Incorporated: 1981 as British Technology Group
Sales: £50.2 million ($94.3 million) (2006)
Stock Exchanges: London
Ticker Symbol: BGC
NAIC: 523999 Miscellaneous Financial Investment Activities; 541690 Other Scientific and Technical Consulting Services
BTG Plc is a leading “technology transfer” company based in the United Kingdom. BTG acquires, invests in, patents, and licenses technologies developed in university-based and other research facilities, and also provides capital investment and related support services to companies developing BTG-held technologies under license. Since 2005, BTG has refocused its technology interests to the life sciences sector, targeting medical and pharmaceutical innovations and technology. The company’s portfolio targets especially such areas of medical development as Aging, Drug Repositioning, Oncology, and Neuroscience. BTG holds the patent, for example, for the hemophilia treatment BeneFix. The company also licenses the chronic lymphocytic leukemia drug Campath, which is also used as a treatment for multiple sclerosis. A promising compound in the group’s pipeline is the varicose vein treatment Varisolve, which entered Phase III trials in Europe at the start of 2007. Other drugs under development include the cervix “ripener” Cervidil, pain treatment Combunox, iron reducer Ferriprox, and colorectal cancer drug Tomudex. For these and other compounds, BTG provides resource management services, sourcing (including locating partner companies to develop its technologies), and patent development and protection. BTG stemmed from the early 1980s merger of the National Research Development Corporation and The National Enterprise Board, and was privatized in 1992. The company is listed on the London Stock Exchange, and posted revenues of over £50 million ($94 million) in 2006. The company is led by Managing Director Louise Makin.
BTG stemmed from the early 1980s merger of two British government bodies. The oldest of these was the National Research Development Corporation (NRDC), founded after the passage of the Development of Inventions Act of 1948. That legislation, and the NRDC itself, was designed to prevent the reoccurrence of what had occurred following the invention of penicillin. Although Alexander Fleming, a British scientist, was credited with discovering penicillin in 1928, he had not patented the molecule, in part because he had not yet worked out a method for producing the antibiotic on a large scale. At the end of World War II, however, the British government was surprised to discover that an American corporation had since patented the production process for penicillin, not only depriving the United Kingdom of much needed royalties, but also obliging the country to purchase its supplies of penicillin from the United States.
In response, the Inventions Act vested the NRDC with the authority to “[secure], where the public interest so requires, the development or exploitation of inventions resulting from public research, and of any other invention as to which it appears to the corporation that it is not being developed or exploited or sufficiently developed or exploited.” The NRDC was established as part of the Board of Trade, and began reviewing patents and inventions being developed in the United Kingdom in the hope of discovering commercially marketable products.
At first, the NRDC’s role consisted largely of identifying prospective candidates and then passing these ideas along to Britain’s industry for development. The NRDC also helped export the United Kingdom’s technology, arranging licensing agreements around the world. However, through the 1950s and especially into the 1960s, the NRDC took on a more and more active role in the development of the country’s scientific breakthroughs, especially those made at public institutions. By the mid-1960s, the NRDC often took a direct role in setting up and managing industrial operations, as part of joint venture corporations. An example of the company’s operations could be seen in the role it played in guiding the process of transforming hecogenin, a product of the waste juice of the sisal plant, into cortisone. For that effort, the NRDC went as far as establishing a factory in Africa, then funding the pilot plant that led to the successful production of cortisone in the space of less than three years.
During the 1950s and 1960s, the NRDC backed the development of a number of significant products. In 1957, for example, the corporation played a major role in the discovery and production of the important antiviral agent interferon. Just one year later, the company began its relationship with the famous Hovercraft technology. That investment also marked the corporation’s departure from publicly funded research, and represented the NRDC’s most significant private sector investment. Into the mid-1960s, NRDC spent more than £4 million assisting the development of Hovercraft’s technology and commercial operations.
There exists a paradox—the potential for medical breakthroughs has never been better, but the operating environment to do so has never been so difficult. The challenges presented by the relationship between innovators and the pharmaceutical industry are both profound and numerous. The industry finds itself at the centre of perhaps an unprecedented scrutiny from the public, from governments, from regulatory authorities, from health care providers, and from shareholders.
Over the last decade, these challenges have resulted in a phenomenon in the industry that has become known as The Innovation Gap: R&D spending going up, whilst the number of drugs reaching the market continue to decline. Addressing these challenges requires companies to think differently about how to make the difficult but rewarding transition from an idea to a potentially life changing product.
Success becomes a matter of finding innovation and managing the complex path to market.
At BTG, we have the ability to harness innovation and realise commercial value in the changing pharmaceutical environment. We are experts in sourcing, protecting and developing new products, and have the scale and experience to help transform the commercial potential of medical research programmes from around the globe. We are also independent, have a significant capacity for investment, and a deep pipeline of development projects which we believe make us a unique and attractive partner to researchers and the healthcare industry.
Toward the end of the 1960s, NRDC’s total investments had topped £19 million, and included such projects as the development of large-screen cathode-ray tubes; microelectronics component production; and the extension of Hovercraft technology. By then, the corporation had become involved in some 60 joint ventures. Other significant discoveries backed by the NRDC into the 1970s included the creation of the cephalosporin class of antibiotics, in 1964; the invention of pyrethrin insecticides, in 1966; the development of cholesterol assay tests in 1971, and the development of magnetic resonance imaging (MRI) in 1975, all of which became significant revenue generators into the end of the century for the later BTG. In another extension, NRDC acquired a 45 percent stake in Data Recording Instruments, a maker of computer peripheral equipment, in partnership with Grundy, of Teddington, in 1994.
