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MANAGEMENT

ofThe Key to Competitiveness

and WealthCreation

TECHNOLOGY

Tarek Khalil | Ravi Shankar

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Technol

ogyTransfer

1

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RANBAXY ENTERS INTO ANTI-

HIV DRUGS MARKET Ranbaxy Laboratories Limited (Ranbaxy) is the largestpharmaceutical company of India, which is now owned by theDaiichi Sankyo Group of Japan

Despite an entry in pharmaceutical area in 1970s, only by late 1980s

that Ranbaxy showed the fruits of its R&D efforts by developing of anovel process for Cefaclor, which was the best selling antibiotic drugin 1980s

Ranbaxy had another excellent experience in development of a newprocess in drug discovery system

The NDDS of Ranbaxy was able to produce a one-dose-a-dayformulation in place of multiple-dose-a-day therapy formulation ofBayer

Bayer did not waste much time and entered into a licensingagreement with Ranbaxy

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RANBAXY ENTERS INTO ANTI-HIV

DRUGS MARKET (Contd.) Third example of a similar type is technology transfer related arrangement

with Gilead Sciences, Inc., which was founded in 1987 in California

Through a technology transfer arrangement in 2006, Ranbaxy got the

marketing right in India and many other developing nations for two drugs,

Tenofovir and Emtricitabine, developed by Gilead that were very popular inHIV therapy

Gilead retained the rights to manufacture and market generic equivalents of

(i)Elvitegravir, an investigational integrase inhibitor,(ii)Cobicistat, an

investigational anti-retroviral boosting agent, and(iii)Quad, which combines

four Gilead HIV medicines in a once-daily, single-tablet regimen Under the agreement Ranbaxy, which is one of the four licensees will also

receive a complete technology transfer of Gilead manufacturing process to

support their efforts to obtain local regulatory approvals and scale up

production

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INTRODUCTION

A user of a technology does not have to be itscreator or inventor

Transfer of technology is a process essential forthe wide application and utilization oftechnology by one or more users

We discuss here some cases of international

technology transfer, present examples ofsuccessful national programmes of technologytransfer, and examine a model of intra-firmtechnology transfer

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DEFINITIONS AND

CLASSIFICATIONS Technology transfer is a process that permits the flow of technology

from a source to a receiver

Jain and Triandis (1990) define technology transfer as a process by

which science and technology are transferred from one individual or

group to another that incorporates this new knowledge into its way of

doing things

Technology transfer can be divided into the following categories:

International technology transfer

Regional technology transfer

Cross-industry or cross-sector technology transfer

Inter-firm technology transfer

Intra-firm technology transfer

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CHANNELS OF TECHNOLOGY

FLOWGeneral channels

Reverse-engineering channels

Planned channelsLicensing

Franchise

Joint ventureTurnkey project

Foreign Direct Investment (FDI)

Technical consortium and joint R&D project

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INTERNATIONAL TECHNOLOGY

TRANSFER The technological production base previously confined to the

industrialized nations of the West and the North has recently spread

to a large number of other countries

In a majority of cases, the migration of technology occurred throughinternational technology transfer, through mutual cooperation

agreements, or through direct purchases from the United States,

Germany, Japan, and other industrialised countries

The migration of technology and production facilities from theUnited States to Japan and other Asian countries in the 1970s and

1980s occurred because of a lack of competitiveness in U.S.

manufacturing

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INTERNATIONAL TECHNOLOGY

TRANSFER (Contd.) Avoiding head-

to-head

contests for

technology

supremacy, the

Tigers prefer to

target niches

where they can

quickly turntechnologies

into world-class

products

Technology Specialisation Among the Tigers

Source:BusinessWeek,

Dec.7,1992

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INTERNATIONAL TECHNOLOGY

TRANSFER (Contd.) The Singapore Model

Establish/maintain a clean, effective government that is well respected by the

people

Avoid internal squabbles for national unity

Build on areas of strength

Encourage savings to increase investment while avoiding external debt

Encourage family projects and local industry to create economic

opportunities, and keep people from emigrating to large cities

Do not waste funds on huge projects

Encourage investment by both small investors and multinationals

Promote education

Develop effective strategies for technology transfer

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TECHNOLOGY TRANSFER IN

TAIWAN In Taiwan, industrial technology R&D is enhanced by a nonprofit

corporation known as the Industrial Technology Research Institute

(ITRI)

