companies providing technological services This area mainly consists in companies providing maintenance services and consulting for submitting the request of approval to the European authority. This area is not involved in production or R&D activities.

8 Characteristics of the Electromedical Industry 7 The electromedical devices are classified according to the risk they can engender to the patients and the personnel in case of malfunctions. Lower the risk, easier and cheaper it is to obtain the authorisation to produce and distribute a particular device. Potential entrepreneurship emerge in niches that require few tests and trials (sometimes not at all).

9 Characteristics of the Electromedical Industry 8 Companies producing small electromedical devices Some 70 companies (ANIE estimations, no official data). Most of these companies are micro-enterprises/SMEs working as subcontractors for large enterprises (mainly assemblers) or producing/customising well-known products for professionals. Barriers to entry are low, innovation content is low (incremental innovation) and competition is made mostly on price and/or service. A small part of these companies produces devices with higher innovation content (usually spin-off from university research centres).

10 Characteristics of the Electromedical Industry 9 Summary Foreign multinational companies do not have R&D departments in their Italian subsidiaries. Italian companies active in the “hospital equipment area” are mostly involved in marketing and distribution. Only a few of them have production plants, but the characteristics of the branch require huge financial strength. The companies producing small electromedical devices are quite numerous but very small. They are mostly assemblers, innovation content is very low and usually limited to the customisation of existing products. Some high technology spin-off from the academic world exist.

11 Geographical specialisation 1 Inventors per LLSPatents applications per LLS

12 Geographical specialisation 2 Main areas in Italy where the electromedical companies members of ANIE (they represent 70% of the industry) are localised are: Milan (18/41), Rome (5/41) Bergamo (4/41) The most active areas in R&D activities seem to be Rome, Milan, Genova, Bologna and Pisa/Livorno.

13 Geographical specialisation 3 Evidence shows that High Technology start-ups are concentrated where active university centres or scientific parks are localised confirming the key role of institutions/technology transfer centres: Consorzio Politecnico Innovazione (Milan) Scuola Superiore Sant’Anna di Pisa Centro Pisa Ricerche Università di Genova - Polo di Savona Università di Bologna Parco Scientifico e Tecnologico di Tor Vergata (Roma) The case of Pisa is particularly interesting as no big electromedical company is localised there.

14 Potential entrepreneurs Methodology 1 Long list creation The original database of inventors did not reveal itself to be a good source of potential entrepreneurs. Relevant innovation centres and technology transfer centres were contacted in the Bologna/Modena area: Osservatorio Biomedicale di Modena ProMo Consobiomed di Modena Ervet/Aster Università di Bologna.

15 Potential entrepreneurs Methodology 2 Given the small number of suitable contacts in the Bologna/Modena area, the geographical area was enlarged. The following institutions were contacted in Northern Italy: Acceleratore d’impresa del Politecnico di Milano, Centro Pisa Ricerche, Scuola Superiore S. Anna di Pisa, Università di Genova - Polo di Savona,. Effective first connections were 40. Short list creation 10 persons could be considered potential entrepreneurs and have been interviewed.

16 Potential entrepreneurs General data All the potential entrepreneurs are engineers. The greatest part of them (8/10) is from 30 to 40 years old, while 2 people are 50. The residence is not homogeneous: Central and Northern Italy. Most of them are university researchers. Only 2 people work in R&D departments of high technology companies (IGEA and ESAOTE). The professional experience is years for the 2 people working in the companies, and from 5 to 12 years for those working for universities.

17 Potential entrepreneurs Characteristics of the “would be” entrepreneurial venture None of them have previous entrepreneurial experiences and only 3 of them intend to create their own activity, while the others were discouraged by the practical difficulties. 7 of them intend to provide products to other companies/consumers, while the other 3 intend to offer some services. Mostly, the idea is born inside universities (only 2 cases refer to companies).

18 Potential entrepreneurs Characteristics of the “would be” entrepreneurial venture Competitive advantages of the project identified by the potential entrepreneurs: Service (7) Personal contacts (4) New need (3) Price (3) Sector knowledge (3) Technical knowledge (3) First mover (0) Process innovation (0)

19 Potential entrepreneurs Characteristics of the “would be” entrepreneurial venture Technological verification In 4 cases, the technological verification and the prototype have already been created; In the other cases, funds necessity for the technological examination is USD / Only 1 case required more than USD Time needed varies between 6 months and 1 year.

20 Potential entrepreneurs Characteristics of the “would be” entrepreneurial venture Money/time to build a prototype 4 entrepreneurs out of 6 stated that they would need 6 months to 1 year and less than USD The others would need years and USD Money/time to get to the market Less than USD and 1-2 years

21 Potential entrepreneurs Financing Support institutions/measures Potential entrepreneurs usually know the existence of structures or measures aimed at financing and/or helping start-ups. 4 of them have applied to public incubators, while 3 consulted Venture Capitalists. Main perceived problems associated with applying to this kind of structures and measures are: Confidential information (Incubators (8/10) and VCs(4/10)) Bureaucracy (Incubators (6/10))

22 Potential entrepreneurs Financing 8 potential entrepreneurs have already prepared a Business Plan and they considered raising money from: Business angels (5) Strategic and commercial partners (5) Venture Capital Funds (3) Banks (2) Family/friends (2) All the potential entrepreneurs are willing to invest little own money. Only one person is disposed to cover 50% of the investment.

23 Potential entrepreneurs Financing 2 Hereafter is an average of marks associated to the perceived difficulty of activities related to the setting-up of a new firm are: Fund raising: 4,2 Marketing: 3,9 Management: 3,7 Strategic plans: 3,5 Development of contacts: 2,9 Market trends: 2,8 Consulting and legal aspects: 2,5 Human resources: 2,4 Intellectual property rights: 2,3 Technical information: 1,5

24 Potential entrepreneurs Personal characteristics and perceived difficulties Hereafter is an average of marks associated to the perceived advantages and disadvantages related to becoming an entrepreneur: Disadvantages Less leisure time: 3,1 Should leave an assured job: 2,5 Would lose peacefulness: 2,5 Legislation too harsh in case of failure: 2,3 Should change residence: 1,6 Advantages Personal fulfilment: 4,4 Higher reward: 4,1 Higher flexibility: 3,1

25 Start-ups Start-ups interviewed are localised in: Pisa/Livorno: 4 spin off from Scuola Superiore S. Anna di Pisa Bologna: 1 spin off from the University of Bologna Florence: 1 spin off Scuola Superiore S. Anna di Pisa Milano: 1 spin off Politecnico di Milano They are all related to the telemedicine branch. Telemedicine is defined as the use of telecommunications to provide medical information and services. It implies a simultaneous use of appropriately customised electromedical sets.

26 Start-ups Main difficulties: Financing Marketing and managerial matters International contacts creation Legal matters Even if the telemedicine branch does not require huge R&D investments USD and it probably could seem more interesting for VCs, financing is still mentioned as the main problem.

27 CAST Consulting Via del Vecchio Politecnico, Milano Tel Fax For further information contact: Francesco Pellizzari Tobia Fiorilli