Keynote Address

Norbert Riedel
Baxter International

Dr. Riedel expressed his pleasure at being able to discuss innovation, innovation clusters, and an innovation ecosystem with the conference attendees. “Of course,” he began, “I do it in the context of asking why innovation is such a strong focus here, and why we need to stay focused on innovation. The obvious answer is because our society, like our global economy, depends on innovation to drive industry’s economic progress and also to provide solutions to other large challenges,” including provision of healthcare, food security, drinking water, clean energy sources, and others.

“I don’t believe those challenges can be addressed without making sure innovation is in the forefront of everything we do,” he said. “For Illinois in particular, we must as a community do a much better job in creating industries that are technology-based, create high-paying jobs, and make us more visible on the map of an ecosystem.”

“When I ask in particular what it is that creates and defines an ecosystem,” he said, “I think it is important to recognize the parts of the value chain that lead from discovery of a concept all the way to the commercialization of that concept. I believe that in our ecosystem there are players involved early in the process, who help advance technology toward the marketplace, and then others who help it reach the marketplace through interdependencies and a value chain where everybody has a well-defined role. That, in my view, is part of what we are trying to do and what we have to a large extent done here in Illinois.”

At a recent meeting, he said, he asked himself what it takes to create innovation hubs and truly substantive networks, and why five or six years ago Illinois had yet to develop them. “I now believe,” he said, “that we have what it takes, and that we have created an ecosystem that in 2006, 2007, and 2008 did not exist.” The challenge for today is to drive more critical mass into that ecosystem, he said, but he finds himself less often asking what is missing in Illinois.

How has this happened so quickly? First was the “obvious correlation between innovation on one hand and highly skilled and trained individuals on



The National Academies | 500 Fifth St. N.W. | Washington, D.C. 20001
Copyright © National Academy of Sciences. All rights reserved.
Terms of Use and Privacy Statement



Below are the first 10 and last 10 pages of uncorrected machine-read text (when available) of this chapter, followed by the top 30 algorithmically extracted key phrases from the chapter as a whole.
Intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text on the opening pages of each chapter. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

Do not use for reproduction, copying, pasting, or reading; exclusively for search engines.

OCR for page 100
100 BUILDING THE ILLINOIS INNOVATION ECONOMY Keynote Address Norbert Riedel Baxter International Dr. Riedel expressed his pleasure at being able to discuss innovation, innovation clusters, and an innovation ecosystem with the conference attendees. “Of course,” he began, “I do it in the context of asking why innovation is such a strong focus here, and why we need to stay focused on innovation. The obvious answer is because our society, like our global economy, depends on innovation to drive industry’s economic progress and also to provide solutions to other large challenges,” including provision of healthcare, food security, drinking water, clean energy sources, and others. “I don’t believe those challenges can be addressed without making sure innovation is in the forefront of everything we do,” he said. “For Illinois in particular, we must as a community do a much better job in creating industries that are technology-based, create high-paying jobs, and make us more visible on the map of an ecosystem.” “When I ask in particular what it is that creates and defines an ecosystem,” he said, “I think it is important to recognize the parts of the value chain that lead from discovery of a concept all the way to the commercialization of that concept. I believe that in our ecosystem there are players involved early in the process, who help advance technology toward the marketplace, and then others who help it reach the marketplace through interdependencies and a value chain where everybody has a well-defined role. That, in my view, is part of what we are trying to do and what we have to a large extent done here in Illinois.” At a recent meeting, he said, he asked himself what it takes to create innovation hubs and truly substantive networks, and why five or six years ago Illinois had yet to develop them. “I now believe,” he said, “that we have what it takes, and that we have created an ecosystem that in 2006, 2007, and 2008 did not exist.” The challenge for today is to drive more critical mass into that ecosystem, he said, but he finds himself less often asking what is missing in Illinois. How has this happened so quickly? First was the “obvious correlation between innovation on one hand and highly skilled and trained individuals on

