state strategies and speculative innovation in ... · the vast but uncertain value of the global...
TRANSCRIPT
1
2
State strategies and speculative innovation in regenerative medicine:
the global politics of uncertain futures
Professor Brian Salter
Global Biopolitics Research Group
3
State strategies and speculative innovation in regenerative medicine: the global
politics of uncertain futures
Introduction
The vast but uncertain value of the global market promised by the science of
regenerative medicine places governments in a difficult position. Should states
choose to embrace the knowledge economy of regenerative medicine as part of their
future there is no accepted model for its support and development that can
immediately be employed, no known package of innovation policies that will
guarantee a country advantage in the global competition. Governments therefore
immediately enter a political terrain which, if not uncharted, is at best poorly mapped.
But should states instead choose to ignore the promise of regenerative medicine
science they may then find themselves portrayed as irresponsible in their neglect of
their populations‟ future economic health. Furthermore, if other countries
subsequently profit from an early commitment to the regenerative medicine field, less
perspicacious governments may find that it is too late to catch up.
It is difficult for governments to claim that state intervention is unnecessary and that
the market will take care of the development process. As with other areas of novel
health biotechnology, the why of state involvement in regenerative medicine is clear.
Without it, the lengthy gestation from the basic science to the eventual therapy
(usually calculated as between 10 and 15 years) becomes commercially unlikely if not
untenable, particularly in the early stages where the theoretical route from bench to
bedside is often obscure. Given such large uncertainties, private investors are
reluctant to commit resources unless government is prepared to take up at least some
of the inevitable risk associated with basic science. For despite its theoretical
promise, the research may not produce results that are commercially viable.
The uncertainty of the development path of regenerative medicine science is
compounded by its complexity. Its evolution is dependent on social, cultural,
economic and political factors that render the construction of a state strategy an
essentially speculative exercise. But it is nonetheless a bounded exercise. Although
the precise way forward may be unclear, there exists a range of possible policy
interventions in the national and international knowledge production process that
states must consider if they are to enable scientific progress towards a market
outcome that benefits their national economy. Such interventions will include both
national policies to support their domestic knowledge economy and moves calculated
to protect or enhance a state‟s position in those arenas of international governance that
impact on new health technologies.
For emerging economies such as China and India, the issue of what, if any, state
strategy to adopt towards regenerative medicine is particularly acute. Unlike the
European and North American states, they have until recently had little experience at
the frontiers of health technology innovation and lack elements of the necessary
supporting infrastructure that the former states take for granted. Yet at the same time
both China and India are keenly aware of the potential value of the new field and the
importance of not „missing the boat‟. They have every incentive, therefore, to adopt a
proactive approach to the science-market relationship that acknowledges their own
strengths, exploits the needs of the more developed economies in this field, and builds
4
alliances based on a commonality of emerging economy interest. Their strategies on
regenerative medicine are likely to be different in kind from those of their Western
competitors.
In developing a perspective on the position of China and India in the global
competition for state advantage in regenerative medicine, I begin with a discussion of
how the „opportunity‟ of the field is conceptualised. What understandings are there of
the future value of regenerative medicine science, the demand for its therapeutic
products and its potential global market? Secondly, in analysing the response to this
opportunity, how can we best theorise the role of the state in promoting what I term
„speculative innovation‟ as the basis for commercialisation in such an uncertain
scientific field. To what extent do the concepts of „the competition state‟ and „the
developmental state‟ provide an appropriate theoretical platform for this exercise?
Finally, using a number of key indicators suggested by this analysis, I briefly explore
the strategic capacity of China and India to compete for position in the regenerative
medicine future.
Future value
Regenerative medicine is an emerging multidisciplinary field involving tissue
engineering, biology, biochemistry, medicine, and physics that aims to restore,
maintain or enhance cell, tissue and organ function.1 The promise is that its
applications will be both diagnostic and therapeutic. For diagnostic purposes, cells
cultured in vitro are being developed for the pharmaceutical industry as alternative
methods for testing drug efficacy and toxicity. For therapeutic purposes, the intention
is to regenerate damaged tissues and organs in vivo through reparative techniques that
stimulate previously irreparable organs into healing themselves. In addition,
regenerative medicine promises to allow scientists to grow tissues and organs in vitro
and implant them in cases where the body cannot be prompted to heal itself. Its future
value lies in its claimed capacity to produce therapies for a broad range of diseases
and conditions including diabetes, heart disease, renal failure, osteoporosis, and spinal
cord injuries for which there is at present only partial treatment or none at all. 2
Almost none of its promise has yet been realised.
