No two projects are alike in converting a technical innovation to a market facing solution. Hence the road map for a given invention has to be custom designed. Yet basic concepts are common and we can learn to build the road map through case studies. One such study on urethral strictures is presented here.

1. Technology innovation to commercial translation :
A case study for treatment of urethral stricture
Session delivered at the
Bindley Bioscience Center, Discovery Park
Purdue University, West Lafayette, IN 47907
Sept 18, 2009
by
Parasuram ( Bala) Balasubramanian
Entrepreneur-in-Residence
Discovery Park
balasubp@gmail.com

2. Disclaimer
v Bala has performed this role in his
personal capacity and is presenting
this as a case study only for the
purpose of knowledge sharing
v He thanks Purdue University and the
Discovery Park for the opportunity to
serve as Entrepreneur-in-Residence
since 2006
v Dr. Sridhar’s permission granted to
make this presentation is gratefully
acknowledged
v I will be presenting this as a business
case and not at the disease/molecular
level

3. Case Presentation
v He has been performing surgeries for a
condition known as urethral stricture [US]
for more than two decades.
v He has also been a researcher and
inventor in allied fields.
v He has been associated with numerous
charitable trusts serving the poor.
v Dr.K.N. Sridhar is a leading urologist in
Bangalore, India
v He holds post graduate degrees in
medicine and surgery from India and UK.
[ M.B.B.S.,L.R.C.P.,(Lon) M.R.C.S.,(Eng),
F.R.C.S. (Ire)(Edin)(Eng)(Can)]

4. Case Presentation
v US is common among low and middle
income group men in their middle ages.
v Patients find it painful to urinate,
experience urge to urinate frequently with
limited control and need longer time to
empty the bladder.
v Traditional solutions to US have been
dilatation
internal urethrotomy
Urethroplasty
v Buccal mucosa is the currently prevalent
grafting material but it leaves the donor
site with many side effects.
Diagram Credit: Phoenix5’s
Prostate Cancer Glossary

5. Case Presentation
v Sridhar has innovated the use of autologous
urethral tissue as the grafting material
v He has performed a research study
(experimental procedure) with 10 patients
and has achieved considerable success. He
has filed a patent application
v The study has been performed during the
past two years
v The study has cost rupees three million
(US dollars 60,000) and it has been funded
by a philanthropist
v A Clinical research Organization (CRO) has
been entrusted with the administration of
the process, data collection and data
management while Dr. Sridhar has retained
control over patient selection
Image Credit:
www. ndsu.nodac.edu

6. Case Presentation
v His approach calls for
growing the tissue in a lab,
testing it to ensure adequacy of
required properties and
planting it in the affected area for
natural healing over three weeks.
v The study has been done adhering to the
national guidelines
with respect to patient trials by
registering the protocol with the Indian
council of medical Research (ICMR)
getting the protocol reviewed by an
ethics committee and
after getting the informed consent
from the patients etc. .
Image Credit:
www. ndsu.nodac.edu

7. Case Presentation
Image Credit:
www.lawofattractionsuccess
stories.com/
v As much as he is excited, Sridhar is
confronted with issues relating to going
forward.
v The need to
perform Clinical Trials with larger count of
patients
understanding and ensuring compliance
with all legal requirements
setting up the tissue engineering lab
identifying partners for outsourcing and
collaboration and
subsequent commercialization of the
solution are
the daunting tasks he is faced with
v Besides, he is also keen to continue his
research activities in allied areas.

