You have a patent. Now what?
Most patented inventions are never commercialised. The patent is the beginning of the journey, not the destination. Here is the roadmap.
Every year, universities and research institutions around the world file hundreds of thousands of patents. In 2023 alone, innovators worldwide filed 3.55 million patent applications, a record high according to the World Intellectual Property Organization's annual indicators report. In biotechnology specifically, the patent allowance rate sits at 72%, meaning nearly three in four applications are granted, according to patent analytics firm PatentPC.
And yet the vast majority of those patents will never become products. Most patented inventions are never commercialised. The US National Science Foundation is unambiguous on this point in its Science and Engineering Indicators report: patents are evidence of invention, not evidence of innovation.
Patents are evidence of invention. They are not evidence of innovation.
The gap between the two is where most scientific careers quietly end their commercial ambitions. A researcher spends years developing a novel compound, a diagnostic method, or a delivery platform. They file a patent. They present at conferences. And then nothing happens, because nobody told them that the patent was the beginning of the journey, not the destination.
This article is for everyone who has reached that moment. The patent is in hand. The question is what to do with it.
The valley between invention and company
The life sciences patent is an unusual asset. Unlike a software patent, which can sometimes be licensed with minimal additional development, a biotech or medtech patent typically protects a discovery that is still years away from clinical or commercial use. The patent establishes priority. It does not establish product-market fit, regulatory approval, manufacturing scalability, or reimbursement eligibility. It establishes, in legal terms, that you got there first.
Getting there first is valuable. But it is not sufficient. The distance between a granted patent and a commercial product in life sciences is measured in years of development, millions of euros of capital, and a series of decisions that most researchers have never been trained to make.
That distance has a name in the industry: the valley of death. It is the stretch between early-stage research and investable venture where most promising science loses its momentum. It loses momentum not because the science is wrong, but because the people responsible for the science have no roadmap for the commercial journey ahead.
Understanding that journey is the first step to completing it.
What the numbers actually say
The statistics on patent commercialisation are sobering, and instructive.
University vs corporate
16%
of estimated value realised by universities
Foreign rights
>95%
of foreign rights never protected
Conversion rate
<30%
converted from provisional filing
Universities realise an average of 16% of the estimated value of matched corporate patents, according to research published by David Hsu and colleagues at the Wharton School, which benchmarked US university patents against comparable corporate IP across a multi-decade dataset. The gap is not primarily a quality gap. It is a commercialisation gap. Academic institutions, on average, are significantly less effective at capturing the value of their IP than the companies they eventually license it to.
More than 95% of foreign rights are never protected, and less than 30% of patents are ever converted to a full patent from a provisional filing, according to analysis of US technology transfer office data published by IPWatchdog. Most patents never even complete the filing process, let alone reach commercialisation.
For the patents that do get filed and granted, the commercialisation routes are narrow. Among UKRI-funded research projects that reported a registered patent outcome, 40% reported the patent as licensed and 27% reported creating a spinout company, according to a 2023 UK government analysis of public research spend and innovation outcomes. The rest, a third of granted patents, reported neither.
The message in these numbers is not that academic patents are worthless. It is that the default outcome for a life sciences patent, without deliberate commercial strategy, is inactivity.
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The three paths from patent to market
A patent holder in life sciences faces a fundamental strategic choice before any other decision is made. There are three paths, and they lead to very different outcomes.
Licensing
The patent is licensed to an existing company - typically pharma, diagnostics, or medtech - which takes on the development risk and pays royalties. The upside is certainty: the inventor is not required to become an entrepreneur, raise capital, or build a team. The downside is economics: royalty rates typically range from low single digits to low double digits as a percentage of net sales. The most common outcome for university patents, and in most cases, the one that generates the least value for the inventor.
Spinout
A new company is created to develop the patented technology, typically with the inventor as founder and external capital funding the programme. The upside is economics: founders capture a significant share of value. The downside is risk: most spinouts fail, and the journey takes a decade or more.
The University of Minnesota reports a long-term spinout success rate of 69% across 286 companies launched since 2006. In Europe, the most successful ecosystems - Oxford, Cambridge, and a handful of continental institutions - significantly outperform the average.
