It Takes Two: University and Industry Partnerships

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When business and academia team up on cutting-edge initiatives, the combination can generate serious revenue and spur the economy.

Compelling research from BIO shows that R&D partnerships between universities and industry contributed as much as $187 billion to the U.S. gross domestic product between 1996 and 2007.

The BIO-sponsored study, The Economic Impact of Licensed Commercialized Inventions Originating in University Research, 1996-2007, shows how university and industry partnerships have helped drive the U.S. economy. Such collaboration creates jobs and spurs innovation in life sciences.

“It has long been believed that the Bayh-Dole Act, which permits and encourages industry to partner with research universities to turn federally funded basic research into new and valuable products, is a critical factor in driving America’s innovation economy,” says BIO President and CEO Jim Greenwood. “This new study provides the evidence to back up that belief.”

A Brief History

Before the Bayh-Dole Act (or University and Small Business Patent Procedures Act) was passed in 1980, university inventions subsidized by taxpayers typically languished on laboratory shelves and were rarely commercialized because of restrictive patenting and licensing practices. The Bayh-Dole intellectual property legislation allows university inventors to patent their discoveries and license them to companies with maximum flexibility and limited federal bureaucracy.

This gave birth the biotech revolution, creating products that improve public health, clean the environment and feed the population. “The United States leads the world in commercializing university-based research to create new companies and good, high-paying jobs throughout the company,” says Greenwood.

Run the Numbers

Dr. David Roessner, professor emeritus of public policy at the Georgia Institute of Technology’s Technology Policy and Assessment Center, led the BIO study. The report focuses on the financial impact, based on royalty data, of licensing university intellectual property. This is just one of the many ways biotech research benefits the economy (see chart).

Roessner and his fellow researchers based their estimates on Association of University Technology Managers annual survey data on licensing income. Though deals between university technology licensing offices and private firms take various forms, in many cases universities base licensing fees on the percentage of sales of new products developed using the university’s intellectual property. Using the AUTM data as a base, researchers then combined it with other data and used the Commerce Department’s Bureau of Economic Analysis input-output model to develop their estimates.

During the 12-year period studied, university licensing agreements based on product sales contributed as much as $457.1 billion to industry gross output. What’s more, university-licensed products commercialized by industry created at least 279,000 new jobs across the country between 1996 and 2007. And the annual change in U.S. GDP stemming from tech transfer grew each year, illustrating the ever-increasing importance of university patent licensing.

The economic significance demonstrates the importance of university-industry partnerships to biotech. “We cannot take tech transfer, or the U.S. patent system upon which it is based, for granted, particularly in the current economy,” Greenwood adds. “Preserving this system is critical to ensuring U.S. economic revival and spurring the next wave of American innovation in the life sciences.”