8. Case Presentation
Image Credit:
www.lawofattractionsuccess
stories.com/
v There are many competing organizations
willing to help him in this venture.
v Some of them are international too.
v He recognizes the global potential of his
solution but is unsure of the cost and time
frame to take the solution to market in other
geographies.
v One of his key concerns is that his solution is
offered to the market at an affordable cost.
v He has been treating poor and middle
income patients for decades and he wishes
to ensure that they would not be deprived of
this solution due to unaffordability

9. Case Discussion
v Many researchers face similar issues.
v They wish to take their invention to the
market place but lack skills to prepare a road
map
v They believe that the invention is of great
market value but do not quantify it.
v They are unaware of the time and other
resources needed to convert it into a product
or a solution before hitting the market.
v They fail to recognize that continued
research to improve upon the solution is not
same as efforts needed to productize the
solution. ( one is technical research and the
other is market research)
Image Credit:
www. One-huge-family.com/

10. Case Resolution
v Need for a feasibility study
v Geographical domain coverage
v Structuring and Cascading the investment
options
v Distinct Life cycle stages [Research,
Productization, Commercialization]
v In sourcing versus Outsourcing
v Structuring the organization
v Cost Estimation
v Demand Estimation
v Solution validation
v Commercial viability determination
v Investment decision
v Road Map preparation
Image Credit:
www. netalogue.com/

11. Case Resolution
v Need for a feasibility study
Potential investors need to know the market
potential, demand elasticity, investment needed
in different time periods. break even period,
competing technologies, cost advantages, likely
pitfalls and technical challenges. The researcher
requires resource commitment and freedom to
continue the research initiatives. They need a
common platform to facilitate dialogue.
Feasibility study is the best means of
accomplishing this.
v Geographical domain coverage
Cost structures, market potential and regulatory
compliance issues differ significantly from one
country to another. A stratified strategy works
better .
Image Credit:
www. netalogue.com/
Sridhar was convinced to go after the Indian market
first and helped to carry out a feasibility study.

12. Case Resolution
v Structuring and Cascading the investment
options
Two different propositions were constructed.
Proposition 1 calls for taking the current
solution to the market place with
appropriate validation.
Proposition 2 is to build a Research Lab to
continue the research activities and to take
future inventions to the market place.
Proposition 2 has been structured as a Add-
on to Proposition 1
Image Credit:
www. netalogue.com/
Cascading approach brings a higher level of clarity to
the investment scenario.

13. Research Extensions under Proposition 2
v (a) Spongiosum and Muscle tube
to grow the Spongiosum and muscle in a lab
environment and subject the tissue for animal and
human studies later.
v (b) New Treatment for Hypospadias
Hypospadias is a serious problem of affected
children . It is a logical extension of previous work
but to a new class of patients.
v (c) Treatment of urinary incontinence following
radical Prostatectomy
to grow the muscle tube in a lab environment and
graft it back in the surgically affected area to
abolish the incontinence issue. .
Case Resolution
Image Credit:
www.imsat.co.uk/

14. Case Resolution
v Distinct Life cycle stages [Research,
Productization, Commercialization]
Productization is the middle stage playing
the bridging role between Research and
Commercialization.
Based on inputs from the Market, Product
specification is derived out of ongoing
Research efforts, scope of offering is
determined, the proposed solution is
validated from technology and commercial
perspectives. It calls for significant
investments.
The road map for commercialization is
prepared in this stage.
Image Credit:
www. netalogue.com/
Proposition 1 (for Dr. Sridhar) is mainly the
Productization stage of his current invention.

15. Case Resolution
v In sourcing versus Outsourcing
Setting up the support facilities such as the
Tissue Engineering Lab, Clinical Research
Management, Material properties testing
and Patient Care add significant fixed costs
These facilities can be in sourced or outsourced.
The decision to in source will be guided by
three major factors:
Ø Mission criticality and Competitive advantage
Ø Facility Utilization rate/cost recovery break even
Ø Technical and managerial expertise required
Picture Credit:
www. netalogue.com/
Proposition 1 (for Dr. Sridhar) becomes cost effective
only when most of the facilities are outsourced

