KU Leuven in Belgium is such a pinnacle of entrepreneurial success that it topped the Reuters list of Europe’s most innovative universities for four years in a row. It was ranked seventh on the worldwide list and first among non-American institutions on the list. Yet it was no easy ride getting their academics to buy into the idea of commercialising their research, Dr Martin Hinoul said.
Dr Hinoul (right), KU Leuven Research & Development’s former Business Development Manager and now its advisor, who has written 14 books and gives lectures all over the world, was addressing senior executives from South African universities at the Executive Leadership Workshop (ELW) on Commercialisation of Research in Cape Town last week. Universities South Africa’s Entrepreneurship Development in Higher Education (EDHE) hosted the workshop, which was sponsored by British Council.
Speaking virtually from Leuven, Hinoul – who has a PhD in physics and a postgraduate degree in business administration from the Catholic University of Leuven (KU Leuven’s former name); has completed postdoctoral research at the Stanford University, M.I.T., and several other laboratories in Europe, the U.S. and Japan and holds an honorary doctorate from the Durban University of Technology – said the academics laughed at him when he suggested they register patents and create spin-off companies. “They couldn’t even write the word spin-off,” he said, exaggerating to emphasise their resistance.
The researchers said they needed to publish if they wanted to move up the ladder and become professors. So why was he telling them to stop that work and do patents and spin-offs?
Unperturbed, Hinoul said he and his team made them aware of the benefits. “And the only way we could do it was showing them the incentives. Incentives, incentives,” he said dramatically. “It took time – years – to convince the guys that making money is not a sin. It’s only good for everybody.”
The early days of technology transfer at KU Leuven
The university’s technology transfer office, KU Leuven Research & Development, had been established in 1972 with a staff of six. “Nobody believed in it. What a stupid thing is this (they thought),” Hinoul said. He had joined it as Business Development Manager in 1978 when the university’s rector at the time, André Oosterlinck, enticed him back from Washington DC where he was the Technology and Science Attaché at the Embassy of Belgium.
Dr Hinoul said “not so much happened” in the first 18 years of the office. They had a couple of patents and 10 to 15 spin-offs. But they did have some stand-out successes.
One spin-off, LMS Engineering Innovation, became a worldwide leading partner in measurement systems and simulation software in the automative, aerospace and other advanced manufacturing industries, and hit the jackpot when it was sold to Siemens in 2012 for $781 million.
One patent became what Hinoul referred to as “a blockbuster”. In 1993 a professor at the KU Leuven Rega Institute for Medical Research, in collaboration with the Institute of Organic Chemistry and Biochemistry of the Czech Academy of Sciences (IOCB Prague), discovered the antiviral agent tenofovir disoproxil fumarate.
KU Leuven licensed it to Gilead Sciences in the US, which further developed it, and now produces and distributes the drug under the trade name Viread – and KU Leuven reaps the royalties. Tenofovir is also an essential component of four other combination drugs and has become the most used antiretroviral drug in the world.
“So we call that lucky. We call those role models,” said Hinoul.
Creating an inventory
Under Dr Hinoul’s guidance, one of the first tasks the transfer office tackled was to consolidate all the research that was happening in every nook and cranny at the university. They created an inventory. “Nobody had done it before,” he said.
The result was what he referred to as a “big book of 200 pages” containing all the research divisions, which today number about 120, some comprising only one person, others with 50 or over 100.
Then they started inviting the head of all these research divisions to their offices. “And we tried to talk to them,” said Hinoul. “It’s important to make them aware that they can do it.”
An office of experts
Dr Hinoul was not the only expert in the technology transfer office. Today KU Leuven Research & Development division totals 110 people. They include 15 technology experts, most of whom have a PhD in engineering or pharmaceuticals; 15 Intellectual Property (IP) experts, all with a PhD plus an IP degree; 10 legal experts who handle the business plans, contracts, and patents unit: and 50 financial employees.
The technical team helped them identify potential spin-offs and the IP team helped suss out possible patents. “We did everything for these guys to start a spin off – everything from the intellectual property to the legal aspects to the business model and the financing,” said Hinoul.
When the division needed seed capital to make things happen, the rector at the time, Oosterlink – whom Hinoul variously referred to as “the tough guy” and “phenomenal guy; You hate him. You love him” – went to see two big banks in Belgium and came back with €25m.
“We made one spinoff after the other. Today we have something like 200 spin-offs at our university. In the meantime, €25 million became €1.2 billion. So we did very well,” said Hinoul.
Hinoul said the scientists and researchers thought they would get 100% shares of their spin-offs but on average they get 25%. “And we hope that they become independent as soon as possible, because we are not willing to run with 200 companies,” he said.
Of the 200 to 300 patents they apply for each year, typically 100 are granted.
For patents, their incentives work like this: the inventor who brings in €5m gets 40% “so is immediately a millionaire” said Hinoul. For income of €5-20m, the inventors get 30%, and for an income of more than €50m, they get 10% – “it’s still a lot of money,” he said.
The suitcases that rake in the Euros
“Contract research has become better and better and better,” said Hinoul, because researchers are even initiating contact with industry.
Hinoul said one of the best examples of this is Professor Ignaas Verpoest, an expert in carbon fibres from the Composites Materials Group of KU Leuven, who went to see Samsonite and told them “your luggage is worth nothing. It’s Middle Ages”.
“So, we developed a new suitcase for them – design, the fibre, the fabrication. And each Samsonite case you see when you travel, that’s a couple of dollars for us,” said Hinoul.
This on-going partnership between KU Leuven and Samsonite includes collaboration with the university’s Department of Mechanical Engineering. And Samsonite’s Cosmolite line of lightweight yet strong suitcases, based on KU Leuven technology, was launched in 2009 and is its best-selling range.
A summary of KU Leuven successes
Dr Hinoul said success factors include having a critical mass of high-quality research, ideally multidisciplinary; and clear, unambiguous incentives for the researchers. “There shouldn’t be any discussion on the incentives,” he said.
Universities also need seed capital and top-class infrastructure such as incubators, accelerators and research parks. “And if the government sees that you are making progress, they’re your friends,” he said.
The transfer office made €325 million last year, 1/3 coming from spinoffs ,1/3 coming from IP and 1/3 coming from contract research. “What are we doing with that money? We pay ourselves 8.5% to pay our people and so on. And we give 8.5% to the university. They’re very happy with that,” he said.
The town has 100 000 inhabitants, which defines it as a small town. It has 200 spin-offs and attracted 200 companies. It does €9-10billion turnover a year and created 16 000 jobs. A study showed that each high value-added job created 4.6 good, indirect jobs for the hotel and restaurant industries, and companies such as law firms. Leuven has become a knowledge economy region and its regional GDP is growing faster than Belguim’s or Europe’s.
“We attracted international companies. We formed networks. Networks are key. That’s my job. I live only for networks,” said Hinoul.
The commercialisation of research has benefited the entire region. “And that’s what I love. That the Leuven region became very rich,” said Dr Hinoul.
Gillian Anstey is a contract writer for Universities South Africa