Academia to Industry:Academia to Industry:

The support of the University Stellenbosch in this processThe support of the University Stellenbosch in this process

Dr. Munro MarxDr. Munro Marx

Unistel Medical Laboratories (Pty) Ltd.Unistel Medical Laboratories (Pty) Ltd.

Interaction: Academia and IndustryInteraction: Academia and Industry

Academic institutes are primarily committed to creation and growth of technology and knowledge

Growing realization exists that mechanisms for meaningful interaction between academia and industry should be fostered and encouraged

Question arises….how meaningful has this interaction been and what is the way foreword?

An answer can be found in the case of UML

Academia and Industry InteractionAcademia and Industry Interaction

Domain of the academia:

• Facility continuing education and

process utilization

• Support for basic research and

knowledge creation

• Academic intervention in specific

industry needs

• Create a “third stream” income

• Vested interest in the intelectual

property generated by staff

• International relationships

fostered

Domain of Industry:

• Provide a cost effective service of a world standard

• Retain academic ties

• Employ correctly qualified staff

• Be financially independent

• Foster and cement ties world

wide

• Broaden horizons in different

areas (locally and internationally)

• Make a profit

A vision of University Stellenbosch:A vision of University Stellenbosch:Commercialize IPCommercialize IP

Vision to commercialize intellectual property that could be successfully patented

By licensing and production agreements between the US, researchers and industry a “third money stream” may be created

Researchers can then be rewarded financially for their endeavours

US could retain academics usually lost to industry

Support of University Stellenbosch for the Support of University Stellenbosch for the commercialization processcommercialization process

To successfully commercialise IP, the commercial activities

of the US would have to be conducted “at an arm’s length”

Facilitated by a registered private company, wholly owned by

the US

Unistel Group Holdings (Pty) Ltd. was registered as vehicle

for this purpose

Support of University Stellenbosch in the Support of University Stellenbosch in the commercialization process: The UML Storycommercialization process: The UML Story

State and University budget constraints painted a clear picture in 1993 ...the

Department of Human Genetics would have to provide for itself

An opportunity to provide a these services on a contract basis to the medical

fraternity was identified

This service could be financially attractive and viable

BUT

In 1993 no means existed to accomplished this under the “unbrella” of the US

Support of University Stellenbosch in Support of University Stellenbosch in the commercialization process: The the commercialization process: The

UML StoryUML Story

The concept was presented to the Vice-Rector ( Prof. H. C. Viljoen) and was

favourably received.

With his initiative the commercialization process leading to the private company,

Unistel Medical Laboratories (Pty) Ltd. was started under the supervision of Mr.

Willem Agenbach.

The Cost Centre: Step 1 The Cost Centre: Step 1 (Service Laboratory for Human (Service Laboratory for Human

Genetics)Genetics)

• A cost centre within the financial system of US made it possible to meet all legal

requirements:

Issue VAT invoices and pay VAT

Purchases managed in US financial system

Permission for use of US equipment was obtained

Staff appointments and pay rolling managed in US financial system

Equipment could be purchased and registered on an asset register

Monthly financial management statements could be provided

Cost centre would be audited on yearly basis

The Cost Centre: Step 2 The Cost Centre: Step 2 (Conceptualization of an Idea)(Conceptualization of an Idea)

• To realize a the concept of a commercial genetic service laboratory

the idea had to be “sold” private medicine and pathology practices

• Availability of intellectual property vested in qualified staff and the

continued provision of a world class service was essential

• Participation in service provision by an attractive partnership made

the concept acceptable to private pathology practices

• Their participation ensured favourable support from the US

management

The Cost Centre: Step 3 The Cost Centre: Step 3 (Independence of the Cost centre)(Independence of the Cost centre)

• Financial independence was essential as US could not be held responsible for

the cost of service provision to private medicine

• Additional equipment requirements had to be met

• Staff had to be appointed and paid

• Approval for PAWC employees to provide and after hours ad hoc had to be

obtained

• To finance the laboratory, a loan was raised (Loan repaid within two years)

• Finally a commercial diagnostic genetic service could be offered on contract

from March 1993 (Service Laboratory for Human Genetics)

Step 4 Step 4 (The UML Story)(The UML Story)

Functioning of SLHG marked the start of a long journey down

the road of full commercialization

This process would be wholly over seen by the US

Process started in 1994 and was completed in 1998

The model should apply to all similar processes in the future

Provide clear guidelines

Accepted and approved by US management, the US senate

and the US council

The UML Story The UML Story ( Viability of a private company?)( Viability of a private company?)

To determine the viability:

• Future patient referrals were accurately projected • A related income projection, considering year on year growth,

was made• Cost analysis based on price and salary escalations • Capital budget requirements to ensure progressive world class

service delivery was projected• Final report presented to the US management late in 1998

The UML Story: Step 5 The UML Story: Step 5 ( Finally… Commercialization!!)( Finally… Commercialization!!)

• On 1 January 1999 Unistel Medical Laboratories (Pty) Ltd was registered as an independent associated company of Unistel Group Holdings (Pty) Ltd.

• To convert SLHG to UML, a comprehensive valuation was performed by PWC and included all asset requirements

• All assets were purchased from the US by UGH• The purchase sum (R3 mil.) was financed by the sale of shares

to invited investors who would contribute to UML• This process culminated in the signing of a share holders

agreement in October 1999.• FINALLY, Unistel Medical Laboratories (Pty) Ltd opened its

doors for business on 1 November 1999

The UML Story The UML Story ( Realization of an opportunity!)( Realization of an opportunity!)

• UML has been providing a world class genetic diagnostic and testing service for 6 years

• Turn over has increased from R3 mil in 2000 to over R7 mil in 2005

• Human sample referrals have increased from 8000 in the year 2000 to 18000 in 2005

• Animal referrals from 800 in 2000 to 5600 in 2005

• Staff compliment increased from 9 to 18

• This sustained growth made it possible for dividends to been paid 5 years consecutively (To date amounting to 73% of the original capital investment)

The UML Story The UML Story ( The end)( The end)

• Quote from final proposal in 1998 relating to the original Dept. of Human Genetics :

“Geen argument kan gevoer word teen die stelling dat niemand ‘n organisasie soos die bestaande Mensgenetikalaboratorium kan bekostig nie. Dit is ‘n hartseer saak om personeel te verminder, maar ongelukkig is dit die enigste aksie wat sal verseker dat die huidige kliënte die noodsaaklike diens ontvang wat tans deur die laboratorium gelewer word. Die Universiteit moet ook nooit betrokke raak by oorneem van afdelings wat, soos die Mensgenetikalaboratorium, gesmoor word deur ‘n oorvoorsiene roetine personeelkontigent nie.

Nog minder moet die Universteit ‘n kans laat glip om voordeel te trek uit ‘n potensiële “money spinner”. ‘n Goed-gestruktureerde privaat laboratoriun is ‘n moet”.

The UML Story The UML Story ( The end)( The end)

• Unistel Medical Laboratories would like to thank a bold University Stellenbosch for the farsighted help and courage in realizing an opportunity

• This was a first for South Africa and set the standard to be followed by various Universities nationally

• Thank you for this exciting ride!!