Alicia Löffler Northwestern University · The biotechnology industry emerged in the late 1970s and...
Transcript of Alicia Löffler Northwestern University · The biotechnology industry emerged in the late 1970s and...
The Globalization of Biotechnology
Alicia LöfflerNorthwestern University
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The US has a historic opportunity to establish a long-term position as a global “hub” in biotechnology.
Specifically, the US has the opportunity to become a “magnet” for the emerging clusters dispersed around the world. A magnet for knowledge, innovation and commercialization.
The centrality of the US as a biotech hub (particularly as a finance center) might offer a point of entry to influence the industry in a significant way
However, progressive policies are needed to size this opportunity
The US has a historic opportunity to establish a long-term position as a global “hub” in biotechnology.
Specifically, the US has the opportunity to become a “magnet” for the emerging clusters dispersed around the world. A magnet for knowledge, innovation and commercialization.
The centrality of the US as a biotech hub (particularly as a finance center) might offer a point of entry to influence the industry in a significant way
However, progressive policies are needed to size this opportunity
Let me start with the conclusion…
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The biotechnology industry emerged in the late 1970s and 1980s with the confluence of technological, policy, and institutional disruptions
The sector gave us a unique opportunity to have a “living experiment” on the evolution of an industry. It is then not surprising that it has been the source of social,
academic, policy and economic development interest.
The sector gave us a unique opportunity to have a “living experiment” on the evolution of an industry. It is then not surprising that it has been the source of social,
academic, policy and economic development interest.
Technology social
Policy/legal
Biotech
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In fact, for many regions around the globe, biotech has become part of a key economic development strategy
Hermans, Löffler, Stern. NAS (2008)
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Globalization of biotech is different than traditional industry sectors
While the globalization of most industries offer low-cost locations to conduct activities that previously had been done in the United States -- the globalization of biotech reflects an attempt to compete “head-to-head” with the United States in the creation of new knowledge
While the globalization of most industries offer low-cost locations to conduct activities that previously had been done in the United States -- the globalization of biotech reflects an attempt to compete “head-to-head” with the United States in the creation of new knowledge
Hermans, Löffler, Stern . NAS (2008)
From cloning to stem cells more and more medical breakthroughs are coming from places other than the US
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In order to determine the globalization landscape we need to ask the following questions:
What is unique about Biotech Innovations?
What are the globalization metrics and trends in biotechnology?
What are the opportunities and policy needs?
7© Kellogg School of Management
Stokes Pasteur Quadrant (1997) Commercial application
AcademicKnowledge
low high
high
Pure (Fundamental)
ResearchUse-inspired
Research
low Applied Research
One of the most distinctive and pervasive characteristic of biotech innovation is its duality
Today biotech defines a new space where scientific contributions make simultaneous advances in both academic science and commercialization
8© Kellogg School of Management
The impact of duality is extensive, and undermines some of the implications of the traditional linear framework for innovation
Government Academia Industry Innovations
GovernmentA
cademia
IndustryInnovations
Innovation occurs at the intersection of disciplines and institutions – it is no longer a “clean and orderly” process
Innovation occurs at the intersection of disciplines and institutions – it is no longer a “clean and orderly” process
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In fact, life science innovation today is so interwoven that it is difficult to delineate government, academic from commercial activities
NIH
Map of Interactions in life sciences. Walter W. PowellAJS Volume 110 Number 4 (January 2005): 1132–205
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In order to determine how to best compete in this new global landscape, it is important to address three key questions:
What is unique about Biotech Innovations?
What are the globalization metrics/trends in biotechnology?
What are the opportunities and policy needs?
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The United States still supports, by far, the single largest bioindustry in terms of employees
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United States (1)
EU (4)
Germany (2,3)
United Kingdom (1)
Korea (2004) (3)
Canada (2,3)
France (1)
Switzerland (2004) (1)
Belgium (2,3)
Israel (2002) (3)
Sweden (1)
Ireland
Finland (1)
Austria (1)
Italy (1)
South Africa (2002) (2,3)
Norway (1)
Iceland (3)
Poland (2004) (2,3)
New Zealand (2005) (3)
Portugal (1)
Persons
International Labor Distributions. OECD biotechnology Statistics (Van Beuzekom and Arundel, 2006).
Hermans, Löffler, Stern (2008)
International Labor Distributions. OECD biotechnology Statistics (Van Beuzekom and Arundel, 2006).
Hermans, Löffler, Stern (2008)
overall employment in the EU is less than 50% of the United States.
EU employment is clustered (2/3 in Germany and UK)
Employment intensity of many countries exceed the US
LOG SCALE
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The United States carries the highest investment expenditures
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United States
Germany (2004)
France
Canada
Denmark (1)
Korea (2004)
Switzerland (2004)
Israel (2002)
Italy (2004)
China (Shanghai)
Australia
Spain (2004)
New Zealand (2004)
Finland
South Africa (2002)
Iceland
Norway
Poland (2004)
Million PPP$, 2003
the United States investment pace is an order of magnitude higher than any other individual country.