Taiwan has located ITRI next to two of its top universities in science andtechnology: the National Tsinghua University and the National Chiao-

Tung University

To facilitate the transfer further, an industrial park is located in close

proximity to permit a project incubated in ITRI to be spun off to a

privately owned facility in the industrial park

Technology transfer through people is a very effective transfer

mechanism

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U.S. NATIONAL TECHNOLOGY

TRANSFER The United States is by far the most intensive technology-producing country in the world

How is it, then, that U.S. competitiveness declined in the 1970s and 1980s and that the nation

has a huge deficit in its balance of trade?

The National Aeronautics and Space Administration (NASA) has been very active in promoting

technology transfer and has created a national network of Technology Transfer Centres

Perrin (1990) described a proactive approach to the transfer of Department of Defense (DOD)

technologies to solve civil problems

Perrin enumerated the advantages of the active transfer process as follows:

Conveys timely information on current and planned developer and user programmes

Provides real-time feedback and criticism on specific technology or problem items

Allows the transmittal of ancillary information and know-how that is not available in formal literature or

reports

Permits the transfer agents to manage and control in a user-need or applied direction

Requires a relatively small expenditure of effort and time relative to the results obtained

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U.S. NATIONAL TECHNOLOGY

TRANSFER (Contd.)NASA National Network

The national network of Technology Transfer Centres and offices sponsored by NASA is dedicated to the timelytransfer of scientific advances and technologies resulting from NASAs aeronautics and space programmes andother federal R&D to practical applications throughout the U.S. economy.

NASA field centres: Each of NASAs field centres has a Technology Transfer Office to coordinate and manage a fullrange of technology transfer activities, including new technology reporting, technical assistance, cooperativeprojects, and industry outreach.

Regional Technology Transfer Centres: The NASA Regional Technology Transfer Centres (RTTCs) are staffed bytechnology transfer experts offering technical consultation services and linkage to other experts in the field. TheRTTCs provide services to industry within their designated regions and assist industry clients to locate, assess, andcommercialize technologies from NASA and the federal R&D base.

National Technology Transfer Centre: The National Technology Transfer Centre (NTTC) serves as a nationalclearinghouse/gateway for federal technology transfer and provides services and assistance in training, planning,and outreach.

Earth Data Analysis Centre: The Earth Data Analysis Centre (EDAC) provides technology transfer services insupport of the distribution and transfer of remote sensing/geographic information systems data and technology.

Technology Application Team: The Technology Application Team (TAT) works with industry to identify and solvecritical problems with existing NASA technology and to develop cooperative projects and relationships thataddress technological needs of national or industry-wide significance.

Computer Software Management and Information Centre: The Computer Software Management and InformationCentre (COSMIC), operated by the University of Georgia, is NASAs technology transfer programme for collectingand documenting computer software technology produced by NASA and distributing it to U.S. private,government, and academic organizations.

Centre for AeroSpace Information: The Centre for AeroSpace Information (CASI) maintains mailing lists anddistributes NASA technology transfer publications, including the annual Spinoff report. CASI provides responses

and referrals to inquiries about technology transfer. CASI also provides centralised technology transferdocumentation support for all NASA centres.Source:NationalAeronauticsandSpaceAdministration,

1995.

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U.S. NATIONAL TECHNOLOGY

TRANSFER (Contd.)

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U.S. NATIONAL TECHNOLOGY

TRANSFER (Contd.)Wood and EarNisse (1992) mentioned the following factors as

contributing to the successful technology transfer project from

Sandia to Quartex:

Technology transfer fit for Quartexs strategic planning.

Sufficient proprietary rights from Sandia to Quartex to justify therisk of investment

Potential for additional proprietary coverage for the technology

through improvement patents and new technology

A landmark invention

Diverse market applications for the technology

Incentives for sustained technology transfer and support by a

product champion

Required resources within Quartex for product commercialization

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U.S. NATIONAL TECHNOLOGY

TRANSFER (Contd.)Wood and EarNisse (1992) mentioned the following factors as

contributing to the successful technology transfer project from

Sandia to Quartex:

Technology transfer fit for Quartexs strategic planning.