OCR for page 100
PROCEEDINGS 101 the other.” This was the responsibility primarily of academic centers of excellence, he said, of which there are many in Chicago and Illinois. “Whether you measure excellence by the number of degrees we give in the life sciences and engineering, by the amount of intellectual property being filed, by the inventions that come from our academic centers, I think it is fair to say that we stand out—not only within the United States, but at a global level.” He praised also the clinical centers of excellence in Illinois’ “fantastic” medical schools. “We conduct hundreds of clinical trials annually, not just for Illinois-based companies but for global companies that seek clinical studies in our centers of excellence.” Despite this excellence, he said, the extent to which Illinois and Chicago is a hub for large healthcare companies is largely unrecognized. “I believe we are the largest hub of healthcare/pharma in the country by now,” he said, “especially with the downsizing that has occurred on the East Coast and certainly in comparison to the West Coast, where the strength is primarily in biotech. With Abbott, Baxter, and others, we have a large number of companies headquartered here where they have been for decades. This local ecosystem is a critical element in driving innovation to commercialization.” He also cited “unusually successful partnerships with the state and the city government.” He said that the Department of Commerce and Economic Opportunity had worked with the industry to locate the Annual International Convention of the Biotechnology Industry Organization, or iBIO, in Chicago in 2006 and 2010, and to repeat as host in 2013 and 2016. “I think this is an important element in creating visibility and transparency,” he said. He described both local alliances, including partnership with i-BIO and “a community spirit that is very important in building this infrastructure.” This was reflected in the new facilities in Skokie, Illinois Institute of Technology, the Illinois Medical District, and the University of Illinois Technology Park, which “for the most part, are filling up to capacity. This clearly shows that we are building jobs, companies, and a technology-based industry. The industry has first-class IP law firms, and a relatively large number of start-ups and new companies. “Just five or six years ago we would have selected them by name because we only had a handful. Now we have many, and the growing numbers clearly show that we are building an infrastructure here and an economy here that is technology based.” Technology transfer is improving steadily, he said, as university offices become more adept at interfacing with industry and creating transparency to the vast portfolios of intellectual property. INVO, the Innovation and New Venture Organization at Northwestern, is not only a tech transfer office but “really an organizational framework that recognizes and finds innovation and spins that innovation into new startups.” There is also more venture money in the region, he said, beginning to provide essential funding for young firms. Baxter was part of a new $200 million fund started the year before, which joins the funds of Abbott and several others totaling more than $500 million available for equity investments. “We support these funds not only because we have a strong interest

OCR for page 100
102 BUILDING THE ILLINOIS INNOVATION ECONOMY in helping to build an economy here,” he said, “but also for the selfish reason that if I have a partnership with universities or new enterprises, proximity matters. Proximity is vitally important for the vital alignment between a small company and a large company, as it is for interaction and personal partnerships.” He emphasized one point, he said, because of his European background and his frequent traveling. That is, the United States has a unique ability to form close partnerships between academic centers of excellence and industry. “We have so much fluidity, because we meet so often through joint appointments, academic visits to our labs, and students working in our labs. I believe we need to nurture this unique ability. I see it as a genuine competitive advantage to most of the world.” INVO, the Innovation and New Venture Organization of Northwestern, has about 30 companies in its portfolio, representing about 300 jobs and more than $200 million in successful fundraising. “This is another clear sign that the system is working and actually delivering,” he said. He turned to the Illinois Innovation Council, created by Governor Quinn, and said that its primary focus is to showcase the innovation excellence of Illinois in both academia and industry—not only in health care, but across agricultural, industrial and other applications of technology. “This is brought about by a combination of our great location as a transportation hub, the efficiency of O’Hare, and the beauty of the Midwest. A big opportunity is to make sure that when we travel around the world, we act as ambassadors for the state of Illinois and educate others about what we have,” he said. “Other people are surprised to learn how much we have here.” The second priority of the Innovation Council, he said, is to create jobs—“well-paying jobs that can sustain an economy.” The third priority is to improve education. “When I look around the United States, but also when I travel the world, it is deeply concerning to me how far we are behind in STEM education. This is without any question the vital line between our remaining innovative or not. I’m also concerned that many students who receive the best education in the world here go back home to compete with us head to head. We need to find new ways of retaining them and ensuring that they contribute to our country and our goals here in this state.” The reason behind his emphasis on education, he said, is its fundamental importance to sustainability. “We are doing a number of things as a company, such as iBIO, and in collaboration with the state and city governments to make sure we provide enough funding for Chicago public schools, create opportunities for students to learn about science, have basic equipment in the labs, and make sure the teachers are capable of teaching science at every level. This is what we need if students are to be prepared and enthusiastic about entering STEM educational paths.” He offered examples from the iBIO educational program, which has provided more than 500 teachers with a degree of professional development, problem-based learning, and the ability to teach science. It has also initiated a science investigation database where students can look up career opportunities