Total expenditures for biotechnology R&D by biotechnology-active firms, OECD biotechnology statistics (Van Beuzekom and Arundel 2006).-
Hermans, Löfler, Stern (2008)
Total expenditures for biotechnology R&D by biotechnology-active firms, OECD biotechnology statistics (Van Beuzekom and Arundel 2006).-
Hermans, Löfler, Stern (2008)
LOG SCALE
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The United States has the highest total VC investments in biotech
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1 10 100 1 000 10 000
USA
Germany (2004)
Canada
UK
Sweden
France
Denmark
Netherlands
Belgium
Switzerrland
Norway
Finland
Italy
Spain
Austria
Ireland
Iceland
Portugal
Venture Capital ($million) 2001-2003
Total venture capital investments in biotechnology, 2001 to 2003 combined, OECD biotechnology statistics (Van Beuzekom and Arundel 2006).
Hermans, Löfler, Stern (2008)
Total venture capital investments in biotechnology, 2001 to 2003 combined, OECD biotechnology statistics (Van Beuzekom and Arundel 2006).
Hermans, Löfler, Stern (2008)LOG SCALE
VC investments are more than 12 times as large in the United States than in the second-largest country target, Germany)
Suggests that the US might continue to extend its dominance as a hub in biotech
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There has been increased activity outside the EU --For the first time in 2001 the US lost to the EU in number of biomed
companies
Number of biotechnology companies in distinct geographic areas (Van Beuzekom and Arundel 2006; OECD biotechnology statistics).
Hermans, Löffler, Stern (2008)
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804
755
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10 100 1000 10000
European Union
United States
Japan (3,4)
France
Korea(2004)
Germany
Canada
United Kingdom
Australia
Spain (2004)
Denmark
Sweden
Italy (2004)
China
Switzerland
Israel (2002)
Finland (4)
Netherlands (5)
New Zealand
South Africa
Belgium (4)
Ireland (5)
Austria (5)
Norway (5)
Iceland
Portugal (5)
Poland (2004)
LOG SCALE
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However, while the average US Biotech has 33 employees/company, the EU has on average 10 employees/company
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We have also seen a “globalization” of academic science, reflected in an increasing share of academic publications by non-US authors
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Moreover, while US S&E doctoral production has stagnated while there have been sharp increases in production by east Asian countries
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Although The US continues to be the dominant country of origin for total number of IP in biomedicine, the gap has slightly narrowed in the last decade
USPTO Patents by inventor and country of origin
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EPO patents by inventor and country of origin
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1 500
2 000
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USA
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Hermans, Löffler, Stern (2008)
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Patents activity is clustered in a few countries
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The gap between biotech R&D expenditures, patents and sales in the EU persists
Relative Intensity of activity. Per capita R&D activity, patenting and sales of the biotechnology industry. OECD biotechnology patents and authors’ calculations (OECD, 2006, author’s calculations, indexed to the US level (US = 1.0).
Both R&D investment and patenting in the EU are approximately 40% of the US level yet sales per capita are nearly at 28% of the US level, reflecting the earlier stage of development of many European firms. In contrast, though Japan exhibit a slightly higher level of patent/capita than Europe and similar sales per capita
Both R&D investment and patenting in the EU are approximately 40% of the US level yet sales per capita are nearly at 28% of the US level, reflecting the earlier stage of development of many European firms. In contrast, though Japan exhibit a slightly higher level of patent/capita than Europe and similar sales per capita
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These country-specific empirics reinforced several of the themes
Increasing global activity in biotech• Global activity seems to be clustered rather than being a simple
dispersion of activity, opening the opportunity for one of the more subtle dynamics of industry clusters: hubbing
• Reflects an attempt to compete “head-to-head” in the creation of knowledge
• Each region is relatively small and early stage
The US still maintains a dominant position in Biotech at all levels• The skewed distribution of financial investment suggests that the
United States may be extending its historical dominance in the creation and evolution of global biotech.
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In order to determine how to best compete in this new global landscape, it is important to address three key questions:
What is unique about Biotech Innovations?
What are the globalization trends in biotechnology?
What are the opportunities and policy needs?
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The US has a historic opportunity to establish a long-term position as a global “hub” in biotechnology.
Specifically, the US has the opportunity to become a “magnet” for the emerging clusters dispersed in the world. A magnet for knowledge, innovation and commercialization.
The centrality of the US as a biotech hub (particularly as a finance center) might offer a point of entry to influence the industry in a significant way
However, progressive policies are needed to size this opportunity
The US has a historic opportunity to establish a long-term position as a global “hub” in biotechnology.
Specifically, the US has the opportunity to become a “magnet” for the emerging clusters dispersed in the world. A magnet for knowledge, innovation and commercialization.
The centrality of the US as a biotech hub (particularly as a finance center) might offer a point of entry to influence the industry in a significant way
However, progressive policies are needed to size this opportunity
To reinstate … the opportunity
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Policymakers can facilitate a process by:
Encouraging international research and collaborations
Support the interactive exchanges of international students and researchers
Support and international mobility of risk capital and investments
In contrast to traditional debates about outsourcing, increased global activity complements rather than substitute US investment, employment and innovation
The centrality of the US as a biotech hub (and as a finance center) might offer an easy(ier) point of entry to influence the industry’s demographics in a significant wayThe centrality of the US as a biotech hub (and as a finance center) might offer an easy(ier) point of entry to influence the industry’s demographics in a significant way