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IN SEARCH OF IMPACT AND OUTCOME INDICATORS BASED ON VANCOUVER BIOTECH CLUSTER STUDIES

IN SEARCH OF IMPACT AND OUTCOME INDICATORS BASED ON VANCOUVER BIOTECH CLUSTER STUDIES. Monica Salazar & Adam Holbrook CPROST-Simon Fraser University Vancouver, Canada. Outline of presentation. Introduction: need for new indicators

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IN SEARCH OF IMPACT AND OUTCOME INDICATORS BASED ON VANCOUVER BIOTECH CLUSTER STUDIES

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  1. IN SEARCH OF IMPACT AND OUTCOME INDICATORS BASED ON VANCOUVER BIOTECH CLUSTER STUDIES Monica Salazar & Adam Holbrook CPROST-Simon Fraser University Vancouver, Canada

  2. Outline of presentation Introduction: need for new indicators 1. Overview of Vancouver biotech cluster, compared to Montreal and Toronto 2. Role of universities: inputs (public R&D funding) and outputs (patents, scientific publications) 3. Outcomes of R&D funding: commercialization of research, venture capital financing, employment 4. Conclusions

  3. Statistical issues • Definition: biotechnology vs life sciences • Human health biotech: our focus • SMEs vs multinational pharmaceutical companies • SMEs mainly, usually called “SBF” • Data at provincial or city level • Clusters in Canada are limited to a single city or metropolitan area: need of data at city level • 2001 is the reference year (as much as possible) • Normalization: population, HQP, innovative firms

  4. 1. Comparison of Canadian biotech clusters(Stat Canada Biotech Survey 2001)

  5. Vancouver: distinct characteristics • Firms recognize the cluster: 59% • Networking patterns and interaction between various actors: • No vertical integration • Neither horizontal integration nor competition among firms • Each firm works in specific niche of technologies or products, knowledge coming from local researchers • Little local manufacturing, IP producer • No competition for local talent • Competition for venture capital financing

  6. Location, location, location • Role of location and lifestyle are contributing factors, for instance: • Why located in Vancouver: 85% founders from the city, with local connections (labs), (and city is nice) • Advantages of the city: cluster existence and facilities -R&D labs, VCC, CROs- associated with it (and city is nice) • Factors contributing to growth of the cluster and the firms (most important first): • research institutions, • supply of workers with particular skills, • co-location with other firms in the same industry, • educational and training institutions.

  7. 2. Role of research institutions: Inputs and Outputs • Biotech industry: research dependent, though • universities and public R&D funding are essential. • Universities are a necessary but not sufficient condition for cluster emergence. • Regions must offer fertile climate and soil to allow seeds from universities to flourish.

  8. R&D funding for biotech 2001 (CIHR and NSERC biology)

  9. Tests to qualify impact of R&D funding in cluster creation and development(Clayman & Holbrook, 2003) • R&D intensity: R&D expenditures normalized by HQP • “Productivity” indicator in terms of IP (allocation mechanisms) • HQP intensity: HQP normalized by labour force • R&D intensity and HQP intensity • Measure of receptor capacity

  10. Year-to-Year Changes in NSERC R&D Intensity for 15 Major Cities

  11. Year-to-Year Changes in CIHR R&D Intensity for 15 Major Cities

  12. Patenting activity • Output measure of R&D activity • Relationships through patents between companies and researchers, involvement in creation of start-ups (economic relations) • Patents as a knowledge spillover measure • Number of patents and patent citation real factors of employment growth in biotech companies (Queenton & Niosi)

  13. Bio-scientists U.S. Patents by Canadian cities in 2002(Queenton, 2004)

  14. Scientific publications • Publications more or less follows the R&D funding pattern, although … • Vancouver bio-scientists publish less per millions of dollars invested (public R&D funding). Why? • One possible answer is the closer relationships these researchers have with local firms.

  15. Scientific publications

  16. Measures of biotechnology activity in metropolitan centres(VEDC, 2002)

  17. Measures … cont.

  18. 3. Outcomes of R&D funding • Commercialization of research: hot topic • Licensing (patents) • University spin-offs: no official collection of statistics • Venture capital raised • Human resources: HQP, employment creation/growth, attraction and retention of talent

  19. Biotech spin-off companies 1995-2001(Holbrook & Clayman, 2003)

  20. Venture capital financing $M(MacDonald & Assoc.)

  21. Venture Capital and CIHR Funding Per City 2000-01 to 2003-04 (NRC & SECOR, 2004) $600 000 $500 000 Venture Capital CIHR Funding $400 000 Funding ($1000s) $300 000 $200 000 $100 000 $- Halifax Ottawa Calgary London Quebec Toronto Montreal Kingston Winnipeg Edmonton Saskatoon Vancouver City

  22. Human resources, talent & employment • Input (HR, HQP) and outcome (employment) • New economic geography of talent • Relations between talent and quality of life of places (R. Florida) • What is the impact in cluster emergence and development? (firms follow people) • Industrial agglomeration: economic, social & cultural factors • Vancouver is attracting people: 70% top management have Ph.D. degrees from non-local universities (new data being collected) • Bio-scientists play a major role in the location and growth of firms • Vancouver firms have a different employment structure

  23. Human resources data(Stats Canada)

  24. Distribution of biotech employees in innovative firms (NRC & SECOR, 2004)

  25. Conclusions • Identified factors and conditions that contribute to the emergence and success of regional clusters [Vancouver]: • Strong university research-oriented [UBC], • Funded by public granting agencies [not as important], • An entrepreneurial spirit [crucial], • Availability of venture capital [critical], • A favourable location and environment, so that talented people is attracted to these places [sticky labour market]. • Research capacity is a necessary but not a sufficient condition.

  26. What do the indicators tell us? • Is Vancouver significantly different in structure, not just size, from Toronto and Montréal? • Is Vancouver biotech industry an emergent or a research-based cluster? • Vancouver is a R&D-based cluster: local firms invest more on R&D, large pool of bio-scientists, who are highly productive (patents), firms employ more scientists and technicians, and there is little manufacturing. • Why do Vancouver perform well in outcomes, but not very good in inputs and outputs? Are we measuring the right issues? Need for new indicators.

  27. Is Vancouver a viable cluster? • The model of being an IP producer cluster seems to work. • It seems that we do not need a manufacturing facility or pharma company to further develop the cluster. • If the largest local company were to relocate or disappear it is unlikely that the cluster would be jeopardized. New ideas, new firms, new people will come. • Policy advice: environment is key; more R&D money would be good. • Need of longer-term studies.

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