16. Case Resolution
v Structuring the Organization
Ownership of the proposed entity and its
structuring have to be thought through well
in advance.
v Funding agencies would have a say in it.
v Research contracts, if funded externally,
need to be drawn up with due care of IP,
indemnity, Usage rights etc
v It is prudent to create separate legal entities
for Research and for Commercialization with
a Chinese wall in-between (especially in
health care)
v Collaboration needs of the two entities
would differ substantially
v What about exit strategy?
Picture Credit:
www. netalogue.com/
Productization role has to be assigned to Research or
Commercialization entity based on case to case
assessment of Conflict of Interest

17. Case Resolution
v Cost Estimation
Cost elements have to be determined .
Costs can vary from being fixed to variable
to hybrid . They can be linear or nonlinear.
Cash flow models serve this purpose well.
Cost estimates need to be validated using
secondary sources.
Proposition 1 total cost is US dollars 386,000
to be spent over 18 months
Proposition 2 costs US dollars 3.72 million
over a six year period but from year 2
onwards.
Picture Credit:
www. netalogue.com/
It is better to consider costs in the worst case scenario

18. Cash outflow Model 2009 4Q 2010 1Q 2010 2Q 2010 3Q 2010 4Q 2011 1Q
(constant costs basis) Q1 Q2 Q3 Q4 Q5 Q6
192.81
Clinical Trial for Validation of AUM total expenses 24.80 31.80 33.43 33.10 32.76 36.92
Protocol Design& Development Outsourced activity 5.00
Hospital facility utilization charges Outsourced activity 6.00 6.00 6.00 6.00 6.00
Clinical Trial Management Outsourced activity 2.00 2.00 2.00 2.00 2.00
Data Management Outsourced activity 2.00 2.00 2.00 2.00 2.00
TEL costs Outsourced activity 4.00 7.00 2.00 2.00 7.00
Consumables 1.00 1.00 1.00 1.00 1.00
Purchase of Equipment 2.00 1.00
Advisory charges of ethical committee 1.00 0.50 0.50 0.50 0.50 1.00
Patenting costs 3.00 2.00
Publication costs 1.00 1.00
Subscription to Journals 0.50 0.50 0.50 0.50 0.50 0.50
Urologist compensation 6.00 6.00 6.00 6.00 6.00 6.00
Tissue Engineer Compensation 3.00 3.00 3.00 3.00 3.00 3.00
Research Assistants' salary 2.00 2.00 2.00 2.00 2.00 2.00
Software development& maint cost 4.00 2.00 1.00 1.00 1.00 1.00
Office Assitant's salary 0.30 0.30 0.30 0.30 0.30 0.30
Other expenses 1.00 1.00 1.00 1.00 1.00 1.00
Biomechanic testing costs IISC 2.00 1.00
Interest charges 0.50 1.13 1.80 2.46 3.12
Case Resolution
Proposition 1 Cost Estimation ( in lakh rupees)

