We felt that our research results offered a good opportunity for drug development. We wanted a partner company with broad scientific know-how in order to effectively use our research results. However, we could not find a partner that matched our criteria, so we decided to set up our own business. Here, I’d like to share my viewpoints and experiences in the commercialization of academic research toward an actual product as “Lessons learnt”.
Lesson 1: Creating your own business
During our start-up phase, we applied for and successfully received support for project commercialization from TEKES; this made it possible to establish our own drug development company. We did not have the necessary experience for setting up a business; fortunately, we received indispensable support for navigating the intricacies of this process from Professor Markku Jalkanen, the founder of Biotie.
We all considered that our company needed a leader well-versed not only in business development but also in biotechnological expertise. Fortunately for us, Henri Huttunen, our research director, had worked for Orion and Harvard University in the USA, after his doctoral thesis. He was an excellent interpreter between us scientists and the business world. The current Managing Director Pekka Simula, together with Huttunen, has continued to develop Herantis Pharma as a product development company focusing on medicines for diseases that lack good therapeutic options.
This optimum targeting of expertise enabled the company to be in skilled hands, while we three professors were able to focus on our research full-time.
Lesson 2: An introduction to entrepreneurship as a part of studies
The University Act defines the three basic functions of universities: 1) to promote free research, 2) to provide higher education based on research, and 3) to enable students to serve the country and humanity. In this process, universities need to promote lifelong learning, interact with other societies, and advance the social impact of research results and artistic endeavors.
Universities do fulfill the required points 1-3, and its employees are trained to deliver these needs. For example, pedagogical studies offer support and training for research-based teaching.
However, social impact should not be limited to researchers speaking on television or radio. True social impact would be enhanced by a young university graduate being able to set up a business, so that he or she can use research results in a productive way.
I find it disappointing to see post-doctoral graduates being unemployed: they certainly have the capabilities for establishing a business, but perhaps lack the knowledge and skills required to set up and run a company.
Research-based companies fuel further research and teaching as well as create jobs. A good example of this is Denmark, where several major drug development companies are registered. The company’s main shareholder is often a Danish foundation, which contributes most of the profits back into research. Danish research is flourishing.
Lesson 3: Patents protect innovations
In research circles, I have often encountered the idea that patenting somehow obstructs research. Innovative companies in the bio and pharmaceutical sectors cannot exist without patents. Patenting your own products is crucial and essential: innovations must be patented. However, the continuation of research, and in particular the commercialization of research results is not possible if someone else uses and patents your innovations.
The century of brain research?
It has been said that this is the century of brain research. However, in terms of funding, its existence is hardly noticeable. In addition to the three lessons above, I think it is important to address the challenges in funding research and product development.
The slow speed of entrepreneurial development based on research in life sciences and neuroscience in Finland is a reflection of low levels of venture capital investment. Although financial and pension insurance companies have tens of billions of euros of investment capital, they invest in foreign companies instead of Finnish biotechnology companies. What is the reason for this? As compared to other scientific disciplines, neurology is not adequately visible in Finland. This lack of visibility is likely to affect the interest, or the lack thereof, from venture capital investors.
Perhaps Finland’s biotech industry needs “smart money”, in other words, investors who understand not only the industry’s enormous potential but also the long product development times. This field is not known for quick wins, but if successful, the value of a company can rise to very high levels. On the flip side, the risks are certainly high.
It is unfortunate that, because of the aforementioned as well as other reasons, many Finnish pharmaceutical companies have moved to the United States. An example is FibroGen, originally founded in Oulu, which has grown into a billion-dollar company in the USA. Similarly, Hormos Medical is a wholly-owned subsidiary of American QuatRx Pharmaceuticals. Biotie is a third example.
Model from Estonia
In Finland, we could adopt the model set up by Estonia, where I was born. In Estonia, the establishment of a company is very easy: you can set up a company just with a smartphone. Additionally, in Estonian universities, the burdensome funding process receives good support: for every successful foreign funding or industrial co-operation received, the professor can pay thousand euros per month towards his or her own salary for the project’s entire duration. This kind of carrot is a great encouragement to seek more funding.