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

Collaboration in Canada In , 52.6% of biotech firms participated to at least one collaborative alliance Large (> 150 employees): 59.6% (10% of the sample) Medium ( 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 of 17Factors that affect collaboration of small biotech firms

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 of 17Factors that affect collaboration of small biotech firms

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 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 *

Evolution of collaboration Percentage of firms that collaborate 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 collaborations Small Medium Large All th September of 17Factors that affect collaboration of small biotech firms Credit crunch in 2001  reduction in collaboration in 2003

With whom and why? Among those that collaborate 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 of 17Factors that affect collaboration of small biotech firms

With whom and why? Proportion among all firms 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 of 17Factors that affect collaboration of small biotech firms Decrease over 4 years of collaboration with public institutions (increase in 2005)

With whom and why? Proportion among all firms 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 of 17Factors that affect collaboration of small biotech firms Decrease over 4 years of knowledge–related collaboration (increase in 2005)

With whom and why? With firms for knowledge With pub. inst. for knowledge 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 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 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

Collaboration in general (negative binomial regressions) SmallSMEs Number of collaborative arrangements 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 of 17Factors that affect collaboration of small biotech firms

Collaboration by type SMEs (small)For knowledgeFor commercialization Nb. collaborative arrangements 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 of 17Factors that affect collaboration of small biotech firms

Collaboration by partner SMEs (small)With firmsPublic Institutions Nb. collaborative arrangements 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 of 17Factors that affect collaboration of small biotech firms

Collaboration for knowledge SMEs (small)With firmsPublic Institutions Nb. collaborative arrangements 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 of 17Factors that affect collaboration of small biotech firms

Collaboration for commercialization SMEs (small) With firmsPublic Institutions Nb. collaborative arrangements 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 of 17Factors that affect collaboration of small biotech firms

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 of 17Factors that affect collaboration of small biotech firms

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 of 17Factors that affect collaboration of small biotech firms

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