Advances in the life sciences are seen as capable of delivering significant socio-economic benefits to health, agriculture and the environment. There is an opportunity to create wealth, cure currently incurable diseases, grow new crops that feed more people and find cleaner and more efficient energy sources. Life science innovation depends on these new ideas and discoveries, but its success in not based on science and technology alone.

Such advancements require productive institutional and funding environments, and are often constrained by social factors, such as public perception, regulation and intellectual property, which can make or break the uptake of new products or services. As such, innovation must be understood as both a social and scientific phenomenon. The Innogen Institute seeks to analyse the social and economic determinants of success in order to improve the odds that scientific benefits will reach society in a timely manner.

AN ECONOMIC AND MORAL IMPERATIVE TO INNOVATE

There is widespread acceptance amongst economists that innovation lies at the core of productivity growth, though the size of the impact is sometimes difficult to pin down. Ground breaking work by the Paris based think-tank, the Organisation for Economic Development (OECD), has recently cast light on this thorny issue. Using multi- or total factor productivity as a proxy for innovation it becomes obvious how significant a driver for growth it is, both in mature, advanced and in rapidly emerging economies. Technological innovation continues to make a leading contribution to the overall innovation impact, and notwithstanding a global shift in favour of business enterprise research and development (R&D), public investment in science remains absolutely crucial to value creation.

Public investment in science and

innovation also can bring major societal benefits beyond productivity growth and there is welcome focus on challenge and partnership-based innovation. Indeed, there is a moral imperative to focus efforts on those innovations that will deliver societal benefits – and to integrate demand more firmly with supply, understanding the close and continuing interactions throughout the value chain.

Successful innovation increasingly relies on cooperation and collaboration nationally, regionally and internationally. “Open” innovation has become the “new normal” and so an increasing challenge is how to access knowledge in open and collaborative ways whilst continuing to capture value where investments are made. The nexus between open science and value capture will be one of the crucial factors for our future economic success. And, for the future of our society, it is a challenge that we must get right.

INNOVATION AND INTELLECTUAL PROPERTY

Science and technology based innovation is expected to generate national capacities, and in turn, wealth. Although they are not the sole source of new knowledge, higher education institutions play a critical role in the generation of new ideas, discoveries and inventions. When this knowledge is used and valued, innovation has occurred. But the principle channel through which knowledge is expected to be mobilised – intellectual property rights – focuses attention on specific types of codified knowledge while overlooking the contributions of other intangible assets.

An entry point to the valuation of intellectual assets is to consider formal intellectual property protection in context of the management of intangible assets. Knowledge management is inclusive of intellectual property, which is to also say that systems of intellectual property are not monolithic, consistent or perfected. Consequently, intangible asset

management strategies can coordinate the tactics of intellectual property by contextualising – for example, patents – in a generalised approach to knowledge management. Valuation of intangible assets, therefore, includes knowledge creation and mobilisation, as well as its monetisation and returns to its creators.

The challenge for innovation, and particularly open innovation, is developing techniques for identifying and valuing intangible assets that may or may not be codified. This can be systematised into four framings: the production of knowledge; tracking of knowledge flows; ownership and sharing; and accountability for knowledge production and mobilisation. Each of these framings is transactional, and the potential flow of transactions provides the entry point to evaluating the value of intangible assets by measuring actual transactions in negotiated deals, mergers and acquisitions, but equally the non-cash contributions of individuals and organisations whose actions determine what knowledge is mobilised and how the process of innovation is transacted.

PRIVATE AND PUBLIC SECTOR COLLABORATIONS AND INITIATIVES

Public private partnerships (PPPs) are multiplying, particularly in regards to health innovation. The drivers behind the increase in PPPs are diverse, but include: the increase in cost of drug development and the search for new ways of working that increase cooperation and reduce cost; new technologies requiring different sets of skills across public and private sectors; and new possibilities for amassing, combining and using large amounts of scientific and patient data.

In previous eras a common rationale for public funding of science was that of market failure, with public funds supporting basic research that the private sector was unable to protect and own, and the private sector funding the applied

The Life Science Innovation Imperative

Date: June 2013

Iain Gillespie, David Castle, Joanna Chataway and Joyce Tait

www.innogen.ac.uk 1

Innogen Institute

aspects of R&D. Whilst this argument is still widely used, the reality of current investment in health research and innovation is very different.

