Preparing A Commercialization Plan

Commercialization Options

Essentially there are only two options available to a R&D Company to bring a new product to the marketplace. The first option is to license the rights to manufacture and distribute the product to an organization with the resources and expertise to successfully launch the product. Licensing arrangements generally involve some sort of royalty agreement. Typically, the Research and Development Company will focus its energies on its core business (R&D) and leave manufacturing and distribution to someone that has the capacity to meet market demand. Examples include Ballard Power Systems Inc.

The second option is to vertically integrate the R&D business with manufacturing and distribution capability. Although this option provides the greatest degree of control it also requires the Company to assemble substantial resources. Examples include Microsoft Corporation.

A third option, a combination or hybrid, generally involves the R&D company developing limited manufacturing and distribution capability. The production capability generally is developed to meet the needs of a specialized market niche or geographic area. For example, a software developer might license the majority of its products to Microsoft but may manufacture and distribute a specialized point-of-sale program under its own name to fast food chains.

Two of these options, Licensing and In-house Manufacturing are explored in greater detail below.