Sale
The patent is sold outright to a third party. This generates immediate cash but permanently transfers the upside. The least common outcome for valuable life sciences IP and the most common for patents whose holders have run out of time, money, or appetite for the alternatives.
Most patent holders, if they are honest, have not thought carefully about which path is right for them before they begin down one of them. The choice of path shapes every subsequent decision about development, capital, team, and exit. Making it deliberately, with full understanding of the trade-offs, is the first substantive commercial decision a patent holder faces.
What a company actually requires
For those who choose the spinout path, the patent is not the most important thing the company needs. It is, in many ways, the least urgent problem to solve. The patent establishes that the invention is protectable. What it does not establish is whether there is a product, a market, a development path, or a fundable business.
Building that requires answering four questions that most researchers have never been asked.
What is the product?
A patent protects an invention. An invention is not a product. The product is defined by the clinical indication, the patient population, the regulatory pathway, the competitive standard of care, and the commercial infrastructure required to reach the patient. A patent on a novel enzyme may eventually become a diagnostic test, a therapeutic, a research tool, or a manufacturing process. Each requires a completely different development plan, regulatory strategy, and commercial model. The product definition is the first decision. Everything else follows from it.
Who is the real buyer?
In life sciences, the end customer of a spinout is rarely the patient. It is the pharmaceutical company, the diagnostics major, or the medtech acquirer who will eventually purchase or license the asset. The question is not how large the market is. It is which specific company would acquire this asset, why they would pay a premium for it, and what evidence package would make the acquisition financially rational for them. Without a credible answer to that question, there is no investable company. There is only interesting science.
How much will it cost to get there?
The development path in life sciences is long, expensive, and non-linear. The capital requirement must be understood before the first euro is raised, because the structure of the funding determines the terms of every subsequent round. A new molecular entity entering clinical development faces mean costs running into hundreds of millions of euros before approval. Even a diagnostic or medical device typically requires tens of millions of euros before generating revenue.
What evidence moves the asset closest to an acquisition?
Not every piece of evidence is equally valuable. The gating uncertainty, resolved first, creates the most value per euro. The development plan should be built around the sequence of evidence generation that maximises the probability of an acquisition, not the sequence that is most scientifically logical or most convenient to execute.
The TTO question
For researchers at universities or public research institutions, the path from patent to company runs through a technology transfer office. The TTO manages the IP, negotiates the licence or spinout terms, and at the best institutions provides active support for the commercialisation process.
The relationship between inventor and TTO is one of the most consequential and least understood in academic entrepreneurship. A 2008 study cited by The Entrepreneurs Network found that of almost 24,000 faculty members who had patented, 42% had bypassed their TTO at least once, suggesting that the formal commercialisation route is not always the preferred one, particularly for serial inventors who have accumulated their own networks and expertise.
The general principle is straightforward: terms that leave the founding team with insufficient equity, or that create licensing obligations that cannot be satisfied from projected revenues, will make the company difficult to fund. Investors will discount the valuation to compensate for structural weaknesses in the cap table or the licence agreement. The TTO and the founding team have aligned long-term interests - both benefit if the company succeeds - but their short-term interests around deal terms are not always the same.
Getting independent advice before signing a spinout agreement is not a luxury. It is a basic requirement for any founder who intends to raise external capital.
The question that precedes all others
Before the product definition, before the buyer analysis, before the development plan, before the TTO negotiation, there is a question that most patent holders in life sciences have never been directly asked.
Do you want to build a company?
It sounds obvious. But the decision to commercialise a patent and the decision to become an entrepreneur are not the same decision. Many researchers who file patents have a genuine commercial instinct and a strong desire to see their work reach patients. Not all of them want to spend the next decade managing investors, negotiating with pharma companies, and building a team from scratch.
The honest answer to that question determines which of the three paths is appropriate. A researcher who wants to see their technology reach patients but does not want to run a company is a licensor, not a founder. A researcher who wants to build something, accept the risk, and capture the upside if it works, is a founder. These are different people, and the commercial strategy should reflect which one is making the decisions.
The patent is the beginning. The question is what you want to do with it.
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