A study of steady support for innovation.
Situated on the outskirts of Stockholm, the Karolinska Institute – one of Sweden’s largest centres for medicine, accounting for 30% of its medical training and 40% of its research – is rated 42nd top university in the world and number one in the Nordic regions, according to the Times Higher Education 2013 rankings. It is also home to the committee which appoints the laureates the Nobel prize in physiology or medicine.
The university has evolved an innovation system consisting of multiple parts, with Karolinska Institute Innovations (KII) acting as the lynchpin. Through scouting by Karolinska’s Unit for Entrepreneurship and Innovation Office, the tech transfer unit supports researchers through to licensing or commercialization using in-house facilities with the institute’s science park acting as an incubator.
Undoubtedly making use of Sweden’s “professor’s privilege” law, which allows Swedish researchers to retain the rights over the intellectual property they have generated, KII not only supports researchers from the institute but also those of other Nordic institutions. Since 1996, the wholly-owned subsidiary of Karolinska Holdings has evaluated more than 1,300 research ideas and taken forward around 130. It utilises funding from Swedish government research agency Vinnova to act as seed grants before passing firms further down Karolinska’s innovation pipeline.
Once at a certain stage, KII will pass the baton to Karolinska Development (KD), which identifies and develops the most commercially attractive life sciences projects coming down the pipeline. It maintains a portfolio of 26 firms across the life sciences spectrum and 38 projects in total.
In 2012, KD closed a Skr220m ($33.7m) deal with Rosetta Capital which saw the venture firm take a minority share in 13 of KD’s portfolio companies, valuing the firms at Skr1.5bn, which have been moved to KDev Investments – a portfolio set up to safeguard Karolinska against potential losses. The deal is the first real indication of the value that the 10-year old university investor’s portfolio can offer the institute. Robin Wright, chief financial officer at KD, said the deal achieved two objectives.
“It confirmed that we are taking our portfolio in the right direction and established that our fair value estimates are achievable in external sales to quality, expert buyers.”
The deal has also provided a change of fortunes for KD’s recent financial data. KD reported a Skr230m loss for 2012, but has reversed this trend in the first quarter of 2013, with profit for this period reaching Skr389m. KD has maintained a positive balance sheet for the second quarter of 2013, with Skr2.5m in profit and Skr158m in investments made into portfolio companies.
It is still early days for KD, which is yet to see any major exits, and many of its firms are still at early stages with only a handful now reaching the product stage of development.
However, Karolinska’s strategy of carefully supporting research through its innovation pipeline means that the institute is in control of the development of its spin-outs and is in no rush to force an early exit. It holds significant equity in many of its portfolio firms, which is starting to bear fruit for the institute, ultimately translating into big wins for Karolinska innovation in the long run.
