What Makes a Novel Technology Innovative How to

What Makes a Novel Technology Innovative? (How to Create a Commercial Partnership) Terry Fetterhoff Head, US Chief Technology Office Roche Diagnostics

Great to be back!

Roche at a glance • • • Founded 1896 in Basel, Switzerland Founding families still hold majority stake Employing 88, 500 people Currently active in 150 countries on all continents 2014 – sales of 47. 5 billion Swiss francs 2014 – 19 million patients treated with one of Roche’s top 25 selling medicines 2014 – 3 billion diagnostic tests performed Clear focus on healthcare Leadership in pharmaceuticals (#3)* World’s largest biotech company (position #1)* with truly differentiated medicines in oncology, virology, inflammation, metabolism and CNS • Leadership in in vitro diagnostics (#1) and pioneer in diabetes management • Unique innovation model § But no position in Cytometry… * Source: Decision Resources, Q 4/2014

Innovation in Cytometry Any Company’s Innovation Potential lies in it’s collective ability to identify and in-license technologies before the competition

? Innovation

Innovation in Cytometry Definitions Invention = A novel idea / technology / process Innovation = A really good invention

Innovation in Cytometry Invention: Example

Innovation in Cytometry Definitions Invention = A novel idea / technology / process Innovation = A really good invention = The commercialization of an novel technology, integrated with the collective ‘know how’ = The commercialization of an novel technology that endows the customer with new capability

Innovation in Cytometry Innovation Occurs when Novel Technology is matched with Unmet Customer Need Pull Insight Customer Needs Technology Development Innovation Space Push Customer Novel Technology Commercialization

Innovation in Cytometry Matching Their Want with Your Have can be a Rare Event Aligned Interest What People Want Focused Alignment Successful Alliance What Scientists & Engineers Make

Innovation in Cytometry Innovation Occurs when Novel Technology is matched with Unmet Customer Need Pull Insight Technology Development Valley of Death Customer Needs Innovation Space Push Customer Novel Technology Commercialization Steps to Avoid Vo. D

Innovation in Cytometry How do you Reach Out to the Right Business Partner?

1. Understand your Commercial Partner Innovation occurs across a business/technology continuum Business Fuzzy Strategic Migration e. g. Unclear Development Path Disruptive Technologies New Market White Space Operational Requirements Technology to Challenge Strategy or Migration Path Well Defined Wish List Point or Off The Shelf Solutions Performance Improvement Usability Enhancement Technology New Dx Capabilities New Dx Platforms Migration Strategy Future State Vision Need for External Technology Source Emerging Technologies

Innovation in Cytometry How do you Predict the Market Value of a Novel Technology

2. Know and Defend the Value of your Invention Framework for Technology Assessment Company Customer ilit y Ut Technology Uniqueness n ar M tio ec ot Pr M a Sh rke ar t e Intellectual Property ize Capital Profitability t. S ke Co st Copyright lue ion Va osit op Pr Fr ee Op dom er at to e t Fi Growth Commerce Competition

2. Know and Defend the Value of your Invention Methods for Technology Valuation Cost Plus • Assumes that the value of the technology is related to the cost of development Comparable Market • Assumes that the value of the technology can be inferred by comparing to comparable technologies already on the market Future Return • Net Present Value (NPV) based on anticipated revenue and costs calculated against a pre-determined cost of capital Monte Carlo • Incorporates uncertainty by characterizing the range of potential future outcomes and interprets the NPV distribution for all scenarios, yet assuming a single course of action Real Options • Decision tree analysis applied to the quantitative assessment of a business opportunity incorporating technical as well as market risk for each go/no go decision point

Innovation in Cytometry So What About Clinical Cytometry?

ed eam Ne Str al ue dic ven Me Re Standardization Is Clinical Cytometry Receptive to Innovation? Market Adoption Nu Value Based Pricing er mb Level of Automation ns tio ca pli I Ap of of el Lev nt me st nve Diagnostic Sequencing Clinical Cytometry Market Health Assessment

Summary • Innovation is the commercialization of an novel technology that endows the customer with new capability. • Commercial companies are more open to alliance with external partners for technologies just beyond their internal reach (expansive innovation). • Successful alliance requires common technology valuation based on objective assessment of unmet market needs. • Valuation of technologies for the clinical cytometry market is negatively influenced by various market factors, so inventors must understand address respective market constraints. • Technology development has largely met the needs of clinical cytometry. The remaining unmet needs include a greater level of automation including data analysis, greater degree of standardization, and IT connectivity. • Greatest value to clinical cytometry offered from academia (inventors) is increasing medical value of new assays through evidence based improved health outcome.

I call my invention The Wheel, but so far I’ve been unable to attract any venture capital.