Sufficient proprietary rights from Sandia to Quartex to justify therisk of investment

Potential for additional proprietary coverage for the technology

through improvement patents and new technology

A landmark invention

Diverse market applications for the technology

Incentives for sustained technology transfer and support by a

product champion

Required resources within Quartex for product commercialization

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INTRAFIRM TECHNOLOGY

TRANSFERA firm attempting to transfer technology from one site toanother or from one division to another must approach thetransfer process in a systematic and deliberate manner

In fact, complicated transfer projects may require two

teams, one at the source and one at the receiving end of thetechnology

In this model, the project starts when a company decides toacquire new technology through the purchase of a smallerentrepreneurial company located thousands of miles away

In this particular case, the team comprises two separategroups: one at the headquarters and one at the acquired-company location

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INTRAFIRM TECHNOLOGY TRANSFER

(Contd.)

Intrafirm

TechnologyTransfer Model So

urce:BeruvidesandKhalil,19

90;1990InstituteofIndustrial

Engin

eers

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INTRAFIRM TECHNOLOGY TRANSFER

(Contd.)

Several useful guidelines for setting up atransfer team are recommended by Beruvidesand Khalil (1990):The smaller the team, the better.

People work best in an atmosphere of trust andhealthy competition.

Building teamwork and motivating the teammembers are critical.

The chain of command and communicationchannels should be well understood by all.

Success is largely dependent on the quality of thepeople selected to perform the tasks

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WEBLINKS www.ranbaxy.com

http://www.ranbaxy.com/UploadInc/CorporatePresentation/Corporate_Pres

entation.pdf

http://www.gilead.com/worldwide_operations

http://articles.economictimes.indiatimes.com/2011-07-13/news/29769199_1_c

obicistat-and-quad-tenofovir-gilead-sciences

http://www.topnews.in/health/ranbaxygilead-sciences-manufacture-and-mark

et-three-anti-hiv-drugs-india-developing-nations-212788

http://www.thehindubusinessline.com/companies/article2221311.ece

http://www.ranbaxy.com/http://www.ranbaxy.com/UploadInc/CorporatePresentation/Corporate_Presentation.pdfhttp://www.ranbaxy.com/UploadInc/CorporatePresentation/Corporate_Presentation.pdfhttp://www.gilead.com/worldwide_operationshttp://articles.economictimes.indiatimes.com/2011-07-13/news/29769199_1_cobicistat-and-quad-tenofovir-gilead-scienceshttp://articles.economictimes.indiatimes.com/2011-07-13/news/29769199_1_cobicistat-and-quad-tenofovir-gilead-scienceshttp://www.topnews.in/health/ranbaxygilead-sciences-manufacture-and-market-three-anti-hiv-drugs-india-developing-nations-212788http://www.topnews.in/health/ranbaxygilead-sciences-manufacture-and-market-three-anti-hiv-drugs-india-developing-nations-212788http://www.thehindubusinessline.com/companies/article2221311.ecehttp://www.thehindubusinessline.com/companies/article2221311.ecehttp://www.topnews.in/health/ranbaxygilead-sciences-manufacture-and-market-three-anti-hiv-drugs-india-developing-nations-212788http://www.topnews.in/health/ranbaxygilead-sciences-manufacture-and-market-three-anti-hiv-drugs-india-developing-nations-212788http://articles.economictimes.indiatimes.com/2011-07-13/news/29769199_1_cobicistat-and-quad-tenofovir-gilead-scienceshttp://articles.economictimes.indiatimes.com/2011-07-13/news/29769199_1_cobicistat-and-quad-tenofovir-gilead-scienceshttp://www.gilead.com/worldwide_operationshttp://www.ranbaxy.com/UploadInc/CorporatePresentation/Corporate_Presentation.pdfhttp://www.ranbaxy.com/UploadInc/CorporatePresentation/Corporate_Presentation.pdfhttp://www.ranbaxy.com/