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The Twin Valleys of Death: McKeon Review Proposes Boost for Australian Research Commercialisation

A comprehensive Commonwealth review of health and medical research in Australia recommends targeted funding and strategic improvements to support research commercialisation.

The report, entitled the ‘McKeon Review–Strategic Review of Health and Medical Research – Better Health through Research’, provides a 10-year strategic health and medical research plan for the nation.

Chapter 6 of the Report provides suggestions to enhance the commercial pathway to provide health, economic and social benefits to the nation and encompasses two key recommendations:

  • Recommendation 16, entitled ‘Support Research Commercialisation’, seeks to provide funding to address the twin ‘valleys of death’ in commercialisation research.

  • Recommendation 17, entitled ‘Enhance Commercialisation Environment,’seeks to improve commercialisation capability, culture and practices.

The Twin Valleys of Death

The report notes that it is within the first two stages of health and medical research that organisations experience shortfalls or inappropriately targeted funding– colloquially known as the twin ‘valleys of death’:

  • The first 'valley of death' occurs during the development of ideas in the preclinical stage of research where further funding for laboratory research is generally not available but the research is still too early in the development chain to attract biotech companies, venture capital or industry investment.

  • The second ‘valley of death’ occurs in the early clinical development stages, where funding is needed to collect data to support late clinical stage development proposals that would seek funding from venture capital, biotechnology and industry corporations.

Proposed Funding for Research Commercialisation

The report suggests the following changes to improve support research commercialisation:

  • Institute a Matching Development Grants scheme to provide $0.5m p.a. to each of the 20 consistently most successful NHMRC peer-reviewed grant recipient organisations, contingent on matching commitments and access to business development capabilities.

  • Maintain health and medical research access to the Australian Research Council Linkage Projects scheme.

  • Establish a Translational Biotech Fund for early-stage development of around $250m, funded by the Australian Government and the private sector on a one-to-one matching basis.

  • Continue to support the Innovation Investment Fund program.

Enhance Commercialisation Environment

The report notes that Australia has a relatively underdeveloped culture for commercialisation of its innovation, with limited knowledge and skills among the research community. The report also notes a lack of infrastructure to assist start-ups and a lack of funding to research commercialisation as leading to the absence of a strong culture of innovation nationally. The report suggests the following changes to improve commercialisation capability, culture and practices in Australia:

  • Foster a culture of commercialisation through freer interchange between researchers and industry, and recognise commercialisation achievements through institutional rankings and industry awards.

  • Encourage research organisations with sub-scale or no business development offices to engage larger institutions/precincts for commercialisation requirements.

  • Protect valuable intellectual property (IP) by strengthening Australia's IP system and encouraging researchers to seek sound advice on the commercial value of their IP before filing patent applications.

  • Implement clinical trial reforms as an urgent national priority (see Recommendation 5).

The above recommendations reflect a strong commitment at a national level to support and improve research commercialisation. The implementation of the report recommendations will therefore be of great interest to the research commercialisation community in Australia.

The McKeon Review “Strategic Review of Health and Medical Research – Better Health through Research Report” was released by the Minister for Health, Tanya Plibersek and is available at http://www.mckeonreview.org.au.

Authors: Jarryd Bartle & Jason Watson, Partner

11 April 2013