The U.S. biotechnology industry is growing very rapidly. In 1990 it had sales of $2 billion. For the year 2000 sales estimates of the U.S. industry vary from $30 billion to more than $70 billion. Biotechnology will be a major factor in the health care industry, even though sales of biotechnology products will represent less than 10 percent of the total. By the year 2010, the role of biotechnology in health care will increase substantially. During the 1990s, many more biotechnology companies will be created than the number that go out of business. The total number of companies will continue to increase, particularly in the health care area. Consolidation of the health care industry will be very slow.

This dynamic industry has emerged from the world's premier science and technology base in the United States and America's venture capital/ public market system. In order for the U.S. biotechnology industry to remain strong, however, it is not enough to do good R&D and create research companies. A new generation of scientists and engineers must be trained. Heavy capital investments in manufacturing technology, product improvements, and global marketing of products also are essential. The new ideas created in the laboratory must be taken to the market, and the market is more and more a global one.

A primary conclusion of the NRC working group is that cooperation between the United States and Japan in biotechnology is inevitable and desirable as we move toward a global market, but policy must be developed. The United States and Japan have different resources to bring to bear in developing biotechnology, as a result of striking differences in the two countries' research systems, industrial structures, regulatory regimes, patterns of disease and food products, drivers of capital market systems, and customer access and delivery. To achieve the potential gains from these differences, however, U.S. firms will need to develop careful strategies that focus linkages with Japanese firms on areas where technology transfer is feasible, such as bioprocessing. U.S. firms that want to do business in the Japanese market and tap into Japanese technology will need to develop effective ways of operating in Japan. Increased cooperation among U.S. companies also is desirable.

There are good reasons to suggest that special efforts will be needed by U.S. government, industry, and academe if the benefits of cooperation with Japan are to be maximized. The danger is that, if conscious strategies are not developed by the U.S. participants to increase inflows of technology from Japan and to expand marketing and sales in Japan, the net result of increasing technology linkages in biotechnology will be to create significant competition from Japan without strengthening the ability of U.S. firms to compete and commercialize technologies. There are powerful forces driving small innovative U.S. biotechnology firms toward relationships with large capital-rich Japanese firms. These forces include the need for infu-

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