The biotechnological competence bloc - article ; n°1 ; vol.78, pg 7-26

Gunnar Eliasson, Asa Eliasson

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Revue d'économie industrielle - Année 1996 - Volume 78 - Numéro 1 - Pages 7-26
Le secteur biotechnologique, plus que tout autre industrie, est le résultat de la recherche scientifique. L'article analyse la constitution d'un « bloc de compétence » en biotechnologie, met en évidence le caractère expérimental de son développement, et explique l'importance critique du capital risque compétent. Il discute également le rôle d'appui, le cas échéant décisif, de l'Etat en vue de fournir le capital-risque compétent, lorsque le marché est en défaut.
L'étude souligne la nécessité pour tout développement technologique dans l'industrie, (1) de combiner des technologies et disciplines très différentes et (2) d'identifier le sous-ensemble limité des possibilités techniques qui respectent les contraintes économiques. Les entreprises industrielles doivent elles développer des compétences gestionnaires permettant de traiter une complexité extrême. Les conséquences de cette complexité sont en effet des faillites fréquentes.
Biotech industry, more than any other industry, is the offspring of academic research. The nature and formation of the biotech competence bloc are investigated, the experimental nature of its development clarified and the critical importance of competent venture capitalists explained. (The possibly critical, supporting role of Government to provide venture competence when the market fails to process entrepreneurship is discussed.
The study documents the importance for industrial technology development (1) to merge different technologies and academic disciplines, and (2) to identify the more narrow set of technological possibilites that satisfy economic restrictions. Industrial firms have to develop management competence to deal with extreme complexity. The consequences of complexity are frequent business failures.
20 pages
Source : Persée ; Ministère de la jeunesse, de l’éducation nationale et de la recherche, Direction de l’enseignement supérieur, Sous-direction des bibliothèques et de la documentation.

Informations

• Publié par: REVUE_D-ECONOMIE_INDUSTRIELLE
• Publié le: 01 janvier 1996
• Nombre de lectures: 13
• Langue: English
• Poids de l'ouvrage: 1 Mo

