Mind to Market: Technology Transfer from Academics to Capitalists Produces Biotech Bonanza

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Researched by Industrial Info Resources (Sugar Land, Texas)--Technology transfer is the methodology of the sharing of ideas, information, data, technologies, methods of production/manufacturing and the like among institutions, governmental entities and the private sector to ensure that scientific and technological discoveries are accessible to a wider range of users that can then further nurture and exploit the technology into new products, processes, applications, materials, services and profits. While, intellectually, the practice has been utilized since ancient times (Archimedes was notable for applying science to practical problems), the present-day volume of research has fueled the successful search for new biotechnologies and other therapeutics.

Biotechnology is a word that is frequently heard, yet is often misunderstood. Many lay people associate and interchange "biotechnology" with "pharmaceuticals," as the term "biotech-pharma" is used as an umbrella moniker for anything that we understand to be a treatment for what ails us. Although some biotechnology discoveries do become pharmaceuticals, this is not always their ultimate fate. In a nutshell, biotechnology is the use of living things to manufacture products. A more robust definition would be that biotechnology refers to techniques used by scientists to modify deoxyribonucleic acid (DNA) or the genetic material of a microorganism, plant, or animal in order to achieve a desired trait.

As might be expected after understanding the definition of biotechnology, much of the biotechnology research into DNA and living organisms are performed at institutions of higher learning. However, until 1980, it was difficult to transcend the mind-to-market hurdle to commercialize academia's discoveries. The first biotechnology company was Genentech (San Francisco, California), now part of the Roche Group (OTC:RHHBY) (Basel, Switzerland). This breakthrough company was founded by Herbert Boyer, Ph.D., a biochemist from University of California San Francisco, and venture capitalist Robert Swanson. The aim of the company was to use recombinant DNA technology to produce commercial medicines. This single liaison, a tenured university professor partnering with a commercial financial backer, brought biotechnology out of the classroom and into the boardroom.

Before 1980, the government would not surrender ownership of federally funded inventions to the inventing organization except in rare cases after petitions had moved through a lengthy and difficult waiver process. Instead, the government retained title and made these inventions available through non-exclusive licenses to anyone who wanted to practice them. However, in 1980, Congress enacted the Bayh-Dole Act. This act was created on the premise that the public would benefit from a policy that permitted universities and small businesses to elect ownership of inventions made under federal funding, and to become directly involved in the commercialization process. This new policy would also permit exclusive licensing when combined with diligent development and transfer of an invention to the marketplace for the public good.

The Bayh-Dole Act made the assumption that stimulation of the U.S. economy would occur through the licensing of new inventions from universities to businesses that would, in turn, manufacture the resulting products in the United States. The act has effectively leveraged the tremendous value of academic research to create American jobs, economic growth, and public benefit, resulting in a powerful system of knowledge transfer unrivaled in the world.

The avenues taken to commercially package research varies widely. The process may involve joint ventures, licensing agreements and partnerships to share both the risks and rewards of bringing new products to market. Other corporate structures, including "spin-outs," are used when the originating organization does not have the necessary motivation, resources or skills to develop a new technology. Often, these approaches are associated with the raising of venture capital as a means of funding the development.

Many universities and private corporations have an "Office of Technology Transfer" that searches for viable products and research that has a potential for commercial success, and determines the means to exploit them. Technology transfer offices may work on behalf of research institutions, governments and even large multinational conglomerates. Where start-ups and spin-outs are the clients, commercial fees are sometimes waived in lieu of an equity stake in the business. As a result of the potential complexity of the technology transfer process, technology transfer organizations are often multidisciplinary, including economists, engineers, lawyers, marketers and scientists. The dynamics of the technology transfer process has attracted attention in its own right, and several societies and journals and dedicated to the process. According to the Association of University Technology Managers, based on aggregate numbers in from 2000 through 2008, United States universities received 147,515 invention disclosures, filed 83,988 new patent applications, and signed 41,598 license and option agreements, of which 4,566 were with startup companies based on university research.

Universities also invest tremendous amounts of capital resources for infrastructure projects to support academic research, manufacturing and business alliances. Industrial Information Resources' Pharmaceutical Tracker - Online Database is currently tracking more than 230 university-based facilities related to research and development and life science, and more than 250 active university-sponsored construction projects worth more than $17 billion. California leads construction with 26 projects worth $1.7 billion, followed by Texas with 19 projects valued at $1.2 billion, and New York with 13 university projects with an approximate value of $1 billion.

The progression of university research centers from stifled bureaucracies to innovative, capitalistic business entities has fueled not only the biotech bonanza but added to the U.S. free-market system.

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