The University of Oregon has given the state of Oregon a 20-fold return on investment in 2004 and 2005, and the school’s tech-transfer office has contributed a significant but difficult-to-quantify amount to the ROI, according to a recent economic impact report by a university economist.
The tech-transfer office’s ability to commercialize products and spin off companies are two of several “multiplier effects” that greatly impact Oregon’s economy, according to the report. However, quantifying such effects remains extremely difficult using established economic-analysis techniques, the report’s author said, and as a result the report didn’t include revenues generated by the tech-transfer office in its calculations.
The report, entitled “A Study of the Economic Impact of the University of Oregon,” was authored by UO professor of economics Larry Singell in association with the UO Office of Public and Government Affairs and the Office of Resource Management.
Among the report’s major findings were that the university returned to the state approximately $1.2 billion while receiving around $59.7 million in state support. Singell estimated that of that $1.2 billion, the university yielded about $54 million in income tax revenue for Oregon, which offset more than 90 percent of state funding.
Other key findings included that Oregon taxpayers receive about $4.67 in tax revenue for every $1 of state funding invested in a UO student during the two-year period; that the 2005 graduating class will pay almost $280 million in state income tax over the course of their careers; and that more than 70,000 UO graduates reside in Oregon.
The report also identified several “multiplier effects” that contributed to the university’s return on state investment, including the school’s tech-transfer office’s ability to successfully translate basic university research into commercial products and create Oregon-based spin-out companies – many of which are in the life sciences – Singell and UO Office of Technology Transfer Director Don Gerhart told BTW.
According to Singell, these factors are very difficult to quantify accurately, and therefore the $1.2 billion in net state expenditures may actually be very conservative.
In 2006, the university’s tech-transfer efforts generated $4.3 million in revenues, the 11th straight year of record income for the university in this area, according to the report. Since 1982, UO has received 86 US patents and entered into 195 licensing agreements for campus-developed technologies.
In particular, Gerhart said that since the end of fiscal year 2002 UO has had 22 patents issued in the US, 21 of which have been licensed or optioned.
“Generally we’re a bit different than you might expect of a research university,” Gerhart said. “We do not have a large patent portfolio – it tends to be on the modest side. The program here is really drawn from the best elements of the Research Triangle [Park] area of North Carolina,” where Gerhart and vice president for research and graduate studies Richard Linton hail from, Gerhart said.
“We do our level best to link to the presence of the life sciences industry here in Oregon. “We also have a pretty good reach across the US and world, but where we can, we create a really effective and strong link to the state economy and to our local region.”
According to Gerhart, the school developed the world’s first transgenic vertebrate, the zebrafish, and is now one of the largest distributors of such animals in the world.
“That doesn’t provide any tech transfer revenue at the institution, but we have had a hand in working … to create, for example, click-through material transfer agreements that the NIH has added,” Gerhart said.
All told, he added, UO receives about $100 million per year in overall research funding, which is “substantially smaller than research institutes like Duke or Stanford, but the quality is quite good.”
According to Gerhart, perhaps the most important link between UO and the local economy is the university’s relationship with Invitrogen’s Molecular Probes business, which he said is the single biggest licensee of UO-developed technologies.
“That history goes way back, so there are lots of exchanges and connections between [Molecular Probes] people and the university’s research programs, as well as a pretty strong connection in terms of different licensing deals with Invitrogen,” Gerhart said.
When Invitrogen acquired West Eugene-based Molecular Probes in 2003, Gerhart said, the entire Eugene community “collectively held its breath” because of the uncertainty surrounding Invitrogen’s plans for Molecular Probes’ research center.
“But interestingly, Invitrogen has pumped more resources into the physical plant here in West Eugene, and expanded it so it’s a global R&D center for [the company],” Gerhart said.
Other recent UO biotech spin-offs include MitoSciences, which produces mitochondrial antibodies and mitochondrial toxicity testing services, and last year won the Angel Oregon investment competition; Electrical Geodesics, which manufactures high-resolution EEG measurement and analysis systems; FloraGenex, a plant genomics company; and Insignia Health, a Portland-based company investigating patient activation measures.
However, Singell told BTW that he didn’t include any revenue generated by UO’s tech-transfer office in his estimate of the university’s economic impact on the state. In the introduction to the report, he said he used “well-established economic techniques to project how the revenues and income generated by the [university’s tech-transfer office] affect the state’s income-tax base and its tax-revenue collections.”
He added that the report is “not meant to offer an exhaustive assessment of the UO’s fiscal impacts, but provides a point of departure for an evaluation of the return earned by Oregon taxpayers on their investment in the university based on sound economic principles.”
“Where we can, we create a really effective and strong link to the state economy and to our local region.”
“I took a relatively standard approach to how economists deal with this,” Singell said. “I make a disclaimer that this [figure] is actually conservative, because I don’t figure into it these types of benefits, which could potentially be very large, and for many institutions is actually very large.
“The report actually doesn’t say much about [tech-transfer office revenues] other than to talk about raw numbers of patents,” he added. “That type of stuff can be done, but we just don’t have the mechanism in our institution to separate out those independent effects.”
Anecdotally, however, Singell said it was easy to conceive of how multiplier effects such as technology commercialization could significantly affect the local economy.
“Let’s say the UO starts a biotech company,” Singell said. “In order to do that, we need to build a building. In order to do that, we need to hire a contactor, and purchase materials, which are likely to be local. Those contractors are going to have to hire local people. So typically it will go through the economy more than once.
“There is a reasonably regular type of prediction you can come up with as to how often a dollar circulates through an economy, but it’s much harder to get a handle on ‘this invention happens, and that leads to an invention over here,’” Singell added.
Singell added that UO is an example of how the “modern university is going to change a lot” in the coming years because of tech-transfer efforts enabled by the Bayh-Dole act.
“This [has] been discussed a lot by economists at the meetings I go to,” Singell said. “It’s fundamentally changed the way in which universities operate. It’s having the desired effect in the sense that there is a lot of human capital in an institution that historically has not looked at commercial applications, simply because there was no advantage to it.
“Now, with Bayh-Dole, it’s created an incentive structure for academics to potentially look for; for companies to find academics that might suit them; and then for universities to serve as intermediaries, because they get to keep some of this money,” he added. “With the pressures that these public and private universities are facing – particularly public, with cutbacks in state funds – they’re really looking for these types of opportunities. It’s only going to get larger.”