each year during the decade of the 1980s, over 1,000 in the last 20 years. The biotechnology and pharmaceutical industries have been rated as second only to the computer software and services sector in terms of total value creation among U.S. high-technology companies founded since 1965.3

Is this rosy view of U.S. preeminence_across the board from basic to applied biotechnology R&D, to commercialization and global market competitiveness_accurate and will it persist? 4 Another, perhaps better, way to pose the question is to ask whether the United States will remain competitive and reap a "fair share" of future profits from the significant investments made in biotechnology. These broad questions set the context for this report, which assesses technology linkages between the United States and Japan. The purpose of this study is not only to examine the scope and nature of technology linkages between the United States and Japan but also to consider the forces behind these linkages as well as the future impact on competitiveness for the organizations involved and for the United States as a country.

To summarize some of the major themes, the study suggests that there are a number of powerful forces driving an expansion of technological linkages of many types between the United States and Japan. We are moving toward a global economy, and the desires of large Japanese companies, both pharmaceutical companies and ones doing business in unrelated fields, to access technology developed in the United States and to compete globally are important contributing factors. Japanese firms see biotechnology as a way to use scarce resources to improve their productivity and international competitiveness. For nonpharmaceutical companies, biotechnology is a technological tool allowing diversification into new, higher value-added product areas. From the U.S. perspective, a driving force for small innovative biotechnology firms is the need for capital to fuel their R&D, thus stimulating relationships of various kinds with large capital-rich Japanese companies. Another stimulus is the desire of large U.S. pharmaceutical companies and biotechnology firms to access the Japanese market.

Increased cooperation between the United States and Japan is desirable and inevitable as biotechnology becomes part of an increasingly global economy and technology base. In this context of increasing cooperation, the question is whether the U.S. biotechnology industry will continue to compete effectively. To do so, it will be necessary to structure technology linkages with Japan to ensure that U.S. participants gain clear benefits.

This study documents a prevailing pattern of transfer of biotechnology developed in the United States to Japan during the past two decades. The analysis in this report suggests that the linkages formed so far serve as

3  

See Arthur D. Little and HOLT Value Associates, "The Upside 100," Upside, December 1990, p. 25. Value creation was measured in a number of ways, including shareholder value, for each firm since its establishment.

4  

For a more sober view, see President's Council on Competitiveness, op. cit.



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