Lessons for nanotech/biotech biz models?

Q&A:

I argue in the book that "monetization of intellectual property" has been a powerful shaping force in biotech. The idea behind monetization of IP is that you don't need to actually develop a product; you can just develop a piece of IP, and then capture financial returns through licensing or other market arrangement. This has worked wonderfully in semiconductors and software, but monetization of IP only works there because of some very specific conditions. You need to have a very modular knowledge base; that is, you need to be able to break up a "big puzzle" into its relatively independent pieces so that a particular piece can be valued independently; and you have to have well defined intellectual property rights. It is hard to sell stuff where the rights are not well defined. There are all sorts of hazards.

These conditions are pretty well met in industries like semiconductors and software; but they do not characterize at all the state of the science in biotech. So, as a result, we have been pursuing an anatomy that focuses on breaking up the pieces of the puzzle into independent pieces (having lots of small specialized firms) when what matters is the way we integrate the pieces.