It’s one thing to have a great idea or undertake groundbreaking research. But to nurture it, patent it and commercialise it foworld markets requires more than just a ‘Eureka’ moment. 
 
Story Tony Malkovic 
 
Bruce McHarrie is a Chartered Accountant with a position that puts him on the cutting edge of health research, one that sees him wearing two very different hats. 
 
McHarrie’s the chief financial officer with the Telethon Institute for Child Health Research based in Western Australia. The institute has an international reputation for its breakthroughs in researching child health issues and McHarrie is responsible for the day-today running of the institute. That includes everything from financial management and balancing the books to personnel and IT issues, managing building facilities and looking after the institute’s 400 or so staff and research students. 
 
But he’s also the person responsible for capitalising on the institute’s R&D efforts and helping commercialise its many significant research findings. It’s a world of intellectual property, patent applications, venture capitalists and spin-off companies. 
 
“One of the aims of the institute is that there’s no point in doing research unless there’s a mechanism to translate that research into some sort of action out in the community,” explains McHarrie. “And that might be through influencing public health policy, for example, or through publishing our work so that others might be able to do something with it. 
 
“But it can also include commercializing the technology and putting it into the hands of commercial entities who can then turn it into drugs or devices or whatever it might be. “So translating research into action is an aim of the institute, and that’s where commercialisation fits in. 
 
“Part of my role is to work with the scientists to make them aware that commercialisation of their research is something they should consider.” 
 
Early Breakthrough  
The institute has an enviable track record when it comes to research. It was founded 17 years ago by former Australian of the Year Professor Fiona Stanley and professorial colleagues Pat Holt and Lou Landau, who all championed a multidisciplinary approach to tackling childhood disease. 
 
An early breakthrough was the institute’s role in the discovery some 14 years ago that women who take folate before pregnancy could prevent spina bifida in babies. In the wake of that discovery, more than 40 countries decided to add folate to their flour products as a preventative measure and the rate of births with spina bifida has virtually halved as a result. 
 
The institute’s key areas of research now include childhood cancer, leukaemia, asthma, allergies and respiratory diseases, and Aboriginal health issues. It also undertakes extensive population studies in which it tracks the long-term factors affecting children’s health. 
 
McHarrie is well suited to helping research scientists find commercial opportunities and investors for their discoveries. 
 
Originally from WA, he worked with Coopers & Lybrand in London, before joining the bioscience unit at Rothschild 
 
Asset Management where he was involved in biotech and healthcare companies from early start-ups through to public listings. He returned to Australia and joined the Telethon Institute in 1999. 
 
“In a way, when I joined the institute, I was moving to the other side of the fence from the Rothschild experience,” he recalls. 
 
“There, I’d been involved in the financial due diligence of new investment proposals. Now I’m having to think about creating my own new investment proposals and taking them to potential financiers.” 
 
McHarrie says that sort of approach is becoming increasingly important for researchers, who in effect, now often need to wear an entrepreneur’s hat as well as a white lab coat.  
 
“A lot of the funding bodies – such as the National Health and Medical ResearchCouncil – increasingly expect researchers, when they make a grant application, to demonstrate they have a commercialization or patent track record,” he says. 
 
“So there is also an expectation coming from the funding providers that commercialisation is an important part of the process.” 
 
McHarrie says at times, his role is to act as a sounding board for researchers’ ideas and weigh up the commercial opportunities, as a sort of acid test. “I’m not a scientist, but the advantage of that is that if they can’t convince me there is a potential opportunity there, then they’re going to have a lot of trouble convincing an investor,” he says. 
 
Attract Dollars 
“When they think they’ve got a discovery, they’ll come and talk to me about it. We chat it through. If we think we should take it further, I’m then responsible for sorting out the patenting of it. 
 
“My role then is to find an opportunity to either license out that technology or to perhaps create our own spin-off company to attract the investor dollars.” 
 
The institute has already been responsible for two start-up companies. Advanced Diagnostic Systems is a spin-off firm funded by a UK-based investor to develop patented technology for prognostic and diagnostic kits for asthma and allergy sufferers. 
 
A second spin-off entity is Phylogica, an ASX company developing drugs for conditions such as asthma, stroke, diabetes and rheumatoid arthritis. 
 
Other commercial opportunities arising from the institute’s research involve a device to monitor or diagnose respiratory disease such as cystic fibrosis as well as diagnostic and prognostic indicators for cancer in children. 
 
