U.S.-Japan Technology Linkages in Biotechnology Challenges for the 1990s (1992) / Chapter Skim
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3. TECHNOLOGY LINKAGES-SCOPE, SIGNIFICANCE AND TRENDS
3. TECHNOLOGY LINKAGES-SCOPE, SIGNIFICANCE AND TRENDS
Pages 13-44
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From page 13... ...
These technologies, which emerged from universities and national research institutes, were public and widely diffused, stimulating the formation of new biotechnology firms by venture capitalists in association with entrepreneurs and university research scientists. In 1981, a peak year for the formation of biotechnology fields, almost 70 new companies were established.
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From page 14... ...
The major motivation for these linkages was to access technology developed in the small biotechnology firms in order to commercialize it and to bring the technology in-house over time.21 Universities and other research institutions continue to be critical actors in biotechnology research. As noted earlier, basic research in biochemistry and molecular biology at universities can lead directly to commercial applications.
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From page 15... ...
SOURCE: PaineWebber, Inc., December 1991. ties become not only scientific leaders but also entrepreneurial leaders in the new biotechnology firms.
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is dwarfed by the investments made by companies.26 The Japanese government, particularly the Ministry of International Trade and Industry (MITI) , nevertheless played a significant role in ~ __ J ~ -~ ~ r A 23Toyota is beginning biotechnology research in its corporate laboratory, according to a December 20, 1990 report of the Nihon Keizai Shimbun (in Japanese)
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From page 17... ...
First, the definition of biotechnology used by the Japanese government appears to be broader than that used in the United States, which would introduce an upward bias in the figures. Second, the figures do not include loans made through the Japan Development Bank, loans through the Small and Medium Size Business Program, and sizable tax breaks on R&D and the purchase of laboratory equipment.
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From page 18... ...
Items that have an impact on biotechnology but that do not appear in the budget include private sector funding for university research adminis tered by the Ministry of Education, extramural support for Ministry of Health and Welfare research institutes, loans extended through the Japan Development Bank and the Small- and Medium-Sized Business Program, biotechnology-oriented ERATO programs administered by STA, and R&D subsidies given as tax breaks.
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From page 19... ...
One indicator is the fact that they have filed many pharmaceutical patents in the United States. These patents are cited often, but they are less science intensive than the U.S.-origin patents filed at the same time.3t In terms of new nonbiotechnology drugs introduced into the market, the growing contributions of large Japanese firms are clear.
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From page 20... ...
A distinguishing characteristic of large Japanese firms, particularly pharmaceutical firms, seems to be their interest in using biotechnology as the driving force in their attempt to become serious global players, rather than as a complement to established business activities. COMPANY-TO-COMPANY LINKAGES BETWEEN THE UNITED STATES AND JAPAN Few studies exist that focus explicitly on technology linkages between U.S.
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From page 21... ...
and Japanese firms was of the first type_ a transfer of technology developed in the United States to a Japanese company through a licensing or marketing agreement. About half of the linkages included in the data base involved licensing of rights to manufacture a product (23.8 percent)
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From page 22... ...
SOURCE: North Carolina Biotechnology Center, Institute of Biotechnology Information, Actions Database. technology linkages established to date have focused on the health care sector, it is important to remember that linkages in biotechnology applications in agriculture, the environment, and bioelectronics will probably increase in the future.
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From page 23... ...
firm Large Japanese firm Nonhealth care Small U.S. firm 31 Small Japanese firm All markets 160 154 90 There appears to be an increase in the importance of marketing agreements over time, but the proportion of linkages in which technology flows to Japan has remained constant.
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From page 24... ...
and Japanese firms.37 In joint ventures and joint development projects, there may be opportunities for technology transfer from Japan to the United States. In only a few unusual instances such as the Kirin-Amgen joint venture, however, is there clear evidence of a two-way flow.
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From page 25... ...
This report indicates an upswing in codevelopment ventures with non-Japanese firms and a definite decline in cross-licensing. During the 3-year period, new licensing from foreign firms and codevelopment with non-Japanese firms made up 22 and 38 percent, respectively, of the total 226 cases.39 It may be that Japanese pharmaceutical companies are becoming more interested in codevelopment with foreign partners, but there is no way to determ~ne whether the major activity is in biotechnology.
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From page 26... ...
Biotechnology A C B importance Justifies existence Enabling technology New products and technical focus and toolbox; some critically important new products Importance of company-company linkages C Develop own Japanese subsidiary with R&D, manufacturing, and marketing strategy to strengthen distribution Must make alliances with Japanese companies to have access to capital and Japanese market B Must introduce newly developed product and enter European and U.S. markets Global presence C A B Objective is to Global orientation Global strategy to become self- critical for long- enter U.S.
