INNOVATION MODELS IN THE BIOPHARMACEUTICAL SECTOR - Innovation in the Biopharmaceutical Industry - page 15

The publications and patents produced by tightly knit geographical communities
of academia, SMEs, and large pharmaceutical companies (e.g. in New England and
California), as well as the benefits gained for these groups, have all been studied
extensively. Pammolli et al. (2002) have analysed the efforts of European countries
to replicate this phenomenon by selectively deployment of government and EU
Commission research funds. Kettler and Casper (1998) have documented early
initiatives of this type in Germany and the UK. While the UK biotechnology sector
has made modest progress, in Germany and other continental countries such efforts
have thus far met with only limited success. Such shortcomings may, in part, reflect
structural differences in the industries of these countries which have a residue of
medium-sized pharmaceutical companies not sufficiently research-intensive to act
as effective local partners (McKelvey et al. , 2003).
A US study of 94 biotechnology start-ups (Deeds et al. , 2000) found that
three factors were associated with success: (1) location within a significant con-
centration of similar firms; (2) quality of scientific staff (measured by citations);
(3) the commercial experience of the founder. The number of alliances appeared
to have no significant impact on success. However, George et al. (2002) have
observed that close association of small firms with academic centres enhanced patent
output.
A distinct stream of research has examined the role of entrepreneurs. Baumol
(2006) has highlighted the “invisibility” of the entrepreneur in contemporary
economic models. He also offers the intriguing view that major innovations
periodically generated by entrepreneurial researchers reflect a wilful determina-
tion, or a bounded rationality, not to acknowledge the excessively long odds
against achieving success. In a similar vein, Audretsch et al. (2006) studied the
prevalence and determinants of the commercialisation of research by university
scientists funded by the US National Cancer Institute. They commented that
“scientific entrepreneurship is the sleeping giant of commercialising university
research. More than one in four patenting NCI scientists in the US has started a
new firm”.
There is substantial disagreement over the extent to which the EU innova-
tion deficit is caused by lack of venture capital (VC) funding (Daily Telegraph,
2006). Robb (2006) concluded that Europe has attracted less institutional VC
than the US, because European entrepreneurs generate fewer projects in the life
sciences and information technology that fit within the VCs' investment strat-
egy. He also speculates that because entrepreneurial activity within institution-
ally backed start-ups is smaller by orders of magnitude than entrepreneurial
activity within large firms, more might be learned about why corporatist
Europe lags in terms of innovation, by examining the behaviour of established
companies.