The mid-1970s was marked by the arrival of a new component to the British government’s efforts to stimulate its domestic industry. In 1974, the government created a new state-controlled body, the National Enterprise Board (NEB), as part of the then-Labour dominated government to establish greater government control over the country’s flagging industries. The hotly controversial NEB then took over the task of analyzing, and acquiring, many of Great Britain’s leading corporations. In 1976, for example, the NEB became responsible for the British government’s ownership of the Rolls-Royce corporations. The link between the NEB and the NRDC also began at this time. In 1975, for example, the NEB acquired a controlling share of Data Recording Instruments, buying out Grundy and acquiring part of the NRDC’s stake as well.
The arrival of the Thatcher government in the late 1970s spelled the end of the era of direct government involvement in British industry, however. By 1981, the long-held Conservative Party’s disapproval of the NEB led to it being merged into the NRDC. The merger created a new government controlled corporation, British Technology Group (BTG). BTG’s initial role was to oversee the divestment of corporations held by the NRDC and the NEB, both of which remained in existence for the first years of BTG. By 1983, BTG’s new role was properly defined, calling for the body to become focused strictly on technology transfer. As such the government ordered BTG to hasten disposal of its investment portfolio. While BTG was given the right to retain revenues generated by its technology licenses, those created by its assets disposal were turned over to the British Treasury. BTG itself was meant to be privatized soon after its formation.
The process of winding down the former holdings and activities of the NRDC and the NEB was largely completed by 1984, at which time BTG’s status as a technology transfer group was formally ratified by the British government. This gave the company the signal to launch a new investment campaign, during which BTG spent some £75 million in order to build its technologies portfolio. One of the company’s most significant investments during this time was its acquisition of the patents for MRI, a major diagnostic breakthrough that had been developed by a British scientist. BTG began actively licensing MRI on a worldwide level starting from 1984.
While MRI technology swept the global medical community, other BTG investments proved more difficult to develop into profits. In 1987, for example, the company acquired the traction control and transmission research division of British auto maker Rover. The purchase gave the company control of the patents behind a new continuously variable automotive transmission, which promised far greater fuel efficiency. When BTG was unable to attract licensees from the automotive industry, the company decided to begin manufacturing its own transmissions, setting up subsidiary Torotrak. Production proved costly, however, dragging the company into losses by the late 1990s, and in 1998 Torotrak was spun off as a public company.
- British government founds National Research Development Corporation (NRDC) in order to market British inventions.
- NRDC backs development of Hovercraft technology.
- National Enterprise Board (NEB) is created by the Labour government.
- NRDC and NEB merge to form British Technology Group (BTG) under Thatcher government.
- BTG becomes technology transfer specialist, selling off former industrial holdings.
- BTG is privatized in management buyout.
- BTG goes public on London Stock Exchange.
- Company launches restructuring to refocus around core biotechnology portfolio.
- Varisolve is approved for Phase III clinical trials in Europe.
By then, BTG too had changed its corporate status. By the late 1980s, BTG and its management had increasingly begun to chafe under government ownership. Yet, despite the initial objective of privatizing the company at its creation, it was only in the early 1990s that the British government agreed to allow BTG to go private. In 1992, the company’s management had lined up backing from the Cinven investment group, and BTG went private as part of a management buyout. By 1995, BTG had gone public, listing its shares on the London Stock Exchange.
The public offering helped the company rapidly expand its portfolio of patents and technologies, so that by the middle of the decade the company boasted control of more than 9,000 patents supporting more than 1,300 inventions. Among the group’s successes in the 1990s were the disposable contact lens, licensed to Bausch & Lomb, and Factor IX, later commercialized as Benefix, a treatment for hemophilia B. In 1999, the company acquired the patents to the highly promising varicose vein treatment Varisolve.
Through the 1990s, BTG’s management earned itself an international reputation for the ferocity with which it protected its ever growing patent portfolio. As an example the company successfully defended its control of the technology behind the two-part hip cup, forcing a settlement with the Johnson & Johnson group. At the beginning of the next decade, the company was able to force both Microsoft and Apple to license their web-based software updating technology after it acquired Teleshuttle Corp., the company that held the patents to that technology, in 1998. In 2001, the company scored new success when it received approval from both the European Union and the United States to market the chronic lymphocytic leukemia drug Campath.
Despite these successes, BTG struggled through years of losses. Part of the group’s difficulties came from the diversified nature of its portfolio, which spanned a wide range of technologies and industries. In 2004, the company brought in a new management team, led by Managing Director Louise Makin, former president of Baxter Healthcare’s Biopharmaceuticals Europe division. Makin, seconded by CFO Christine Soden, set out to restructure the company, refocusing BTG around a new core of biopharmaceuticals. The company began divesting its noncore holdings, maintaining only revenue-generating assets outside of its core range. The restructuring effort, which left the group with a loss of £35 million on total revenues of just £38 million, soon paid off. By the end of 2006, with total revenues climbing past £50 million, the company posted profits of £1.4 million. With a growing number of highly promising drugs in its pipeline, BTG appeared to have discovered the formula for success in the new century.
M. L. Cohen
British Technology Group; BTG Employee Share Schemes Ltd. (Guernsey); BTG International (Holdings) Ltd.; BTG International Inc. (U.S.A.); BTG International Ltd.; BTG Investment (Holdings) Ltd.; BTG Licensing Ltd.; Iclectus Ltd. (80.5%); Inter-Corporate Licensing Ltd.; Provensis Ltd.
Candover Investments plc; CVC Capital Partners Limited; Investcorp S.A.; Electra Investment Trust; 3i Group PLC; IP2IPO Group plc.
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