Transformative Technologies and the Internationalization of R&D

1. Transformative Technologies and theInternationalization of R&D Geoff Nimmo Industry Canada

2. Central Thesis Transformative technologies do more than change industrial processes. They change entire infrastructures, including governance and regulation. They do this in uneven ways, leaving some sectors unchanged, while destroying and replacing others. This results in a need to develop perspectives that elicit relevant nuances for industrial strategy.

3. Outline • Technology Dynamics • Diffusion of Innovation • Institutional Roles • Local – Global • Developed – Developing Issues Landscape • Considerations • Roles and Activities • Conclusions

4. Basic Questions • How to manage the ‘public good’ aspects of science? • In what way will biotechnology (and other technologies) be transformative? • Are radical changes in public policy needed, or will incremental changes work? • Where does burden of proof lie – with the status quo, or with potential future benefits? • How will interactions between transformative technologies and existing institutions merge to produce benefits?

5. Industrial Technologies (Dynamics I) Nano ICT Aviation, Petrochemicals, Electronics BIO ICE, Electricity, Chemicals Technology Intensity Steam, Rail, Steel Waterpower, Textiles, Iron 60 Years 55 Years 50 Years 40 Years 1800 1900 2000 1775

6. Industrial Technologies (Dynamics II) • Mature • Commodity pricing • Low risk • Full support infrastructure • Transformation Zone • New vs. Old • Risky vs. Safe • Unknown vs. Known • Opportunity vs. Stagnation • Growth • Standardization • Wide acceptance • Impacts understood • Developing • Rapid development • Increased acceptance • Growing support structure • Early • Competing concepts • High implementation risk • Unknown impacts

7. Information Flow Innovation Production Use Research Development Manufacturing Marketing Customer Support End User Valley of Death Sales Chasm Commercialization – Continuity of Interest Value Process Flow Diffusion of Innovation

8. Stakeholders • Government • Economic development • Regulations • Intellectual property • Conflict resolution • Business • Research and development • Market Development • Infrastructure and support • Financing • Non-Government Organizations • Represent specific public interests • Rely mainly on influence • Can (and do) appear anywhere • Driven by principles rather than practical issues Regional Global Local National

9. Issues Landscape • Science as public good • Global projects (Genome) • Regions (ERA) Global • Scale • Spread R&Dcost • Culture &customs TENSION Regional Government Business Non-Government Organizations Incentives for global outsourcing • Nat’l science agendas • Academic support • SMEs • Source ofbusinessmodel • Source ofIdeas National • Academia Local Research Develop Manufacture Market Support Use

10. Big Science • Considerations • Global impacts – new life forms, pandemics • Implications for global orgs: WTO, WHO, FAO, OECD • Large-scale projects (Human Genome) • Global assessment tasks – risk management, environment, systems • Global problems – security, climate, communications & transportation • Roles and Activities • Joint priority setting • Provide adequate funding • Extend/modify treaties

11. National R&D Agendas • Considerations • Specific national requirements • Security, environment, skills, international competitiveness • Specific national impacts • Environment, legacy industries • National values & ethics may differ (EU vs. NA) • Regulatory process built into legislation & jurisprudence • Temptation to use standards to create dominance • Roles and Activities • Identify national priorities • Co-ordinate R&D efforts • Create country linkages within innovation cultures

12. Academic Support • Considerations • Essential for moving science forward • Primary domain of pure research • Specific areas of expertise • Necessary for skills development & economic growth • Springboard for national positions in international debates • Roles and Activities • Participate in local technology clusters • Need greater sensitivity to end use of research

13. SMEs • Considerations • Primary vehicle for new technology exploitation • Engine of technological progress • Accept costs and risks of product development • Subject to threats due to loss of competitive advantage • Roles and Activities • Need to participate in cluster formation • Need to support infrastructure development • Maintain & support entrepreneurial posture • Focus on business model

14. Global Manufacturing • Considerations • Very cost conscious and competitive • Requires availability of labor, skills, resources • Takes place locally and globally • Offshore manufacturing a major issue • Pharmaceuticals exemplify a special case • Full supply can be produced in one production run • … but there could be many products • International co-operation needed to rationalize drug development • Roles and Activities • Production for global markets a nat’l strategy • May require new patent regimes • Integrate with other sectors for bio-economy (energy, agriculture)

15. Global Markets • Considerations • Area of considerable conflict and tension: • Local customs, standards and regulations • Need to accommodate many interests in one business model • Need economies of scale & distribute R&D costs • Grey markets, IP protection an issue • Strong NGO presence • May impact regulations, limit profit potential • Roles and Activities • Participate in global regulatory regimes • Foster adaptability, agility • Work with NGOs

16. Conclusions • Biotechnology experience demonstrates that the evolution and impact of transformative technologies on science and its internationalisation cannot be projected as a straight line from the past • Possible long term institutional shifts that will lead to increased internationalisation in regulatory science, and perhaps large scale public good projects • Incentives for the private sector to engage in many of the core areas of human health and agriculture have been reduced and the costs increased • Despite being the targets of resistance, MNEs are more likely to benefit from the institutional shifts than SMEs • Developing countries could leapfrog up the development ladder more rapidly through superior institutional readiness for transformative technologies • This could lead to a rethinking of the role of R&D in the acceleration of economic development in the the developing world