IP portfolio valuation for Agri-biotechnology innovation – long shelf life tomato trait

June 18, 20210

Client and Transaction Context:

Our client is a leading Indian seed company actively engaged in in-house research as well as global partnerships to strengthen pipeline of traits for vegetable seeds portfolio across India and South East Asian markets. Sathguru worked with the client to evaluate the patent, ascribe valuation range based on a detailed IP valuation exercise, negotiate and in-license the technology to be incorporated in their existing pipeline. This transaction entailed cross-border licensing of IP portfolio from an American corporate partner with rights to several countries of commercial interest.

Overview of Technology and IP portfolio:

Rotting of tomatoes is one of the biggest challenges faced for tomatoes. The client wanted to strengthen their tomato portfolio and was in-licensing relevant traits that would help them expand their market reach. Portfolio of IP valued included patents filed/granted across geographic regions of interest as well as knowhow.

Approach and methodology for IP portfolio valuation:

A] Technical assessment and benchmarking with current and pipeline competition:

Sathguru’s team of technical experts comprehensively mapped marketed competition and pipeline technologies. Through literature review, patent and IP landscaping, we analyzed the global pipeline of research at various stages of development. We benchmarked technology being licensed and assessed relative technical merit vis-à-vis current and evolving pipeline.  We assessed strength of the scientific claims that provided competitive advantage. We also evaluated the client’s current portfolio to assess potential for portfolio synergy.

B] IP Claims and strengths review:

IP portfolio was reviewed in detail by the team. The patent claims were evaluated in depth to understand their composition. Based on the geographies the patent was filed in, the claims were analyzed in detail for each geography. Also, there was a patent watch set up for monitoring the ungranted patents and probability of grant of these patents was evaluated.  Strength of patents was specifically assessed to infer implications for level of ring fencing from competition and monetization potential as a source of competitive advantage.

C] Commercial value realization potential and IP valuation:

To map the current landscape of commercial products with similar claims, Sathguru team carried out detailed market research. Income based approach and market based approach was adopted for valuing the patent. As the client intended to incorporate trait in existing portfolio, hence we adopted incremental cash-flow approach to model monetizable value attributable to trait being licensed. The comprehensive bottom-up valuation reflected fundamentals of market being targeted across geographies of interest. The valuation approach contextually factored in potential for monetary value realization through premium pricing as well as market share gain. Finally, part of incremental value was ascribed to the IP portfolio. While we considered the Goldscheider reference, it was adapted to context considering complexity of technology licensing and contribution to value realized. For the market approach, we used consideration of comparable transactions to assess value of IP portfolio being licensed based on market benchmarks.  Finally, value of IP portfolio was determined as an average of value inferred from the two approaches adopted.

Case study highlights:

  • Technology stage and combination of patents and knowhow implying higher complexity of techno-commercial review required for IP valuation: In early stage technology, need for translating to local varieties implies higher reliance of IP valuation on technology benchmarking, assessment of technical merit and intrinsic in technology advancement. Our proprietary techno-commercial risk assessment model that considers stage gated technology and market risk at various stages of development was adopted. Our industry and technical experts’ review of case specific opportunity levers and risk drivers was fundamental to engagement execution.
  • Comprehensive transaction support in addition to IP valuation: Based on patent valuations and other IP and technology due-diligence, the technology value was assessed, valuation price band for tomato germplasm was ascribed and the client was supported in transaction negotiations for the germplasm licensing.
  • Handheld the client through the complex technology licensing process from technology providers spanning international research institutes. Engagement throughout the continuum of negotiation and licensing transaction closure allowed us to use insights from IP valuation exercise to assess relative merit of various transaction structures and licensing terms to finalize a mutually agreeable model that was did not disadvantage our client.

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IP portfolio valuation for Agri-biotechnology innovation - long shelf life tomato trait

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