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From page 27... ...
The United States is the world's largest pharmaceuticals market; as such, LJCs need to penetrate it.40 Another factor that is just as important in stimulating linkages between LJCs and SBFs is a desire to access products and technology developed in the United States. From the perspective of an SBF, linkages are essential under current conditions in order to obtain capital needed to support it&D-intensive operations and gain access to the Japanese market.
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From page 28... ...
LUCs, in contrast, take a more defensive approach to technology linkages, particularly with Japanese firms.
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From page 29... ...
pharmaceutical firms is beyond the capabilities of most of even the largest Japanese pharmaceutical companies. Their general unfamiliarity with the U.S.
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From page 30... ...
Following an apparent takeover attempt of Shaklee Corporation by Irwin Jacobs, Yamanouchi moved expeditiously in March 1989 to acquire the company for $395 million, presumably to protect the 78 percent interest in Shaklee Japan KK, which it had acquired the previous month. Although the Shaklee acquisition is outside the pharmaceuticals sector, it demonstrates that Japanese pharmaceutical companies can act quickly when necessary to shore up their strategies.
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From page 31... ...
Another of Hungary's premier pharmaceutical companies, Egis Pharmaceuticals, signed a funding and cooperation agreement with Japan Tobacco in May 1991. This comes on the heels of several investments by Japan Tobacco in U.S.
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In addition, the relative lack of liquidity of the stocks of most small biotechnology companies makes them unsuitable for the large funds typically managed by Japanese institutions. Venture capital is increasingly talked about in Japan, but a significant domestic venture capital industry has yet to emerge.
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One Japanese expert estimated that 10 years from now, Japanese companies will be spending $3 billion annually in U.S. universities.s° In 1990 the Japan Productivity Center sponsored a survey of how Japanese firms are using foreign universities and research centers.
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From page 34... ...
A prominent example, mentioned above, is the investment of $85 million by Shiseido to establish the world's first comprehensive cutaneous biology center at Massachusetts General Hospital, Harvard University's largest teaching hospital. In this case a sponsored research agreement was negotiated that outlines patent protection, salaries, direct and indirect costs, and relationships with other sources of funding.
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From page 35... ...
Almost two-thirds of the Japanese researchers who spent more than 1 month at U.S. national research institutes in 1988 were reportedly carrying out research in biotechnology.54 It is estimated that there are 450 researchers from Japan at NIH, out of a total of 1,800 foreign researchers.55 While data are inadequate to provide an accurate estimate of the exchange of U.S.
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From page 36... ...
universities, and the growing number of Japanese researchers in the nation's premier public sector biotechnology laboratories. These debates have drawn attention to the question of whether the end result will be to build a formidable competitor in Japan's biotechnology industry.
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From page 37... ...
Questions of reciprocity also arise in the context of participation in international conferences and dissemination of research results through professional journals and data bases. There is no satisfactory way to judge the numbers of Japanese researchers attending conferences in the United States or other locations or to draw firm conclusions about their contributions to professional organizations as paper presenters and program organizers (as contrasted to registrants who come to listen)
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From page 38... ...
Japanese scientists, from industry as well as academe, participate significantly not only in attending meetings but also in conference planning, authoring papers, and subscribing to publications (see Tables 7a, 7b, and 8~. To better understand the internationalization of biotechnology, it would 64Data provided by ABC.
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From page 39... ...
39 TABLE 7a ASM Full Membership by Region 19851986198719881989 1990 U.S. full22,84223,51024,10325,10026,203 26,725 members81.01%80.47%79.82%78.95%78.09% 77.29% Asia full1,2881,3821,4581,5731,748 1,906 members4.57%4.73%4.83%4.95%5.21% 5.51% Total full members28,18429,21630,19731,79233,556 34,578 Japanese full members constitute approximately 50% of the Asia region.
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From page 41... ...
Four examples of U.S.-Japan technology linkages have been examined for this report, and full case studies are included in Appendix A The cases are Kirin's operating joint venture with Calgene in seed potatoes, Monotech's licensing and marketing relationship with Showa-Toyo Diagnostics (STD)
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From page 42... ...
From a U.S. perspective, a common thread in the calculations of companies_particularly small biotechnology firms_as well as universities is the need for capital to support a world-class R&D effort.
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From page 43... ...
Market access also is an issue for American partners. For the stronger biotechnology firms, the development of linkages with Japanese companies has opened opportunities in the Japanese market for expanded sales, mostly licensed sales.
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From page 44... ...
44 firms by Japanese companies, and it was not possible for the NRC working group to prepare a study on that particular technology transfer mechanism. Thus, these cases are not ideally representative, nor do they comprehensively illustrate the factors that can lead to asymmetrical benefits or outright failure.
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