The Surface Logix

Categories: Capitalism Economics Finance Innovation Intellectual Property Management Marketing

Essay, Pages 6 (1476 words)

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Introduction

Founded in 1999 by Carmichael Roberts and Dr. George Whitesides, a Harvard University chemist of repute, Surface Logix, Inc. creates and develops new drugs by improving the composition of existing drugs and compounds in their later stage of development. It applies its expertise in biophysical chemistry to produce new small molecule drugs that have significantly improved properties, as compared to those of other brands in the market. As a start-up company in the field of nanotechnology, Surface Logix, Inc. has put together a portfolio of intellectual property and has gotten started with the R&D work necessary for the conceptualization and development of the company’s actual products.

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In May 2000, CEO Roberts recruited for Surface Logix, Inc. an experienced management team to run the company and world class scientists to work on concocting drugs for the company. Through this strategy, the company’s foremost aim is to provide better solutions for the prevailing diseases and disorders that threaten the overall health of mankind.

Dr.

Whitesides, on the other hand, has hitherto been both working in the laboratory as a scientist and sitting in the board as management. At present, the company’s products include SLx-2101, a phosphodiesterase 5 inhibitor for the treatment of cardiovascular diseases; DLx-4090, a microsomal triglyceride transfer protein inhibitor for the treatment of dyslipidemia and familial hypercholesterolemia; SLx-2119, a rho kinase inhibitor for the treatment of oncology diseases; and SLx-3XXX, a rho kinase inhibitor for the treatment of inflammations. (www.surfacelogix. com) Indeed, Surface Logix, Inc. ’s growth serves to reward the people behind it for the dedication and hard work they committed to the company’s mission to produce better medicine by utilizing the advantages that technology provides.

Choosing between two proposals CEO

Roberts was deeply into all the preparatory work for setting up the operations of the company from the day of its incorporation. He was the one to attend to the management of the company, while Dr. Whitesides was to focus on the scientific and technical matters at hand.

With acute foresight, the company management designed an intellectual property strategy that would enable them to explore and discover concrete applications of licensed, Harvard-owned technologies without fear of losing to imitators and copycat competitors the businesses that will be spawned. With such notable scientists and management people behind it, Surface Logix, Inc. had 20 licenses granted to them by Harvard for applications that should result to the production of commercial products. In return, Harvard received fees and royalties traceable to the 20 licenses and all their applications.

For such a gigantic undertaking, Surface Logix, Inc. raised $13 million by borrowing from venture capitalists who were confident that the inventors in the company can deliver technological breakthroughs. As detailed in the submitted business plan, the three product applications that the company would cover were life sciences, electronics and photonics. All these welcomed developments brought in the first major challenge that Surface Logix, Inc. faced. CEO Roberts had to choose between two proposals from two prospective development partners of the company (Proposals I and II).

Proposal I involved developing for a large food processing company a product that would show food retailers and consumers the presence of e-coli bacteria in packaged meat. The product required just simple technology; there then was a high success rate. This proposal would entitle Surface Logix, Inc. to receive milestone payments, a margin from R&D, and royalties. Proposal II, on the other hand, involved developing 10 to 12 bio-devices with over 95% reliability in testing a specific molecule under highly precise conditions.

This proposal also promised milestone payments and royalties. However, it is projected to generate no margin from R&D. Furthermore, Proposal II involved more risk and required a high level of accuracy and performance.

Recommendation

With all the relevant factors taken into consideration, accepting Proposal II is recommended. Proposal II comes with the promise of a big opportunity that the company must not pass up and miss.

While it is true that failure to deliver warrants the industry’s dampened interest in Surface Logix, Inc., success in this engagement could result to both the commercialization of a technology in a high-volume application and more importantly, a manifest demonstration of the company’s marketability right in one of its niche segments – life sciences. Surface Logix, Inc. has set to focus on two others: photonics and electronics. These three segments were identified and evaluated as the key areas where the company can excel and rapidly grow. All other segments of the market for product applications of soft lithography – like food and consumer products - would also have sizeable demand volumes waiting to be tapped and served.

However, the application of soft lithography to design and manufacture products was foreseen to have unlimited prospects and vast market sizes in these three areas. The decision to choose these three as the company’s areas of specialization resulted from CEO Roberts’ thorough discussions with venture capitalists, prospective customers, Dr. Whitesides, and the company’s scientists. It would be wise to stick to this decision. Attempts to set out for other market areas would mean spreading the start-up company’s limited resources too thinly.

This might result to making no mark in the industry; worse, this might gradually bring in the company’s ruin. For this reason, accepting Proposal I is not recommended. It would be like hurling the company into an arena that it did not prepare to compete in. Proposal I would introduce the Surface Logix, Inc. to the food industry, and this is not in accordance with plans already made. Choosing Proposal I would usher in more proposals of the same nature, and consequently lead to the company’s deviation from its painstakingly established goals.

Many companies have taken the path through all sorts of mismanaged diversification that led to heavy losses. Even when confronted with tempting offers packaged to appear lucrative, any company would do well to hold back, revisit its vision, mission and objectives and decide to never depart from them. Meanwhile, accepting Proposal II is in complete harmony with Surface Logix, Inc. ’s goals of manufacturing effective drugs and working for technological advancements that would contribute to the pharmaceutical industry.

Proposal II also translates to higher amounts of milestone payments for the company, and will secure a better place for it in the market through the large-scale similar deals that would follow. Surely, too, the success of this deal will take care of the skeptics that CEO Roberts at one time talked about. This is just the kind of deal that would bring the company closer to its planned goals.

The company's business model in the long term

During the earlier years of its operations, Surface Logix, Inc. would propose to manufacture product prototypes for companies with such pilot products.

At the onset of the deal, Surface Logix, Inc. would be given upfront and milestone payments which it would use for the making of the needed technology. If it works, then Surface Logix, Inc. would be further entitled to royalties based on product sales. At the end of it, Surface Logix, Inc. would retain the intellectual property pertaining to the developed technology – the client company, therefore, could not use its knowledge of the technology for similar projects. Surface Logix, Inc. ’s interests would thus stay protected. Similarly, Surface Logix, Inc.

would have to agree to never duplicate the technology for the client company’s competitors. This, in turn, protects the client company’s interests. This generally illustrates the business model that Surface Logix, Inc. used to pursue. Another business model that Surface Logix, Inc. also went for involved companies that had products that already were in the market. Surface Logix, Inc. ’s part in the deal would be coming up with a technology that would develop the subject product into a breakthrough product, one with improved quality and value.

As agreed, payment of fees and sharing of benefits brought about by the technology would follow. Today, the company applies a business model that maximizes the variety of scientific and technological skills that it has in its pool of dedicated manpower. Surface Logix, Inc. has become a drug development company that zeroes in on uncovering scientific truths that often necessitate innovation. It documents and applies for intellectual rights on these discoveries, and then acts on them innovatively by applying them on identified drugs.

This exercise results to the evolution of available drugs into highly improved ones. Backed by strong financial resources and equipped with expertise in the fields of biophysical chemistry and biotechnology, Surface Logix, Inc. currently pursues the business model that involves less of other companies. The company has acquired the capabilities, systems, resources and facilities needed to completely undertake the chain of transactions that make up its main thrust: the development and production of drugs with improved properties.