In a political sense this does not matter because, as with many scientific ventures,
regenerative medicine is concerned with the political capture of future imaginations,
be these of publics, patients or politicians. Embedded in these imaginations are hopes
and expectations of what the future might bring and, if the faith is sufficiently strong,
a commitment to support the allocation of the resources required to enable that
imagined future to become reality. 3 4 5 In power terms, it is its political sustainability
that is important, not whether the belief subsequently turns out to be true. Recent
examples such as transgenics, reproductive science and bioinformatics reveal the
competitive nature of this enterprise and the importance of not allowing a rival area of
science to capture the imaginative high ground. For if public support is gained then
the authenticity of the future market becomes more tangible; if political support, then
the winning of scarce scientific resources becomes more likely. At the same time,
scientific advocates must beware of over-hyping their future products since this may
overstretch the imaginary envelope and cause both its collapse and that of its
associated anticipated future values. To be politically effective, advocates must be
seen to act responsibly, rationally and with due discretion.
5
Regenerative medicine is unusual because it incorporates a wide range of both
scientific disciplines necessary for its advancement and disease groups to which it will
apply. The breadth of the disease groups is important because it indicates not only the
range of patient organisations that will lend their support to the advancement of the
new science, but, more significantly, the size of the value of the potential market that
regenerative medicine will create. It enables regenerative medicine to expand its
future territory to include the economic as well as the scientific imagination and with
it to capture the interest of such significant players in the innovation process as state
actors and venture capitalists (VCs).
In the promotion of the economic imagination of regenerative medicine, statistics are
frequently employed in attempts to demonstrate the rationality and hence the
legitimacy of the projected market future. In terms of future patient population
demand, the United States National Academies of Science report Stem Cells and the
Future of Regenerative Medicine estimates that in the US the market for stem cell–
based therapies, an important sub-division of regenerative medicine, includes more
than a hundred million patients with conditions such as cardiovascular disease,
autoimmune diseases, diabetes, cancer, neurodegenerative diseases, and burns 6. In
terms of financial value, one source „conservatively estimates‟ the worldwide market
for regenerative medicine to be $US500 billion by 2010 7, while another announces
that the European market is expected to reach $15 billion by the same year 8 – though
precisely how these figures are calculated is not revealed. Forecasts by consultancy
firms on the stem cell market include a US market of $3.6 billion and a world market
of $8 billion by the same year. Others are less optimistic, predicting a world market
of $100 million by 2010 rising to $2 billion by 2015.9 Although the market
forecasting of regenerative medicine can be seen to be a highly variable exercise
dependent on what diseases, technologies, and types of firm are included, it is
nonetheless sufficiently prevalent to help establish the impression of an achievable
future reality even though the precise nature of this reality may be elusive. It is also
an exercise usually detached from any consideration of the impact on patient demand
for the new health technologies of factors such as the mode of health care funding,
cost constraints, ethical considerations, regulatory frameworks or policies aiming at
the protection of domestic pharmaceutical industry.
Closely allied to the carrot of future economic benefits is the stick of the opportunities
to be lost by states that are too limited in their political imagination. The assumption
is one of a finite reservoir of future value in regenerative medicine that only those
states with the appropriate foresight and commitment will be able to access. For the
developed countries of the West, this means ensuring that their traditional hegemony
in the health biotechnology field is not lost. Thus the 2006 US report on regenerative
medicine starkly warned the nation that „the U.S. pre-eminence in the field of
regenerative medicine is in jeopardy‟.10
Similarly, the United Kingdom‟s report on a
ten year strategy for the development of stem cell research, therapy and technology
(the „Pattison Report‟) made clear its ambition „for the UK to consolidate its current
position of strength in stem cell research and mature…..into one of the global leaders
in stem cell therapy and technology‟.11
The report was at pains to document in detail
the investments being made by other countries in stem cell science. Most recently,
the German government produced a study that whilst noting Germany‟s leading
6
international position in regenerative medicine argued for urgent policy changes to
facilitate the translation from the science to the therapeutic product.12
Whilst the developed countries may be anxious that their dominance in the future
markets of new health technologies is not eroded, developing countries are equally
concerned that their ability to compete is not undermined by their own failure to
anticipate and respond to these future opportunities. For them it is less a case of
building on what they already have and more a question of what new kinds of
innovation infrastructures they are best placed to construct, given their previously
limited activity in regenerative medicine science. Their policy choices are both more
generous and more demanding in scope.