McHarrie says the irony for the institute is that, in some ways, it is in danger of becoming a victim of its own success: “In the past six or so years, since we’ve moved into our new building, the institute has grown in almost all ways you could measure: financially, head count, number of grants and the number of research projects we’re doing. It’s grown at something like 15 per cent per annum. 
 
“What it means is that we now have some 400 staff, a similar number of projects on the go and our field like any other field is becoming increasingly competitive.” 
 
While McHarrie has been on board, there’s been a healthy rise in the institute’s annual gross income from $11 million to some $29 million. But he says the big challenge is to build up sufficient reserves and a recurring income stream to develop its up-and-coming researchers to replace those due to retire, as well as continue to attract top-class researchers from around the world. 
 
To help achieve that, McHarrie and the institute have an ambitious plan to substantially increase the institute’s $20 million in reserve funds to meet future needs and the growing cost of undertaking research. “Between now and the next five to 10 years we hope to grow it up to $100 million so that we have that recurring income stream,” he says. 
 
Another goal is to continue increasing the number of patents lodged by the institute. McHarrie says the institute’s patent portfolio currently contains 37 patent families (that is, a patent which might include several variations lodged in different counties). And ultimately, along with the patents, come more spin-off companies. 
 
“In the seven years I’ve been here, we’ve generated two spin-off companies, and my target is to have a third in the next 12 months,” he says. 
 
Better and Smarter 
On the other side of the country, Charles Golding is a Chartered Accountant who knows that innovation comes in many shapes and sizes. 
 
Golding is the commercial manager with the Cooperative Research Centre for Mining, or CRCMining, which is headquartered in Brisbane but operates across Australia. 
 
CRCMining is a joint R&D venture involving four universities and 12 industry partners, including some of the world’s largest mining companies. Basically, its role is to find better and smarter ways for the mining industry to do its job. 
 
CRCMining research ranges from the concept stage to commercial ready innovations, looking at areas such as smart mining systems, coal production and geo-engineering. Its brief is not only to make its research findings available to industry, but also to directly sell or license its technologies, or create spin-off companies. 
 
If you ask him what innovation in the mining industry involves, Golding says that it can be as simple as coming up with a new fatigue monitoring cap, such as the one the CRC is in the final stages of developing. “This Smart Cap is effectively an EEG contained completely within the lining of a cap,” Golding explains. 
 
“It’ll measure all levels of drowsiness and can display this to the operator and also relay the information to their supervisor. “When you become too tired to operate efficiently, it uses Bluetooth technology, similar to your mobile phone, to alert them – and you – you’re tired. 
 
“And it’ll look and feel, to all intents and purposes, just like a baseball cap. ”At the other end of the scale, CRCMining has overhauled a century of mining technology with its Universal Dig and Dump (UDD) project involving draglines. 
 
The fatigue sensor cap might fit on your head but the UDD project involves giant equipment typically costing many millions of dollars. 
 
“Draglines were invented about 100 years ago for the Panama Canal, and this is the first major change in dragline technology in 50 years,” he says. 
 
“Essentially, it’s a change to the way they use the rigging, with the ability to use a lighter bucket as a result. And therefore you can move a lot more earth in a much shorter period of time, coupled with advances in IT to allow the operator to move more overburden. 
 
“BHP Billiton Mitsubishi Alliance funded the development while we did the research. We estimate that when using the UDD system, draglines will improve efficiencies by up to 25 per cent. 
 
Draglines may be based on old technology but there’s a good reason why the industry wants to make them more efficient. “The trouble is these draglines are expensive, costing around $100 million each. As a result, not many are made,” explains Golding. 
 
Golding is originally from Zimbabwe, where he spent some 18 years with PricewaterhouseCoopers, and then six years with a public company before joining CRCMining. 
 
Since he joined, Golding and his team have introduced their own innovation, overhauling the reporting system for the many research projects under way. 
 
“The first thing I was tasked with was to improve the group accounting and information reporting systems so that the researchers knew where they were in terms of the various projects,” he says. 
 
“The CRC had been going for 13 years when I joined and had never been able to produce accurate monthly project accounts. And within a few months, we were able to do that. 
 
“What we did is create a web-based time recording system, and then we got a couple of clever people here in Brisbane to integrate that with our own accounting system and the accounting systems of our university partners. 
 
“Each project has its own website to store all its financial information as well as other relevant data such as contracts, project plans, reports, a notice board and so on. After updating the information each month, we simply send out an email to staff advising them of the updated information on the websites.” 
 
