Doing Business Together A European Industrial Perspective

1
Doing Business TogetherA European Industrial
Perspective

• Andrew DearingPCAST, Washington, 5th October 2004

2
Objectives and Environment
Preface

• Aim of achieving more productive benefit from
  knowledge
• Removing barriers to increase prospective value
  of this knowledge
• Avoiding opportunity costs of investments that
  fail at a late stage
• Science, Measurement and the Environment are
  universal
• Why/when do we need different standards?
• When a position is established, its usually too
  late to talk!
• Models, roles and expectations are changing
• Public Science System, Business RD,
  Public/Private Collaboration, Intellectual
  Property
• RD globalising driven by markets, skills,
  standards, access
• Lots of institutional vehicles - no absolute
  must do processes

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Yesterday and Tomorrow
Trends

• Linear model Nationally Organised Companies
• Company cared about its own capacity to generate
  proprietary know-how
• Premium was on internalising/moving knowledge
  within the rules
• Led towards centralised management to administer
  knowledge sharing Research Agreements,
  Research Cost Sharing
• Open Innovation Globally Connected
• Company cares about ability to use
  co-generating, transforming knowledge and
  accessing best skills when need occurs
• Premium is on creating productive value from
  knowledge
• Leads towards decentralised management that
  concentrates on knowledge use ad hoc Technology
  Agreements
• Predictability remains the key concern
• Control business risk avoid getting drawn
  into uncertainties that you cannot manage

4
Outsourcing RD is not new at all
Trends
1e generation
3e generation
4e generation
2e generation

• Importance of innovation networks as source of
  know-how
• Balance between outsourced RD and in-house
  capacityAppraise, select and use "brought in"
  research and technical elements
• Now on a global scale

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During the late 19th and the early part of the
20th, practically all research had been conducted
outside of the firm in stand-alone research
organizations
Outsourced
15
10
5
Golden age of corporate RD labs
0
1900
1920
1940
1960
1980
2000
Roughly 3 of research is bought outside the
firm EIRMA study
5
RD Spending by Firms
Trends
M
Investment concentrated within larger firms
only 700 companies spend 50 million A very
long (and important) tail of smaller firms Sense
that growth comes primarily from smaller firms
Company based in
Rank Order
(A lot of D at this end)
(Still a lot of D down here)
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Being Part of the Network
Trends

• There are only a few major regions of biomedical
  excellence
• Major pharmaceutical and biotech companies aim to
  be part of these regions
• Self-reinforcing process which no one player can
  direct by themselves
• Outcome
• US biotech market cap 10x EU
• Major shift of EU pharma RD to US

7
Being a Credible Player
Comments

• People argue about the role of public subsidy.
  This misses the key part that infrastructure
  plays. The EU has better infrastructure for
  public debate on the environment, and the US has
  the industrial structures that support NASA EU
  defence
• We know we need to be there to be a credible
  partner. But the national system has also to
  recognise our right to be there EU telecoms
• Much more can be done to make access to EU
  research funding less bureaucratic US consumer
  goods
• Its becoming too easy to pull the national
  security card we lose collaborative programmes
  and we have to duplicate our own internal
  programmes several

8
Regulation, Standardisation
Comments

• Everyone feels that regulatory burdens go beyond
  what good science requires, but no-one knows how
  to take the first step EU Aerospace
• The widely varying public attitudes towards
  scientific risk and acceptability are a growing
  issue for us to manage several
• Reproducibility is crucial. By adopting
  different measurement standards, we make so much
  published work useless. For key emerging areas
  like nanotechnology, this is problematic EU
  Public Lab
• The EU Technology Transfer Exemption is fine in
  principle, but how shall the market share rules
  be interpreted? The danger is that we encourage
  knowledge transfer then penalise it when it
  succeeds EU Energy

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Different Intellectual Property Regimes
Observations

• Traditions First-to-File and First-to-Invent
• Can we achieve global consistency?
• Can the EU actually sort out the common patent?
• Positive view of AIPLAs position on moving to
  First-to-File
• Implications for Grace Period
• Views over underlying business models
• Business Method Patents, Software
• Pathways for Public Sector IPR
• Appropriation Open Science versus Open
  Innovation
• Research Exemption ease of building on existing
  knowledge
• Procedural concerns
• EU trans-national complexity, simpler process
  for early opposition
• US Submarine patents, Publication,
  Continuation-in-Part

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Joint RD with US Institutes
Observations

• EU companies tend to view US RD as offering
• More liberal funding rules for foreign
  participation
• Clearer market focus, lower early-stage costs and
  better supporting infrastructures venture
  capital NASA
• Belief that US system recognises need to
  appropriate IPR
• But does not always seem to appreciate that the
  overseas partner shares the same need!
• Leading some companies to walk away from
  collaboration with US universities
• Sense that EU system is better at achieving
  consensual standardisation
• But it is also better at forcing non-consensual
  overhead!

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Responsible Partnering
An Initiative

• Scheme is being launched by EIRMA, EUA, EARTO,
  Proton as a tangible contribution to the European
  Research Area initiative
• Objective is to achieve a voluntary approach that
  improves joint RD and technology transfer within
  different primary missions
• Responsible Partnering
• Sets out two principles and ten guidelines to
  achieve a win-win
• Offers a framework for clearer governance,
  strategy, organisation and management skills and
  education development and communication of joint
  programmes
• Intention is also to focus the development of
  appropriate public policies and support measures
• Builds on Responsible Care chemicals industry

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Conclusions

• Free trade is still a good thing!
• Harmonise what matters, otherwise be flexible
  e.g. IPR frameworks v IPR for software/bio
• Give institutions and agencies the mandate and
  funding to reach closure on systems/rules
  relevant to needs of 21st century IPR,
  technology export, regulatory environment
• Talk first to avoid arguing later
• Invest in the basic skills that universities,
  public research laboratories and companies need
  to work together effectively Responsible
  Partnering
• Understand the forces driving change IRI, EIRMA,
  GUIRR and others working together on RD
  globalisation