OCR for page 100
PROCEEDINGS 103 and industry data both in science and related fields. “It provides them with a much-needed understanding of what these industries look like and what they can accomplish. Another program provides after-school science teaching for girls.” He summarized his talk by saying that “over the last few years we have done a pretty impressive job in building an ecosystem here in Illinois that is technology based.” He attributed this in large part to a new spirit of community among academic centers of excellence, industry, small and large companies, and also the governments of state and city. “We all understand better what it takes to do this,” he said, “and do it well. It is a matter of driving it and improving it to create more and more opportunities for us to become what I believe we can become, namely a technology hub in the country that can easily measure itself against the East Coast and the West Coast. “What I think speaks for us in particular is technology applications across healthcare, agriculture, and industrial applications, for which we are particularly well suited. What we need to pay attention to, as I mentioned, is transparency and making innovation more visible, and being willing to talk more about it outside of Chicago and the state. We also need an even stronger effort in advancing STEM education, because otherwise what we are doing cannot be sustained. “I am very optimistic, and I am also cautious. I don't want to become too confident with what we have accomplished. But as the industry representative at the symposium here, I think we can look back and say we have begun to build the ecosystem. So let’s continue to build it, make it larger with respect to the jobs it creates, make it better known with respect to opportunities it creates, and move innovative solutions to the marketplace.” DISCUSSION Cmdr. Walker of the U. S. Naval Reserve asked whether the venture capital money available in Illinois had increased or decreased. Dr. Riedel said he was quite involved with a large network of VC firms, and said that funding of very early-stage discoveries is difficult to find. For later-stage developments it is easier “and continues to be very achievable.” He said that many companies have managed to attract funding in Illinois rather than the old custom of moving to the East Coast or West Coast to catch the attention of VC firms. He said that in the cases of very early-stage development, corporate venture funds have an important role. “The Baxter fund I mentioned is comfortable investing early on, when technology is spun out for the very first time, so we are trying to bridge the valley of death gap that needs to occur. I am concerned about using the easy excuse of being unable to create technology-based companies simply because there is not enough venture money. When there is good technology, you can be certain there will be venture people who recognize that and invest in it. I am very, very confident of that.” Dr. O’Halloran said that Dr. Riedel had painted a “fabulous portrait” of recent progress. He said that a key asset still not being unlocked in the Chicago

OCR for page 100
104 BUILDING THE ILLINOIS INNOVATION ECONOMY region are the academic discoveries, which are “almost by definition” those in need of early-stage venture funding. He asked Dr. Riedel what percentage of the new Baxter fund will be aimed at early stage, and where could similar small, well-targeted funds be created. Dr. Riedel emphasized the importance of transparency for the portfolio of innovations within the universities. “That is why I mentioned INVO, because traditionally it is hard for someone like me to know what you have that I could tap into. I think INVO is doing a great job making the pipeline of innovation more visible and accessible. Once I recognize an innovation that I like, I have multiple mechanisms for investing. We have partnerships with Northwestern and the University of Illinois where we put seed funding into laboratories. The goal is not to influence the research but only to support research we recognize to be attractive. When that research matures, Illinois Ventures39 can be the obvious next vehicle to help to spin it out. I think it is more about the mechanisms of doing it than about the funding itself. I cannot imagine that we would be limited by resources if indeed we have a recognizable, logical path. I will always be as critical of research here as I would be of research anywhere, because I consider innovation to be independent of location, but if I can get it here, I want to stay here because of the importance of proximity.” A questioner asked whether the venture community might direct more of their funding toward early-stage research. Dr. Riedel said that the venture funds he knew were most interested in syndicate investing after the proof of principle or pre-clinical work had been done. “I think they expect corporate strategic funds to take on that early financing responsibility. I don’t think their investors have the patience to wait the 10-plus years for returns.” Dr. Wessner asked whether the size of corporate funding programs was large enough to meet the needs of early-stage firms. Dr. Riedel said he thought it was. He said that a typical start-up might need about $1 to $5 million initially, in which case the $200 million Baxter corporate fund would be able to engage in “quite a few equity investments on an annual basis, and that’s just speaking for one company. I think the critical phase of enabling technology to go from an academic lab into a startup is a very modest investment, and yet it brings validation that can attract more funding. In our environment, where large companies are desperate to acquire technologies and products, you will find more acquisitions and partnering early on. So I don’t think the venture money per se is insufficient.” 39 Illinois Ventures is a seed and early stage technology investment firm with a focus on Midwest universities and federal laboratories. .