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BIO Report, Survey Reveal Importance of Academic Tech Licensing to US Economy

NEW YORK (GenomeWeb News) – The licensing of inventions by academic institutions to corporations contributed as much as $187 billion to the US gross national product and $457 billion to US gross industrial output, and created nearly 300,000 new jobs from 1996 to 2007, according to a report released Wednesday by the Biotechnology Industry Organization.

In addition, a survey of BIO's member companies revealed that more than three-quarters of those polled have a technology-licensing agreement with an academic institution or other company, and about half were founded upon such an agreement, BIO said.

According to BIO, the results of the study and survey underscore the importance of the Bayh-Dole Act – which grants academic institutions performing federally funded research ownership of their inventions – to the US economy.

"It has long been believed that the Bayh-Dole Act … is a critical factor in driving America's innovation economy," BIO President and CEO Jim Greenwood said in a statement. "Indeed, because of this inspired piece of legislation, the US leads the world in commercializing university-based research to create new companies and good, high-paying jobs throughout the country. This new study provides the evidence to back up that belief."

The BIO report and survey come during a time when both academic and life science patenting have been under attack from several fronts, such as pending federal patent reform legislation that has contained provisions seen as detrimental to both sectors; myriad lawsuits questioning core issues such as patentability, ownership, and patent claims construction; and various academic reports asserting that patenting stifles, not promotes, innovation.

"We cannot take tech transfer, or the US patent system upon which it is based, for granted, particularly in the current economy," Greenwood said. "Preserving this system is critical to ensuring US economic revival and spurring the next wave of American innovation in the life sciences."

The research study, funded by BIO and conducted by a group of consultants headed by David Roessner, a professor of public policy emeritus at the Georgia Institute of Technology and associate director of the science and technology policy program at SRI International, examined annual university licensing survey data collected by the Association of University Technology Managers during the 12-year period ending in 2007 – the most recent year for which AUTM has released such data.

The study's authors combined the AUTM metrics with other data and used the input-output model used by the US Department of Commerce's Bureau of Economic Analysis to estimate the annual national economic impact of university-licensed products that have been commercialized and generated sales.

The estimates included measuring the change in gross output of all industries due to the university-licensed products in the marketplace, and the impact on GDP of university-licensed products.

The model generated annual values for sales revenues using a range of assumed royalty rates paid by industrial partners to academic institutions. The authors wrote that a "moderately conservative estimate" based on 5 percent royalty rates yielded a total contribution to GDP for the 12-year period of more than $82 billion. Using the range of royalty rates, the researchers estimated that university licensing agreements based on product sales contributed at least $47 billion and as much as $187 billion to the GDP.

In addition, the researchers examined the impact of technology licensing on the US gross industrial output, which combines company sales generated by licensing agreements; additional income and research funds attributable to the licensing; and changes in gross output of all other industries that directly and indirectly provide inputs to the universities.

Again, using a moderately conservative estimate based on a 5 percent royalty rate yielded an estimated impact of university licensing on total industry output of $195.6 billion over the 12-year period. Overall, the researchers estimated that the total contribution figure is at least $108.5 billion and as much as $457.1 billion.

Other key findings of the report include: an estimated 279,000 jobs can be attributed to academic technology licensing; and the annual change in US GDP attributable to university-licensed products grew each year during the period studies, "illustrating that the impact of university patent licensing grows even more important each year," the authors wrote.

The full study, entitled The Economic Impact of Licensed Commercialized Inventions Originating in University Research, 1996-2007, is available for download here.

Meantime, the survey of 150 BIO member companies in the therapeutics and diagnostics space – most of which employ fewer than 100 people – provided several insights into the importance that patenting and licensing has played in their creation and growth.

Specifically, the survey revealed that a majority of biotechnology companies' licensing agreements are with universities (76 percent) and other pharmaceutical/biotechnology companies (77 percent). In addition, 71 percent of respondents indicated that more than half of their licensing agreements are with US-based entities, "reflecting US leadership in technology transfer and biotechnology innovation," BIO said in a statement.

Other key findings of the survey include: half of the surveyed companies said they were founded on the basis of obtaining a license to specific technology; 79 percent of companies believe that exclusive licenses are critical to their ability to research, develop, and commercialize a product; and many companies experienced their most significant growth in the two- to five-year period following the completion of their first licensing agreement.

A compilation of the survey results is available for download here.