19. Case Resolution
Proposition 2 Cost Estimation ( in lakh rupees)
Cash outflow Model 2010 4Q 2011 1Q 2011 2Q 2011 3Q 2011-12 2012-13 2013-14 2014-15 2015-16
(constant costs basis) Q5 Q6 Q7 Q8 Y3 Y4 Y5 Y6 Y7
land development charges 0.00 0.00 0.00 0.00 5.00 5.00 5.00 5.00 5.00
Building cost 5000 sq ft facility 25.00 25.00 25.00 25.00
Purchase of Equipment 10.00 20.00 20.00 40.00 10.00 10.00 10.00 10.00
hardware &software maintenance 1.00 3.00 3.00 3.00 3.00 3.00
Research Consumables 5.00 20.00 40.00 40.00 40.00 40.00
Running costs ( water,power,security etc) 3.00 3.00 12.00 12.00 12.00 12.00 12.00
Protocol design 5.00 5.00 5.00 5.00 5.00 5.00
Advisory charges of ethical committee 1.00 1.00 4.00 4.00 4.00 4.00 4.00
Hospital facility utilization charges 6.00 6.00 30.00 30.00 30.00 30.00 30.00
Patenting costs 3.00 2.00 5.00 10.00 10.00 10.00 10.00
Publication costs 1.00 4.00 4.00 4.00 4.00 4.00
Subscription to Journals 0.50 0.50 2.00 2.00 2.00 2.00 2.00
Registration charges 1.00 1.00 4.00 4.00 4.00 4.00 4.00
Urologist compensation 6.00 6.00 36.00 36.00 36.00 36.00 36.00
Tissue Engineer Compensation 3.00 3.00 18.00 18.00 18.00 18.00 18.00
Data Manager salary 3.00 3.00 18.00 18.00 18.00 18.00 18.00
CT Administrator salary 18.00 18.00 18.00 18.00 18.00
Research Assistants salary 2.00 2.00 16.00 20.00 24.00 24.00 24.00
Biomechanic testing costs IISC 1.00 1.00 2.00 2.00 2.00 2.00 2.00
Animal Lab costs 2.00 5.00 5.00 5.00 5.00 5.00
Travel 2.00 2.00 8.00 8.00 8.00 8.00 8.00
Canteen & Transport 1.00 1.00 5.00 5.00 5.00 5.00 5.00
pathology study 2.00 2.00 10.00 10.00 10.00 10.00 10.00
Other expenses 11.36 34.67 59.76 87.18 116.80
Contingency
Interest charges 2010-11 2011-12 2012-13 2013-14 2013-15 2013-16
Annualized expenses 142.00 291.36 313.67 342.76 370.18 399.80

20. Case Resolution
v Demand Estimation
Potential demand for services is to be
estimated.
There are no reliable nationwide data on
patients treated.
Hence data from Dr. Sridhar’s clinic has
been extrapolated to Bangalore city level
first and then nationwide to estimate
demand.
Multiple methods are used and most
conservative figures have been selected.
Estimates have been arrived at for each of
the Research initiatives separately; also take
into account the cross demand implications.
Image Credit:
www. netalogue.com/
It is better to consider demand with most conservative
scenario. Provide corrections for Incidence versus Prevalence.

21. Case Resolution
First estimate for India : USD incidence
total no of patients seen per urologist per year 3000
No of patients with Strictures per year per urologist 120
Percentage with strictures 4
No of urologists in Bangalore 100
Bangalore population 6500000
Incidence rate per population in Bangalore 0.001846154
India population 1100000000
Indian male population 550000000
Indian male population in the age group of 20 to 40 & 60 and above 181500000
estimate of incidence in India ( based on population count) 167538
estimate of incidence in India ( based on clinic visits) 96000
Conservative Estimate 96000
Demand Estimation in India: Method 1

22. Case Resolution
Estimates for India
Y3 Y4 Y5 Y6 Y7
Number of active Urologists 800 800 800 800 800
Patients seen per month per urologist 250 250 250 250 250
No of patients with Strictures per month per urologist 10 10 10 10 10
No of surgeons doing Hypospadias 200 200 200 200 200
No of patients with Hypospadias per month per surgeon 2 5 8 10 10
No of patients with cancer prostate per month per urologist 0.05 0.1 0.2 0.2 0.2
No of Urethral Strictures observed per month per urologist 10 10 10 10 10
No of Buccal Mucosa grafts done per month per urologist 1 1 1 1 1
No of urethrotomy procedures done per month per urologist 10 10 10 10 10
Potential cases for AUM nationwide in a year(conservative estimate) 9600 9600 9600 9600 9600
Potential cases for AUM nationwide in a year 28800
Potential cases for TE Hypospadias 4800 12000 19200 24000 24000
Potential cases for anti incontinence surgery for cancer patients 480 960 1920 1920 1920
Total number of patients for the new research initiatives 5280 17760 30720 35520 35520
Demand Estimation in India: Method 2

23. Case Resolution
v Solution Validation
Validation is considered under technical and
commercial view.
Technical validation occurs when clinical Trials
are successfully concluded.
Publication in a tech journal is pending.
The proposed solution was presented in a
conference of urologists and some of them were
interviewed in-depth to review the procedure,
validate the demand estimates and to ascertain
the price elasticity of demand.
The investment figures and time period were
reviewed by industry experts in a clinical
research organization.
.
Image Credit:
www. netalogue.com/
Cross Validation of assumptions, estimates and predictions lend
a higher level of confidence.

