First published in the Financial Times on 25th November 2014.
Business opportunities are lost when academics and entrepreneurs inhabit separate worlds
I’ve recently appointed a chief executive for a medical research organisation I chair. The task was a fascinating one, mainly because the job needs that rare blend of scientist and manager – with just a touch of the industrialist. And it made me think hard about this intersection of learning and business.
The territory is incredibly important. Nations like Britain possess outstanding centres of scholarship: according to the latest QS world university rankings, four of the six top higher education establishments internationally are in Britain. We receive 11 per cent of total scientific paper citations. Since 2001, Britain claims more scientific Nobel laureates than Italy, Holland, Spain, Sweden, Finland, South Korea, Switzerland, Ireland, India, Belgium, Taiwan, Denmark, Canada and Austria combined. But we do not fully exploit this academic prowess economically.
The UK should be a world leader in terms of scientific companies – pre-eminent in sectors like advanced materials, photonics, synthetic biology, nanotechnology and the like. But Japan, Germany, South Korea and Taiwan generally profit more from technological developments.
Britain is only just in the top 10 nations by patent filings. We should somehow replicate those models which translate discoveries made in centres of learning into commercial successes. As Sir Andrew Witty’s review of the sector suggested, universities should see their “third mission”, alongside education and research, as wealth creation.
Importantly, more academics need to embrace entrepreneurship as a second career. Unfortunately the world of education and research places emphasis on awards, degrees, citations and professorships. This pressure to publish can discourage academics from filing patents.
As a rule, academic plaudits are irrelevant to entrepreneurs, who are primarily interested in industrial applications. Likewise, many of those who seek to discover the secrets of the universe in laboratories spurn the profit motive and the marketplace.
When I studied medicine at Oxford university in the 1980s it was clear to me that virtually none of my fellow students or tutors was interested in starting a business or making a fortune. The culture of discovery for its own sake is reflected in the fact that Tim Berners-Lee, a Briton, is credited with being the inventor of the world wide web: but essentially all the large businesses that have taken advantage of his ingenuity are American.
California does things differently. In 1987 a 29-year-old doctor called Michael Riordan founded a biopharmaceutical company called Gilead Sciences, specialising in antivirals. Gilead has become one of the largest such businesses in the world, capitalised at $150bn, partly thanks to the remarkable hepatitis C treatments Harvoni and Sovaldi, which may well become the most profitable pair of drugs ever.
Societies require patient capital to take advantage of scientific ideas. Innovation requires plentiful early stage funding for high risk investments, and later stage money to scale up the real breakthroughs.
America’s rare combination of academic excellence, substantial government support and an appetite for commercial risk led to the creation of modern venture capital and, thanks to that, the biotechnology and computer industries. As we all know, the rewards for big inventions can be extraordinary. It requires a blend of venture capital, government intervention, charitable backing and corporate venturing. All the forms of money need championing because the failure rate can be very high.
London has become a world capital for crowdfunding and is a major hub for venture capital. The City is a huge banking centre and Britain a magnet for business and scientific talent. Aim is perhaps the best small company stock exchange in the world. The rule of law applies here, as do property rights, and new “patent box” legislation creates an exceptionally favourable tax regime for intellectual property.
There should be no excuses. The Wellcome Trust charitable foundation recently commissioned a review by Bain & Company asking why Britain’s innovation ecosystem falls short. It pinpoints weaknesses, and offers possible solutions. Policy makers, academics and financiers would do well to study its recommendations.