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Gunnard Eliasson
Asa Eliasson
The biotechnological competence bloc
In: Revue d'économie industrielle. Vol. 78. 4e trimestre 1996. pp. 7-26.
Résumé
Le secteur biotechnologique, plus que tout autre industrie, est le résultat de la recherche scientifique. L'article analyse la
constitution d'un « bloc de compétence » en biotechnologie, met en évidence le caractère expérimental de son développement,
et explique l'importance critique du capital risque compétent. Il discute également le rôle d'appui, le cas échéant décisif, de l'Etat
en vue de fournir le capital-risque compétent, lorsque le marché est en défaut.
L'étude souligne la nécessité pour tout développement technologique dans l'industrie, (1) de combiner des technologies et
disciplines très différentes et (2) d'identifier le sous-ensemble limité des possibilités techniques qui respectent les contraintes
économiques. Les entreprises industrielles doivent elles développer des compétences gestionnaires permettant de traiter une
complexité extrême. Les conséquences de cette complexité sont en effet des faillites fréquentes.
Abstract
Biotech industry, more than any other industry, is the offspring of academic research. The nature and formation of the biotech
competence bloc are investigated, the experimental nature of its development clarified and the critical importance of competent
venture capitalists explained. (The possibly critical, supporting role of Government to provide venture competence when the
market fails to process entrepreneurship is discussed.
The study documents the importance for industrial technology development (1) to merge different technologies and academic
disciplines, and (2) to identify the more narrow set of technological possibilites that satisfy economic restrictions. Industrial firms
have to develop management competence to deal with extreme complexity. The consequences of complexity are frequent
business failures.
Citer ce document / Cite this document :
Eliasson Gunnard, Eliasson Asa. The biotechnological competence bloc. In: Revue d'économie industrielle. Vol. 78. 4e trimestre
1996. pp. 7-26.
doi : 10.3406/rei.1996.1641
http://www.persee.fr/web/revues/home/prescript/article/rei_0154-3229_1996_num_78_1_1641Gunnar ELIASSON
The Royal Institute of Technology (KTH)
Stockholm
Âsa ELIASSON
Biomédical Centre (BMC), IBMP-UPR University of 406 Uppsala, CNRS
THE BIOTECHNOLOGICAL
COMPETENCE BLOC
Key words : Biotechnology, Science-based, Competence Bloc, Venture Capital, Complexity.
Mots-clés : Biotechnologie, «science-based», bloc ou pôle de compétence, capital-risque,
complexité.
I. — THE PROBLEM
For politicians among the wealthy industrial economies science-based indust
ry has been seen as the key to high-value production and future economic growt
h as simple manual production is gradually taken over by the learning NIC
countries and the emerging East European producers. Governments, more than
before, feel a responsibility to improve the future through industrial policy.
The first high-tech policy excitement was electronics (later called IT). It arr
ived in the early post-war years, grew rapidly and is now the dominant technol
ogical force in global industrial production. And it continues to grow, only it
is not science-based and is not the result of industrial policy. It originated pre
dominantly in private industry research laboratories and entrepreneurship in
the U.S., and development there was fast (Eliasson 1995a, 1996a). European
industrial policy makers, on the other hand, encouraged investments in tech
nologies of the past. The IT train came and went in Europe, which was left
behind without a competitive computer industry.
Biotech is the next hope for a science-based industry. This industry in
today's modern form did not exist before 1975. It was founded on a series of
methodological developments in the U.S. around that time, creating the potent
ial for genetic engineering.
Biotechnology differs fundamentally from other industrial technologies in
the origin of its competence base and in its diffusion. First, biotechnology or
iginated in academia and therefore corresponds to the ideal picture of a scien
ce-based industry pushed in academic literature (see eg. Nelson 1986,
Stankiewicz 1986, Jaffe 1989). The academic research lab is in core.
REVUE D'ÉCONOMIE INDUSTRIELLE — n° 78, 4e trimestre 1996 there are no principal differences between the academic and the Technically
industrial biotechnological laboratories.
Second, production in biotech, and in the related pharmaceutical industry, is
mainly laboratory work and marketing. When completed, clinically tested and
authorized, the actual manufacturing cost of a drug is relatively insignificant.
Third, new discoveries of products are almost always the result of a combi
nation of different clusters of scientific knowhow ; for instance in chemistry,
in molecular biology, cell biology, physiology and laboratory technology. As a
consequence, innovations and industrial applications predominantly occur in
competence blocs where a sufficiently diverse environment exists and where
new and often not foreseen synergy effects can be captured.
Fourth, and not mentioned in many of the studies referred to, new product
discovery is experimental. While econometric link measured successes
to measurable determinants, we learn nothing of failed experiments. They may
be many, and most of the success determinants may have been present also
where the experiments have failed. Hence, failed experiments are a significant
part of the total development costs in industry.
In biotech, Europe appears to have a high-quality research foundation.
Provided other supporting elements of a biotech competence bloc are not lacking
a biotech industry should develop. In this paper we identify the complementary
elements of this bloc and assess the potential for positive development. So far,
however, this development appears to have taken place only in the US. Since
1975 venture capital on the order of magnitude of $20 billion has been poured
into the US biotech industry and about 1000 new firms have been established.
The expectation that fuelled such large investments (Business Week, Sept. 26,
1994, p. 68) was that by "creating a more efficient path to new drugs, biotech
entrepreneurs would take over the pharmaceutical business". US biotech indus
try is globally dominant and clustered around a few advanced university centers
in particular ; the San Diego, the San Francisco Bay and the Boston-Cambridge-
Worcester areas. There is very little to be seen in Europe and Japan so far. The
train has arrived at the station. Will it leave again without Europe ?
The paper is organized as follows. We outline the principal discovery pro
cesses involved in biotech innovative activity, the formation of competence
blocs and the diffusion of related technology. This is both to demonstrate the
role of infrastructure knowledge capital and the need to take economic analys
is down to the micro level in order to understand what is going on. It is of par
ticular importance to understand and to model how economic and biotechnol
ogical competence have merged in competitive markets behind the commerc
ially successful innovations and, if possible, why and under what circum
stances business mistakes have occurred. Since biotech industry, more than
any other industry, is the offspring of academic research, it is of particular
interest to determine whether the origin of capital spending (private or public)
makes any difference. It is also of interest to clarify the market selection
mechanisms behind success and mistake.
Q REVUE D'ÉCONOMIE INDUSTRIELLE — n° 78, 4e trimestre 1996 There is first a theoretical presentation of the principles involved. We then
draw on existing empirical literature to narrow the range of possible interpre
tations.
The case studies nicely illustrate both the cross-disciplinary nature of comm
ercially oriented biotech research, notably to develop pharmaceutical sub
stances, and the need to focus research efforts across disciplinary borders and
methods. The critical importance of criteria for selection of projects comes out
clearly, and since criteria differ from discipline to discipline, depending on the
particular concerns, such choices are intellectually disruptive for academicall
y trained people. In industry, therefore, where integration determines the suc
cess of a development project, the choice of the team of managers and special
ists and above all project leaders is critical.
The purpose of industrial research is to develop new products that please
customers and to design new process methods that make possible more cost-
efficient production. The possibilities are technically defined. But there are
economic restrictions that reduce the economically viable opportunity set. The
identification of the more narrow economic opportunities, and the realization
of a viable business is therefore a critical competence in itself.
Development work is resource-using,