American universities are supposed to be becoming the nation’s scientific powerhouse, turning innovative research into the applied science that will drive new products and wealth creation. Well that’s the theory, anyway.
In reality an examination of New Drug Applications filed with the Federal Drug Agency reveals that just 5% of applications were supported by patents that originated in universities. The other 95% were backed by patents protecting the work of scientists employed by companies.
There are success stories to be sure and universities can hit the mother load when they happen to strike it lucky.
Emory is one such university. Emtricitabine is a compound used in the anti-HIV drugs, Emtriva and Truvada. Emtricitabine was discovered by scientists at Emory University. The compound was licensed in 1996 to Triangle Pharmaceuticals, an Emory University start-up company. In 2002, shortly after it had filed an NDA for emtricitabine to the FDA, Triangle Pharmaceuticals was acquired by Gilead Sciences. Emtricitabine received its first approval in the USA and Europe as an HIV drug in 2003. In 2005 Gilead Sciences and Royalty Pharma bought Emory’s interest in the compound for $525 million.
Overall between 1991 and 2006 Emory earned $720 million in revenue from its commercialised research. By 2006 Emory had 16 licensed therapeutic products already in the marketplace and 38 licensed products in various stages of drug discovery, clinical development or regulatory approval and had established 37 companies around the university’s technology, leading to seven publicly traded companies and seven companies marketing products.
Emory’s achievement in turning research into revenue streams is unusual to say the least. Stanford University and the University of California earned just over $200 million in royalties for Boyer and Cohen’s patent for DNA splicing by the time of its expiry in 1997. In 2002 the last year for which we have figures, Harvard University, received a total of just $20 million licensing revenue across all industrial, scientific and technological research areas. These licensing revenues accounted for less than 4% of Harvard’s total research spending of more than $520 billion in the same year. The licensing revenues came from over 550 outstanding licenses so each license generated just over $35,000 a year. In 2002 Harvard was involved in 59 patent applications, granted 89 licenses and options and was involved in 8 startups so it seems likely that a large chunk of the $20 million was swallowed up in legal and administrative costs. Other top universities do little better.
So what is going on here? It may be that university scientists focus on the type of research that gets published in Nature and Science and generates citations rather than research that companies want to license. It could be that the huge spend by the American government in universities skews research away from research that can be turned into products. It may be that universities are not very good at identifying commercialisable research and selling that research to companies. It could be that companies are not very good at recognising promising research in the academic laboratory. Or it may just be that companies prefer to deal with other companies operating on the same profit and loss driven mind-set as themselves.
Churning out scientists who found companies, invent new products and make fortunes is one thing. Keeping a stake in that innovation-driven wealth creation is an altogether more difficult challenge.
Whatever is the case universities have some way to go before they become the nation’s scientific engine of growth.