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Tom Krikke

on 6 November 2012

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Transcript of Biotechnology

1919: First use of the word "Biotechnology" 1928: Discovery of penicilin, the first antibiotic 1953: The structure of DNA first described 1982: First approval of a biotechnology drug 1997: First cloning of a sheep 2003: Human Genome Project declared complete Competition Learning Profit vs. Society Dilemma Financial, Political and Societal Constraints Investment & Risk Rumors & Expectations Regulation Politics Influencing nature of research in biotechnology Competition "The current medical path is becoming increasingly challenging, risky, inefficient and costly." 1. Venture capital / Private Equity
2. Public Equity
3. Monetization of IP Between 8% and 20% of New Chemical Entities
receive final marketing approval (FDA, 2004) When the price of failed drugs is taken into account,
the cost of bringing an NCE to market is estimated between
$800 million and $1.7 billion (FDA, 2004) Consequences "The historical nature of the industry had often been blamed for creating unrealistic expectations in the public mind" "A series of well-publicized and unanticipated complications during clinical trials has dampened investor enthusiasm for some of these technologies" Me-too vs. break-through medical solutions
A large amount of unused patents "By definition science is all about predictive power... in less mature sciences by definition predictive power is lacking" Policies dependent on political party Tend not to have long term goals due
to short terms More transparency and society
interest and scrutiny Dedicated research funding programmes Financial and technical support for start-up firms and regional clusters In the industry's traditional form, the rate of innovation is not as high as it could be. (Hopkins et al., 2007)

Research in biotechnology is not aligned with society’s needs. R&D tax credits Lower regulatory hurdles From Past To Present: Challenges Biotechnol gy However... Ground-breaking research can be facilitated, for example through (Stuart et al., 1998):

Which make use of the respective comparative advantages of small and large medical firms (McNamara and Baden-Fuller, 2007):
Financial, Material, Knowledge, etc.
Exploration vs. Exploitation Clusters and Collaboration Why? What happens within
these clusters; Innovation Challenges/Disadvantages
of Collaborating
“The phenomenon of knowledge flows is perhaps best addressed by organisational network theory. According to this perspective, the evolution of networks occurs as actors accumulate experience and information about other members of the network through repeated experiences” (Gulati, 1998)

“Evolutionary economics emphasises the role of path dependence and cumulative processes in explaining industry structure and dynamics” (Arthur, 1994)

“Population ecologists would argue that the size and growth of the agglomeration of complementary organisations is explained by the differential rates of survival of competing groups of organisations within the cluster” (Niosi and Banik, 2005)

“Evolutionary economics also suggest that in complex systems (such as RSIs) organisations co-evolve on the basis of their interactions” (Barkley Rosser, 2003) Jorge Niosi and Marc Banik provide three phenomena of innovation within geographic clusters;

Knowledge Flows
Between Clusters and External Organisations
Org2Org within clusters

Heterogeneity of Ogranisations
Knowledge flows within clusters; scientific, technological, financial
Organisations innovating within clusters; developers, users, financial institutions, government laboratories, universities
Complex Management Problem

“Benefits (or losses) that some economic agents impose on others, not captured by market transactions”

Hypothesis 2; Firms in clusters display better performance (more innovative and higher growth rate) than firms outside clusters. Collaboration raises entry barriers

Interfirm cooperation accelerates the rate of technological innovation

Reliance on collaboration has potentially transformative effects on all participants

Collaboration may, in itself, become a dimension of competition

Comparable advantage for each firm participating FDA, 2004 Innovation or Stagnation
Hopkins et al. 2007, The Myth of the Biotech evolution
Pisano, G. 2004 The Evolution of Scienc. Hopkins et al. 2007, The Myth of the Biotech evolution
Pisano, G. 2004 The Evolution of Science Hackett et al. 2003, Microarray Data - The US FDA, industry and academia
Hopkins et al. 2007, The Myth of the Biotech evolution
Pisano, G. 2004 The Evolution of Science Governments & The FDA Giesecke, 2000, The contrasting roles of government in the development of biotechnology industry
Pisano, G. 2004, The Evolution of Science Definition: The use of living organisms to enhance crops, fuels, medical treatments and a host of other tools that can help humans (Biotechinstitute, 2010) Focus on medical treatment and drugs ? How can we realign society's needs with biotechnology's research? Will competition and natural market dynamics solve the problem? Or do we need some kind of regulation to force research to be focused on society's needs? Is co-location becoming less important due to technological improvements? Or is the tacit knowledge-component still prevalent?
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