Huge Costs 
Golding says mining is one of Australia’s oldest industries, and there’s a simple reason why it needs to innovate. “With mining now, the easily accessible resources are pretty much gone,” he says. “Mining in the next 10 to 20 years is going to have to go deeper and harder to access locations, and that’s where we see ourselves playing a very significant role.” Yet the huge costs and the rapid pace of change were making it hard for companies to maintain their own R&D efforts. 
 
“Most of the major mining companies have closed down their own research facilities because technically things are changing so quickly now,” Golding explains. “We are now, I understand, the largest mining research company in the world. 
 
And the reason for that is a bit like Stephen Bradbury (Australia’s gold medal Olympic ice skater who won gold when his rivals crashed out on the last lap) – we’re the last man standing, basically.” 
 
Golding says CRCMining has close to 50 people working for it, along with another 60 researchers and postgraduate students across the country. 
 
In fact, CRCMining itself is probably a good example of an innovative workplace. In effect, it operates out of a virtual office, with its R&D teams spread across the country based in nodes at other institutions. What’s also unique is the wider system of cooperative research centres that underpins R&D across the country. 
 
The Australian Government started the CRC system in 1990 as the major national network focusing R&D efforts on meeting industry needs and commercialisation. Today, there are more than 50 CRCs focusing on six key areas: the environment; agriculture and rural; information and communications technology; the mining and energy sector; medical science; and manufacturing. 
 
Over the past 17 years, the various CRC parties – including the Federal Government, universities, industry and the CSIRO – have contributed more than $11 billion in cash and kind. 
 
That investment seems to be paying off, with a report last year finding that Australia’s CRCs provided a $2.7 billion boost to the economy, and that for every dollar invested in the CRC program, $2.16 comes back. 
 
Golding says there’s a good reason why the collaborative model involving industry works wells for CRCMining – and a lot of it has to do with the bottom line. 
 
“You’ve got research and you’ve got development. The research is relatively cheap, the development is phenomenally expensive,” he says. 
 
“With the UDD project, for instance, BHP Billiton Mitsubishi Alliance contributed in-kind expenditure to CRCMining of nearly $72 million.” 
 
All CRCs have an initial life of seven years to develop their research programs. In the case of CRCMining, it’s now in its third seven-year cycle and will receive $27 million in federal funding, and another $100 million from industry and university partners. 
 
Corporate Governance 
Like McHarrie on the other side of the country, Golding is responsible for the financial management of his organization as well as helping commercialise its research findings. He’s also responsible for corporate governance. 
 
“We are a CRC but we have four operating subsidiaries and four other companies which own IP as well as three operating associated companies, so I keep an eye on all of those,” he says. 
 
“The CRC itself is a not-for-profit research organisation and the rest are all commercial enterprises. 
 
“I see my role as giving researchers all the resources they need. In other words, giving them access to the money when they need it, and giving them access to the information they need to run their projects correctly. 
 
“And then once that’s all done, there’s assistance with the commercialisation of the products themselves.” 
 
SMEs and Innovation 
Every state in Australia has its 
communities of inventors, researchers, 
innovators – and Chartered 
Accountants have an important 
part in the innovation cycle. 
For instance, the CSIRO has just 
launched a new funding program to help 
small to medium enterprises access the 
CSIRO’s R&D and intellectual property to 
develop their commercial ideas. 
In effect, it’s a new source of funding 
for SMEs with plenty of ideas and 
get up and go, but not so much R&D 
expertise or cash. Called the Australian 
Growth Partnerships program (csiro. 
au/agp), it has at least $16 million to 
fund technology savvy SMEs positioned 
to make a difference in areas of national 
priority. In return, the CSIRO will be 
looking for a return on its investment. 
The program is on the lookout for 
10 or so star SMEs to collaborate with 
across Australia. 
The program’s manager, Dr Darren 
Cundy, says Chartered Accountants and 
other financial experts play a key role in 
helping innovative SMEs make the most 
of their ideas. 
“As the AGP will be structuring the 
terms of its investments in SMEs in a 
way that best aligns with their growth 
trajectory, it’s likely AGP will use a variety 
of securitisation arrangements,” he says. 
“Given that, AGP expects the 
successful SMEs will use Chartered 
Accountants and related advisers 
to determine eligibility and the most 
tax effective structures for R&D tax 
concessions. In this way, Chartered 
Accountants offer SMEs an opportunity 
to maximise the value of the investment 
and reach their commercial goals faster.”