Minds Conference on Financial Institutions for Innovation and Development

Transcription

1 Minds Conference on Financial Institutions for Innovation and Development Session 4: Challenges of financing innovation Julio Ramundo BNDES Rio de Janeiro, 28 June 2013

2 Innovation as consensus Comparing concepts to urban landscape, innovation could be compared to these town squares in the form of a star, such as the Place Charles de Gaulle in Paris and the Raul Soares roundabout in Belo Horizonte, which receive avenues from several places that come together, and then, continue on to different destinations. Fabio Erber(2010), Inovação Tecnológica na Indústria Brasileira no Passado Recente: Uma ResenhadaLiteraturaEconômica, in TextosparaDiscussãoCepal-Ipea, n o 17. 2

3 Innovation: Over a decade of Legislation and Policy 2013 Inova-Empresa, Embrapii PBM, MEI Pro-Innovation Committee, Margins of Preference (Law Nº. 12,349/2010) 2008 PDP 2007 FNDCT Regulation (Nº. 11,540/07) 2005 Law of Goods (Nº. 11,196/05) 2004 PITCE, Creation of ABDI, Innovation Law (Nº. 10,973/04) 1999 Law of Sectorial Funds 3

4 Federal Government Support for Innovation: 2000 to 2010 Source: Delgado, V. (2012): : UmaDécadade ApoioFederal àinovaçãono Brasil, in Revistado BNDES, n. 37, June

5 Brazil: Innovation rate and innovation expenditures Innova on rate (%of Companies) 38,11 31,52 33,27 33, Expenditureson Innovation Activitiesin ManufacturingSector Item Machinery& Equipment Internal R&D Industrial Projects Introducing Innovation in the Market External R&D Other External knw-how Software Trainning Total Source: based on data from IBGE, PINTEC(2008) %of innovation expenditures 49,2 24,5 9,1 5,7 4,0 2,7 2,6 2,1 100,0 5

6 Private R&D: LIVRO international VERDE landscape DO ETANOL Private R&D as%of GDP Country (%) 2008 Variation (pp) Portugal 0,76 0,45 Finland 2,77 0,31 Denmark 1,91 0,23 USA 2,00 0,21 China 1,08 0,18 Spain 0,74 0,14 OECD 1,63 0,13 Germany 1,84 0,12 EU 1,21 0,06 Brazil 0,53 0,04 Italy 0,60 0,05 Norway 0,87 0,05 France 1,27-0,03 Holland 0,89-0,12 Source: Cavalcanti& De Negri(2011), IPEA TD ,0 Finlandia, 0,31, 2,77 2,5 EUA, 0,21, 2,00 2,0 1,5 OCDE, 0,13, 1,63 1,0 China, 0,18, 1,08 Portugal, 0,45, 0,76 0,5 Brasil, 0,04, 0,53 0,0 0,00 0,05 0,10 0,15 0,20 0,25 0,30 0,35 0,40 0,45 0,50 6

7 Innovation inlivro the BNDES programs VERDE DO ETANOL Fins 90 The BNDES Programs, Lines of Credit and Products for Innovation Programas, Linhas e Produtos BNDES para Inovação (*) PROSOFT (1997) PROFARMA Novo PROSOFT Inovação Produção e Inovação PD&I PROTVD Prog. de Apoio à Eng. Automo va Pro-Aeronáu ca FUNTEC CRIATEC Linha Inovação Tecnológica Linha Capital Inovador Inovação Produção Cartão BNDES PSI Inovação Pró-Engenharia PSI BK TIC Tecn. Nacional Pró-Plás co BNDES P&G PAISS 7

8 BNDES Support for Innovation BNDES disbursements to Innovation (*) Focus on Innovationthrough equity direct investments in 2012 R$ million 77%of investments went to companies focusing on Innovation and Clean Technologies (R$ 1.44 billion of the R$ 1.87 billion total) For each 1 realfrom the BNDES, a further 4 reaisare invested by coinvestors (R$ 9.57 billion of the total)... and through VC and PE funds, as well Source: based on data from the BNDES Planning Division. (*) does not include acquisition of machinery and equipment (BNDES- FINAME) or disbursements to variable-income operations # of funds # of companies

9 Supporting innovative entrepreneurs 9

10 BNDES invests across all stages Commited Capital (individual Co) High Risk Investments In Funds Direct Investments Expansion Stage Capital Markets Growth Stage Criatec Early Stage Seed Capital Start-Ups Low Risk 0 Seed (06) Venture Capital (12) Private Equity (17) Time BNDES has stakes in 206 companies through 35 funds

11 Criatec: entrepreneurship through seed capital Belém Pará R$ 1.5 MM 1 company Fortaleza Ceará R$ 5.7 MM 4 companies Pernambuco Recife R$ 6.9 MM 5 companies Belo Minas Horizonte Gerais R$ 11.8 MM 8 companies Companies per Stage R$ 61,2 MM 36 Companies Late Seed Expansion Start-up Proof of Concept Santa Florianópolis Catarina R$ 11.8 MM 5 companies Rio de Janeiro R$ 7.0 MM 5 companies Campinas São Paulo R$ 16.7 MM 8 companies Proof of concept: no revenues, final technical and scale-up tests Start-up: tested products, launching products into market Expansion: first market expansion revenues between R$ 1 MM and R$ 4,5 MM Late Seed: expansion revenues between R$ 4,5 MM and R$ 6 MM 11

