Joint Ventures

• Author: Russell L. Parr
• Profession: President of Intellectual Property Research Associates
• Pages: 338-351

CHAPTER 22

JOINT VENTURES

As discussed in Chapter 14, joint ventures pool valuable intellectual property and other

unique resources into a business in which the partners own equity and share prots. Forces

driving joint ventures are time-savings, cost-savings, and risk reduction. These forces are

bringing together corporate partners from all over the world as they expandinto new product

lines and new global markets. Any one of the driving forces of saving time, saving costs,

and risk reduction can be the genesis for a joint venture. Sano recently entered into a joint

venture providing it all three benets.

Sano SA has expertise in diabetes medication. Verily Life Sciences LLC, a unit of

Google parent Alphabet, has knowledge of miniaturized electronics, analytics, and software

development. In September 2016, the two companies announced a joint venture to create

high-tech tools for the management of diabetes. Potential products might use microchips to

continuously monitor blood sugar levels in patients. The joint venture will be called Onduo.

Sano expects revenue declines from diabetes drugs as competition between insulin

makers intensies. Verilyis attractive to Sano because it offers Sano the chance to intro-

duce a new and protable product much faster than developing a new drug. Onduo can

launch a new product in a few years where a new drug would take 10 years before entering

the market; remember, new drugs have the risk of not getting nal approvalfrom the FDA.

Some companies bring manufacturing capabilities to a venture while other partners

bring research capabilities or distribution networks. A joint venture between Merck &

Co. and Johnson & Johnson allowed for the optimization of unique intellectual property.

Merck & Co. used its unparalleled research center to develop a new product line of

over-the-counter drugs. Merck has expertise in development, commercialization, and the

special skills needed to efciently obtain Food and Drug Administration (FDA) approvals.

Merck, however, did not possess a well-recognized trademark among general consumers.

It also lacked the distribution network required to get the new products onto store shelves.

Johnson & Johnson possessed the perfect complementary intellectual property in the form

of world-class trademarks, along with a well-developed distribution network that had

access to store shelves across the country.

The development of complex technology can also drive joint ventures where a single

company cannot go it alone. Volvo Cars, a luxury carmaker, and Autoliv, a leader in cre-

ating automotive safety systems, have come together to create Zenuity in 2017. The joint

venture will focus on the development of leading advanced driver-assist systems (ADAS)

and autonomous driving (AD) technologies. Autoliv and Volvo Cars license and transfer

intellectual property for their ADAS systems to the joint venture. Using the contributions

from each party, the joint venture will develop new ADAS products and AD technologies.

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