The private sector is able, either through patenting or agreeing to share pre-competitive research openly, to invest in early stage basic science, and state funds are commonly deployed to support drug development in multiple ways much further downstream. The conceptual basis of market failure and the need to leverage and ‘de-risk’ private sector investment is no longer necessarily a good characterisation of the terms of public sector engagement. Whilst PPPs multiply there is often a lack of clarity about the foundations of public and private engagement and a stark absence of evaluation that could guide future investment strategies and determine what works.

Recent high profile critiques of private sector handling of applied research from Ben Goldacre and others have suggested the need for increased transparency and a stronger voice for academia in clinical trial research. However, there is also evidence to suggest that problems of ethical conduct and good practice, which would increase success in demonstrating efficacy and effectiveness in drug development, is not confined to pharmaceutical companies or applied research.

There is increasing evidence that the quality of basic health research is very low (Prinz, 2011; Ioannides, 2010). Publishing in Nature, Amgen researchers report that they were unable to replicate 47 out of 53 ‘landmark’ basic science publications in cancer, which had originated in academia (Begley and Ellis, 2012). Is it possible that poor practice in academic basic research could be overcome to some extent by increased collaboration with private sector actors who are more aware of the real and immediate costs of ‘pollution’ of scientific literature and the problems that poor quality basic science pose for subsequent steps needed for drug development?

Improving the quality and ethics of science and research in order to bring down lead times in drug development and reduce wasted effort in both public and private sectors is essential. It could be one way of considering the worth of new institutional environments and ‘social technologies’, which encourage good practice and trust in interactions between public and private sector actors across the research and development value chain.

GOOD GOVERNANCE AND RESPONSIBLE INNOVATION

Since the 1980s there has been a shift in the way many countries are governed, away from a top-down approach where governments dictated and citizens obeyed to a more consultative, bottom-up approach that tries to engage citizens and stakeholders in decision making processes, known as the ‘governance approach’.

The notion of Responsible Innovation (RI) is part of this new governance agenda, and in 2008 it was recommended by the Royal Commission on Environmental Pollution as an approach to reducing the uncertainties associated with risk assessment for nanotechnologies. In nanotechnology and information and communication technologies, the Engineering and Physical Sciences Research Council is applying it in an ‘upstream’ manner as part of ‘anticipatory risk governance’ to minimise environmental, health, societal and ethical concerns. It is also being applied by the Technology Strategy Board (TSB) as part of its Synthetic Biology Feasibility Studies competition.

The governance approach has worked quite well in areas like planning and social policy where people are more directly affected by proposals and will have a clearer understanding of their implications. However, it has proved more difficult and contentious to apply it in areas of technological innovation where there are long lead times from discovery to the market place, as in life sciences.

Where upstream engagement takes place

in the context of speculation about the

outcomes of today’s basic research, it can

become a competitive process to frame

a novel technology, either positively or

negatively, in the public mind. The use

of phrases like ‘anticipatory governance’

(equivalent to the precautionary

principle) and ‘upstream engagement’

suggest a continuation of a process begun

under the heading of Ethical Legal and

Social Implications (ELSI) that has been

insufficiently criticised by researchers

with an understanding of innovation and

regulatory processes. RI is likely to become

an increasingly important factor affecting

innovative companies in Europe. Most of

them are already behaving responsibly,

but they will be under increasing pressure

to demonstrate that.

It is vitally important for the

competitiveness of the EU that the

concept of responsible innovation

does not proceed unchallenged in its

present direction. It needs to be refined

and applied in a way that genuinely

encourages responsible behaviour and

at the same time supports innovation. A

small step in this direction was taken in

the Nuffield Council on Bioethics report

‘Biofuels: ethical issues’, adapted by

the TSB for its Responsible Innovation

Framework.

Five ethical principles are proposed,

related to (i) preserving essential human

rights, such as access to food and

water; (ii) promoting environmental

sustainability; (iii) contributing to a net

environmental benefit; (iv) development

in accord with trade principles that are

fair; and (v) equitable distribution of

costs and benefits. Principle VI brings

in the innovation imperative - if the first

five principles are respected and if the

development can play a crucial role

in mitigating environmental and social

harm, then depending on key market and

economic considerations, there is a duty

to undertake the development.

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Contact Innogen:

Elisabeth Barlow, Communications and Policy Officer, Innogen Institute, University of Edinburgh, Old Surgeons’ Hall, High School Yards, Edinburgh, EH1 1LZ t - +44 (0) 131 650 2842e - elisabeth.barlow@ed.ac.uk