Over the last decades advances in biomedical technologies and bioengineering have provided a multitude of possibilities for new products and services to prevent diseases, make diagnosis and provide new therapeutics. However, despite substantial progress in biomedical research, commercialisation of new biomedical products and services is a difficult task for numerous reasons. Although entrepreneurs are increasingly tempted to commercialise their inventions, the success rate is low and the survival of a start-up depends on its capacity to access large funding rounds, spending many years without financial return. This is a strong deterrent for investors during a period when capital markets are at low levels.
The problem is particularly acute in healthcare biotechnology where product development can take up to 12 years before a viable, marketable product is achieved. This means that many companies are dependent on external funding for long periods of time in order to maintain high quality research and development activities.
Obtaining public funding is one way of containing this financial gap and increasing the chances of survival for high-tech, small or medium-sized enterprises (SMEs). The EU 6th and 7th framework programmes are one source of these funds.
A recent study financed by the European Commission (project “KAPPA-Health”) indicated that over 90% of research-intensive SMEs having participated in a FP6 co-financed research project considered their participation as a success and 50% of these have already generated commercial return. The KAPPA-Health project aims to assess the success factors which lead healthcare companies to generate value from their participation in a co-funded research project, and to determine how this can be planned at the time the decision is made to apply for an FP7 project.
The first step of the KAPPA-Health project involved surveying nearly 200 SMEs to ascertain these “success factors” and interesting results can be seen below. The second step, already underway, will involve interviewing a further selected 40 companies for in-depth interviews and analysis.
Participation in an EU funded project was a complete success for 58% of the SMEs that answered our questionnaire.
Fig.1: Distribution of answer to the question: is the project a success in term of the results obtained?
Knowledge is the main result obtained by at least 80% of the SMEs. Only one SME in our sample did not obtain any interesting results.
Fig.2: Distribution of the results obtained
Furthermore, SMEs have stated that their participation in EU projects allowed them to increase their network, find new customers, access complementary expertise and become more visible at an international level. Getting commercially exploitable results from their participation in the research project was not mentioned as the main objective. This is not surprising as the criteria for participation in FP6/FP7 is to develop pre-competitive scientific research.
76% of successful enterprises have participated in projects which corresponded to their core activity. Typically successful companies have also participated in more than one project (80%) and had previous contacts with their partners. For most successful SMEs, 83% of the projects lead to research contacts and 50% to business contracts.
In general, SMEs prefer to participate in small or medium size projects which are easier to manage.
Some preliminary conclusions can be drafted about success factors that allow a company to benefit from its participation in EU research projects and to prove viability of new technologies in view of commercialisation. We can identify a preliminary list of key success factors that allow a company to benefit from its participation in EU research projects and to prove viability of new technologies in view of commercialisation:
- The project should preferably be in line with the SMEs core activity,
- The project initiators and coordinators should preferably have been involved in a previous FP research project. The second project presented by an SME is often more successful than the first one,
- The preparation of a project with an expert or the support of specialised services can help to better identify the role of each partner and expected results,
- For an SME, it is better to be involved in FP projects with partners from an existing network,
- SMEs prefer smaller projects: the size of an SME and the size of the project may influence the relationship between partners. If an SME is small, it will have more difficulty finding its place and being successful in larger projects,
- SMEs should take advantage of their academic research close environment: Spin- offs from universities or organised clusters seem to be favoured by their pre-existing research networks.
Another important aspect is that 90% of the SMEs participating in FP6 projects had been able to co-finance the project. This was made possible through a combination of external private funds and own resources for the unfinanced part (15%) of the grant.
About KAPPA-Health:Title: K
ey Performance Factor A
ssessment and Valorisation for Successful EU-FP P
articipation of innovative SMEs in the A
rea of HEALTH
HEALTH-2007-4.1-3: Assessment and valorisation of project outcome for high technology and research intensive SME participating to Framework Programmes of Research in the healthcare sector. (SME-valorisation).EU contribution:
750 000 €. Duration:
The project includes 7 Participants. Five of them are SMEs. They provide complementary knowledge on Framework Programmes, managerial issues, financial market and awareness of the challenges that SMEs are facing in their perspective of achieving commercial success out of their research results.Euro Top,
Belgium (coordinator) Steinbeis-Europa-Zentrum,
GermanyEU relations AG,
Switzerland Venture Valuation,
SwitzerlandBeacon Tech Ltd.,
The main objectives of the EU-funded project KAPPA-Health are to identify the key factors of a successful participation of health-related SMEs in the FP6 and FP7 research programmes and to support the SMEs in the valorisation of their project results and their acquisition of additional funding.
To this end, interviews and coaching of SMEs will be conducted by KAPPA-Health partners in the months to come. If you wish to participate in this enquiry please contact the project Coordinator:
Dr. Jacques Viseur,
Euro Top Cooperation Partners