24. Case Resolution
v Commercial Viability determination
Given the need to validate the estimates during
the clinical trial phase, it has been felt that
accurate investment figures cannot be obtained
for the Go To Market stage.
Hence a break even analysis has been carried
out under the assumption of various Net Margin
rates for the commercial entity.
For Proposition 1 it is assumed that the entire
investment needs to be recovered in 3 years
equally amortized. ( annual recovery of US
dollars 129,000 or Indian rupees 7.5 million)
The number of patients treated is kept as a
fraction of affected population
.
Image Credit:
www. netalogue.com/
The Break Even period (Proposition 1) will vary from 3 to 5 years
depending on the net margin figures ranging from 50 % to 30 %
respectively.

25. Case Resolution
Proposition 1 2011 3Q 2011-12 2012-13 2013-14
Q8 Y3 Y4 Y5
Annual recovery of R& P expenditure 74.27 74.27 74.27
Charge per patient 0.30 0.25 0.20
Estimate of patients who will be treated 500 750 1125
gross revenue 150.00 187.50 225.00
50 % of Gross revenue 75.00 93.75 112.50
40 % of Gross revenue 60.00 75.00 90.00
30 % of Gross revenue 45.00 56.25 67.50
20 % of Gross revenue 30.00 37.50 45.00
Break Even Period is
3 years at 50
% Net
Margin
4 years at
40% Net
Margin
5+ years at
30 % Net
Margin

26. Case Resolution
v Commercial Viability determination
For Proposition 2 it is assumed that successful
completion of Extension 1 will cannibalize the
demand of Proposition 1. Appropriate
corrections are made to the financial analysis.
Instead of assuming number of patients treated
each year, the break even number required
under various Net margin figures is calculated.
It can be seen that even in the worst case
scenario, the number required for break even is
less than 25 % of the most conservative estimate
of demand.
.
Image Credit:
www. netalogue.com/
The Break Even number (for Proposition 2) of patients is about
8000 when the charge per patient is as low as Rupees 20,000 (US
dollars 400)

27. Case Resolution
Research Center
( Research &
Productization) Proposition 2
2010-11 2011-12 2012-13 2013-14
Charge per patient 0.20 0.20 0.20
No of patients for Break Even
at 50 % Net Margin 3387 3981 4644
No of patients for Break Even
at 40 % Net Margin 4234 4977 5805
No of patients for Break Even
at 30 % Net Margin 5639 6629 7732

28. Case Resolution
v Commercial Viability determination
Key assumption pertains to charge per patient. It
is assumed to be rupees 20,000
This figure has been arrived at based on the
validation exercise done with urologists in India.
Currently patients spend up to rupees 40,000
per year since multiple treatments are needed in
a year.
The corresponding figure from US is 6000
dollars per patient undergoing the urethroplasty
treatment.
.
Image Credit:
www. netalogue.com/
One of the paradoxes of India is patients’ ability to fork out large
sums for medical expenses when their average monthly income is
rupees 4000 and the insurance coverage is minimal.
You may want to point – why in general cost
is cheaper compared to USA ? $400 is really
a very cheap for a surgery case in India vs.
USA!

29. Case Resolution
v Investment Decision
The feasibility study has been presented to a
major potential investor in Aug 2009
The investor is considering franchise versus
owned facilities approach to reach out quickly to
the patients.
The investor has endorsed the Net Margin
figures as reasonable.
A leading German firm has expressed interest
to be a collaboration partner in setting up the
Tissue Engineering Lab.
Issues related when other investors jump in? They are looking ROI.
Other business options/decisions licensing vs. going forward at own?
Image Credit:
www. netalogue.com/
The Investor is aware of the expectation that funds required to
support the Research facility on an ongoing basis need to be
generated by the commercialization Unit.

