The victory of competence

PIPE, the pioneering program in the country for the support of technological innovation, hits the mark of 330 projects.

eduardo cesarThe Small Business Innovation Research (PIPE) program, an unprecedented initiative in the country inaugurated in 1997 by FAPESP, has overtaken the mark of 330 projects. Throughout this period the Foundation has invested R$ 55.1 million in the research and development of products and processes in the entrepreneurial environment and in the financing of grants for researchers involved in the enterprise. The PIPE resources have permitted the creation and consolidation of 287 companies in 63 municipalities throughout the State of Sao Paulo.

The results obtained have stimulated the Foundation to widen the resources for the program. The limits of financing for Phase 1 – the period in which the project’s innovative character, its methodology and the commercial potential of the new product are verified – has gone from R$ 75,000 to R$ 100,000. In the second phase, that of the development of the said project, the support has jumped from R$ 300,000 to R$ 400,000.

An emblematic example of the program’s success is that of the company Hormogen Biotecnologia, founded by researchers from the Nuclear and Energy Research Institute – IPEN and a pioneer in the production of the growth hormone hGH in the country. The PIPE program sponsored the development of the medicine up until pilot production, attracting the interest of the market. During 2002, the share control of Hormogen was acquired by the national pharmaceutical company Biolab-Sanus, which plans to initiate the production of hGH in 2005. During the initial phase, the goal is to conquer 10% of the national market of 1 million doses with a price 20% inferior to similar imported brands.

The Hormogen case describes perfectly the trajectory projected by the program: that of the analysis of the technical viability of the idea and of the effective research development – both supported by FAPESP – and that of the third phase, the development of new products, under the auspice of private partnership.”It was FAPESP’s most audacious program. It demonstrates in a paradigmatic form the Foundation’s compromise with technological innovation in the State of Sao Paulo”, evaluated José Fernando Perez, the Foundation’s scientific director.

The PIPE program was inspired by the Small Business Innovation Resource (SBIR) program, maintained through 2.5% of the budget of North American government agencies with an budget greater than US$ 100 million. The visionary suggestion of the creation of a similar program in Sao Paulo was that of Alcir José Monticelli, from the Electrical Engineering and Computing Faculty of the State University of Campinas (Unicamp) and a member of FAPESP’s Board of Trustees, who passed away during 2001. At that time, Dr. Monticelli was a first hand advisor to the scientific director. “In 1996 he had analyzed two technological innovation projects in small companies that had been sent to him by the National Science Foundation (NSF).

His choice as an assessor had come about by the fact that an article by him had appeared as references in the projects. It was then that he perceived that the program could be adapted to Brazil”, remembered Dr. Perez. During this same era, in Michigan, Dr. Perez commented upon the idea of the PIPE program to Marcos Mares Guia, ex-president of the National Council for Scientific and Technological Development (CNPq) and a founding member of Biobrás, the national company frontrunner in the production of insulin, who became enthusiastic over the proposal. Much to Dr. Perez’s surprise, Mares Guia, who at that time had been living in Miami, related that he had a project in the SBIR program being financed through the National Institutes of Health (NIH).

Monticelli and Mares Guia – the former a reference for the international agency, and the latter a national entrepreneur who had emigrated to the United States – were, they themselves, the concrete proof that the country had installed competence, sufficient to make use of an innovative proposal. “We had been exporting people who would deal with projects and we had people competent to evaluate projects”, Dr. Perez analyzed.

Taking up the challenge, Monticelli and Francisco Antonio Bezerra Coutinho, a Foundation assessor, took on the responsibility of setting out norms for the program along the same lines and with the same demands as those of the NSF. The projects, presented by researchers linked to small companies, are analyzed by two ad hoc assessors who are in the area related to the project.At FAPESP, the PIPE program was launched in July of 1997 with the presence of the then Minister of Science and Technology, Israel Vargas, and Governor Mario Covas. “The skepticism as to the viability of the application of the SBIR model to Brazil resulted in some resistance to its approval”, remembered Dr. Perez. “Some thought that there would be no demand and the most optimistic were wagering on, at the maximum, 20 projects.” Eighty projects were presented in reply to the first edictal. Of those 30 were excluded and the remainder were submitted to a more refined evaluation. Of the 50 analyzed, 32 received favorable approval. The first contracts were signed at the Bandeirantes Palace, at the request of Governor Covas himself, who would remain impressed with the success of the initiative.

Business management: In order to consolidate the insertion of PIPE companies into the market and to support business management, FAPESP, in partnership with the Endeavor Enterprise Institute and the Brazilian Service for the Support of Micro and Small Companies (Sebrae), created, during 2003, the PIPE Entrepreneurial Program for the training of entrepreneurs. An evaluation by Endeavor revealed that many of the PIPE companies had excessive focus on the product and reduced focus on business as a whole. In order to overcome this limitation a series of observed activities were designed and at a distance there were strategic counseling meetings with executives from the Endeavor network and the development of specific projects in conjunction with postgraduate students, among other activities. These courses are conducted through the W-Institute, a contracted educational partner.

The PIPE program contribution towards technological innovation has stimulated the creation of similar projects, within the national environment, of the Small Business Support Program (Pappe), launched last year by the Ministry of Science and Technology (MST), with resources from the Financier of Studies and Projects (Finep).Now FAPESP’s goal is to link together partnerships that guarantee resources to these companies for financing production. “It is not up to the Foundation, as long as it is a development agency, to finance production”, advised Dr. Perez. During this phase companies must be able to count upon risk capital support or that of an organism such as the National Economic and Social Development Bank (BNDES). The companies that integrate into the PIPE and Pappe programs, according to Dr. Perez, make up precious capital that the nation has an obligation to support. “There has been considerable investment in the generation of innovation and now we need to make production viable. The fact that these companies have already been able to count upon the support of development agencies during the research phase should make them into priorities for the bank’s support.”