An Analysis of the Critical Role of Public Science in Innovation: The Case of Biotechnology

Examines the link between public science and thebiotechnology industry in the United States. As knowledge plays an increasingrole in our innovation-based economy, firms at the forefront of industry mustexploit their absorptive capacity, defined as the ability to recognize newinformation, assimilate it, and apply it commercially. The most importantsource of external knowledge centers on public science, which is scientificresearch performed in and supported by governmental, academic and charitableresearch institutions. Previous studies have found that biotechnology, as a relevantly recent industrycomposed of mainly small, innovative firms, plays an important role intransferring knowledge from the university to the marketplace. In an effort toexamine this link more closely, this study focuses on scientific citations,funding sources and countries of origin, and a comparative analysis ofdedicated biotechnology firms and large pharmaceutical companies in theirlinkages to public science. Using the IPO prospectuses of U.S. biotechnologycompanies that were public traded as of 1993, 119 firms were identified. AllU.S. patents they acquired from the date they went public through 1997 wereidentified. Analysis of this patent data shows that the biotechnology industry relies moreheavily on publicly funded science than do other industries, including largepharmaceutical companies, though mostly for basic as opposed to appliedresearch purposes. The National Cancer Institute and National Institute ofGeneral Medical Sciences were identified as the two largest funding sources.Examination of the scientific papers listed in these industry-held patentsfound that the majority of citations emanate from U.S.-based authors at publicresearch institutions. Concludes that as biotechnology continues to develop andrevolutionize many fields of industry, continued public support of basicresearch will give the U.S. a strategic advantage economically. (CJC)