30. Case Resolution
v Road Map Preparation
The set of major activities for
Proposition 1 and 2 ,their duration and
time sequence is presented in ensuing
slides.
These diagrams further facilitate
coordination of activities between
different entities.
They can be used for high level project
monitoring and milestone setting
purposes.
.
There are many tools , such as MS Project, available for preparing
the road Maps. Familiarity with PERT/CPM concepts would be a
great advantage for project management.
Image Credit:
www. Betalabs.nokia.com/

31. Research
Productiz
ation
Commercia
lization
Funding
Agenda
Develop
ment
Lab Research
Research
Planning
Team
Mobilization
IP creation
Ethics
Committee
Publication
Preparation
Product
Identification
Product
Opportunity
Assessment
Protocol
Design
Ethics
Committee
Human Trials Phase 2
Registration
Phase 2
Review & Execution Management
IP creation
Y1 (completed the
Research Stage)
Current
Quarter Q1 Q2 Q3 Q4 Q5
Seed
Capital Techno
Feasibility
Study
Venture
Capital
Funding
Commercial
Viability Study
Facility
Enhancement
Figure 1: proposition 1 Road Map
Outsourcing
contracts

32. Research
Productiz
ation
Commerci
alization
Funding
Y3 Y4
Interface to Research and Productization
Facilities
Set up Facilities
Expansion
Facilities
Expansion
Train Tissue
Engineers
Recruit
Staff
Evolve Policies
& Procedures
Obtain
Approvals
Y5Y2
Vendor &
Distributor
tie ups
Goal Setting& Operations Management
Goal Review & Operations
Management
Goal Review & Operations
Management
Institutional and Corporate Funding
Continuing Research…..
Continuing Productization……
Figure 2: Proposition 1 Road Map for the Commercialization Stage

33. Research
Productiz
ation
Commerci
alization
Funding
Agenda
Development
Lab Research
Research
Planning
Team
Mobilization
Facility Setup
Animal Trials
IP creationEthics
Committee
Review & Execution Management
Publication Preparation
Product Identification
Product Opportunity
Assessment
Protocol Design
Ethics Committee
Registration
Phase 1
Human Trials
Phase 1 Human Trials
Phase 2
Registration
Phase 2
Review & Execution Management
IP creation
Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8
Seed
Capital
Set up bank
account
Angel Funding
Techno
Feasibility
Study
Venture Capital
Funding
Commercial
Viability Study
Facility
Enhancement
Figure 3: Proposition 2 ;Research Unit Activities

34. Figure 4 : Proposition 1: Detailed Road Map Diagram
0 4321 2010 Jan
2010 end
months
Finalize
Funding for
Proposition 1
Conclude
Agreement with the
Sponsor
Revise
Memorandum
and AOA of
the RU
Finalize
Funding for
Proposition 2
Conclude
Agreement with
the Sponsor
Prepare
NDA
Select the
Legal and
Accounting
support teams
Conclude
Agreement with
all outsourcers
Initiate TE work
Protocol design
Complete
biomech testing
at IISC
Form Ethics
committee
Protocol Review
& finalization
Obtain
registration &
approval from
ICMR
Create Data
management
infrastructure
Finalize
Patient
count
Contact
Urologists to
create a funnel
for patient
recruitment
Procure & test
equipment
Conduct Clinical Trial
Finalize the
Land
arrangement
Construct RU
Procure & Install
equipment
Recruit & Train Staff
Conduct
Commercial
Unit Viability
Study
Lay the infrastructure
for CU
operationalisation
IP creation

35. Technology Innovation to Commercial Translation :
A case study for treatment of urethral stricture
Contact details
Parasuram ( Bala) Balasubramanian
balasubp@gmail.com
Ph : USA 765 337 3098
India 91 80 4121 4297
Image Credit:
www. myparents.genes