12 Criatec: entrepreneurship through seed capital R$ millions Revenues 58% 45% 109% 84% 73% 46% Vintage 2012 Vintage 2011 Vintage 2010 Vintage 2009 Vintage % 58% 38% 247% 84% 118% 218% 149% Revenues CAGR 160% 45% 69% 65% 84% E # Companies Revenue CAGR per Vintage Criatec invested in 36 companies 12

13 Concentrating national public resources for strategic technological segments 13

14 Inova Empresa: LIVRO an institutional VERDE innovation DO ETANOL Mobilize and amplify resources from all relevant federal institution Contracts have to be signed until December 31st, 2014 Support for innovation plans of corporations; not projects Within strategic areas, innovation priorities at higher risk profile Strategic Areas defined according to potential demand or national interest Intensive consultation to define innovation priorities For each strategic Area, Open Call for Innovation Plans to be submitted by stand alone or consortium of firms and research Institutes Government financing agencies: BNDES and FINEP operate jointly up to contracting an operation

15 Inova Empresa: resource allocation Resources to Strategic Areas Resources to Generic Efforts Energy Oil and Gas Health Defense & Aerospace ICT R&D SME Tech Labs Sub Total US$ 0.5 US$ 0.9 US$ 1.1 Agribusiness Environment To be launched by July Total US$ 14 billion Sub Total

16 Competing in the worldwide race for the cellulosic ethanol 16

17 PAISS: leveraging resources PRE-PAISS: Portfolio of the BNDES and FINEP for new technological routes to the tune of R$ 100 million R$ Million Dev. Agency Before-PAISS PAISS Budget After-PAISS FINEP BNDES TOTAL Source: BNDES, Biofuels department. POST-PAISS: Growth of almost 30x Only 1/3 of the demand aimed at 2G and new products bio-chemicals 17

18 PAISS: Repositioning Brazil 2G Ethanol As a result of PAISS fostering investments in R&D, Brazil has been repositioned in the worldwide 2G Ethanol race. PRE-PAISS POST-PAISS Pilot 2 3 Demonstration 2 Commercial 3 Source: BNDES, Bio-fuels Dept. Source: Biofiuels Digest, FO Lichts and BNDES (*) Estimate for 2014, made in

19 Impacts resulting from 2G Ethanol: Investments, Competitiveness and Sustainability Demand: billions of liters Demand 2021 (EPE) 68.5 Export. Potential 2021 (BNDES) 11.5 Total Prod Source: BNDES, Bio-fuels Dept. Investment Potential (diffusion): R$ billion Retrofit 400 plants newly integrated plants (1) 68.0 TOTAL Source: BNDES, Bio-fuels (1) Plant with 4MM tons, 1G+2G Estimate of Impacts/Benefits: For the same growth... Without 2G With 2G Savings New plants Processed sugarcane (MTC) Plantation area (Mha) 7,886 3,200 4,686 19

20 Catch-up efforts in the biotech pharmaceuticals 20

21 Biotech in the Pharma Industry Market Opportunity and arena Biotech patents expiration US$ 45 billion ( ) Emerging countries with aggressive catching-up strategies (Korea, China) Competitiveness High value products and leading the market growth New technological path for Brazilian companies One big buyer: the Brazilian public health system (SUS) Biotech medicines: nearly US$ 2 billion dollar per year Biotech on SUS medicine budget, Units Biotech on SUS medicine budget, U$ Source: Ministry of Health.

22 Biotech in Pharma: LIVRO special VERDE institutional DO arrangement ETANOL Health Care System Ministry of Health Demand risk mitigation Public Private Partnerships Brazilian companies and state owned labs Funding BNDES and others Special condition for biotech projects (Profarma) Intellectual Property Fast track for key biotech patents Regulatory ANVISA Special Biotech pathway (RDC 55/2010) 22

23 Biotech in Pharma: recent developments Technology Transfer Scheme Private Company State-owned Lab Public procurement 14 biotech products to be transferred US$ 1 billion per year 8 Therapeutical classes 37 agreements 25 partners involved 8 State owned labs 17 Private companies 23

24 Concluding Remarks Innovation is in the core of national development strategies but this theoretical consensus has not always been transformed into business strategies; Brazilian government has continuously put innovation both in the policy and in the new legislation for more than a decade but private investments are still lagging behind; BNDES has adapted its programs, products and codes in order to foster innovation but we are still very timid; a lot has to be done; BNDES experience shows that the challenge of financing innovation means innovative and specific approaches; there is no panacea or silver bullet; industry-based knowledge is key;

25 The logic and data aim to raise questions. What produces is the imagination. Antonio Barros de Castro, in Conversas com Economistas Brasileiros, Editora 34, São Paulo