Responding to regenerative medicine as a leading example of the promise of the new
health biotechnology, states such as China, India, South Korea, and Singapore have
all made an investment in regenerative medicine science. China‟s annual investment
in stem cell research was recently said to be between US$4 and 10 million with 300
researchers working in 30 separate institutions.13
However, these figures are set to
increase dramatically. Estimates quoted in the UK‟s Pattison Report suggest that over
the next five years China‟s Ministry of Science and Technology (MOST – the main
source of public research funds) is expected to spend between RMB 500 million (US
$63 million) and RMB 2 billion (US $0.25 billion), depending on how productive the
science turns out to be.14
In January 2005 India‟s Department of Biotechnology
(DBT) and the Indian Council of Medical Research (ICMR) announced plans for a
national stem cell initiative that would prioritise research funding, focus on clinical
applications and promote „stem cell city clusters‟.15
Despite (or because of) the
fallout from the Hwang affair,16
South Korea remains firmly committed to the
aggressive expansion of stem cell research and in May 2006 allocated $454 million to
the field over the next decade.17
Meanwhile, Singapore‟s vast investment in its
Biopolis complex ($8 billion committed through to 2010) continues to act as a magnet
for Western regenerative medicine scientists.18
The commitment of both developed and developing countries to the imagined future
value and global opportunity of regenerative medicine is clearly present. How can we
best analyse their capacity as states to translate this imagined future into a globally
competitive reality through strategies that deal with the social, cultural and economic
dimensions of innovation?
States and speculative futures
The theoretical roll call of types of states that are categorised as responding to the
opportunities of the global knowledge based economy is long. They range from the
competition state (with variations such as the entrepreneurial, regulatory and
managerial states) through the developmental state (with variations such as the post-
developmental and democratic developmental states) to the more loosely framed
enabling or facilitative state and the very loosely framed adaptive or flexible state.
Despite the conceptual promiscuity of the field and the confusing use of categories
based on both functions and institutional characteristics, a picture emerges of states
responding in a variety of ways to the problems and prospects of globalisation, and
learning as they do so. What is significant is that some states learn faster than others
and at a speed that reveals the static quality of some social science categories. This is
particularly true of the globalisation of the life sciences where states confront an
7
essentially speculative future. In such a context, states characterised by rigid planning
systems are unlikely to produce policies that serve the national interest.
Competition states and commercialisation
It was precisely to deal with the uncertainties accompanying the shift from Fordist to
post-Fordist modes of mass production and consumption that the „competition state‟
of the advanced economies of the West is seen to have developed. 19
20
21
22
Rather
than concerning themselves with government interventions to ensure full employment
and respond to market failures states, states began to focus their attention instead on
the neo-liberal supply-side policies that would give a sharp edge to their
competitiveness in the global knowledge economy. Particularly in the case of the bio-
industries, this meant a concentration not only on the infrastructures of innovation but
also on „agglomeration and network economies and the mobilisation of social as well
as economic sources of flexibility and entrepreneuralism‟.23
To be effective,
competition states needed to bring their social and cultural values into line with their
entrepreneurial ambitions. Entrepreneurialism needed to be embedded: as a
consequence the institutional reforms of the competition state eschewed rigid
bureaucratic hierarchies and relied instead on new forms of network based
governance.24
25
Should they choose to respond to the demands and opportunities of the new
knowledge economies, competition states can make the decision to intervene at any or
several points in the process of knowledge production from the basic science through
to the market product. Such decisions are highly political in the sense that they
involve the allocation of scarce scientific resources, the acceptance of the risk
involved in speculative science, the assumption that public support for the field
selected can be maintained over time and, above all, the need to outmanoeuvre a
state‟s global competitors. When analysed in terms of the knowledge production
process, each political intervention becomes a policy component which, if brought
together in a sequence, would constitute a state strategy. In terms of components, this
approach is similar to the conceptualisation of „a national innovation system‟ defined
by the World Bank as:
a complex set of relationships among actors producing, disseminating,
acquiring and applying various kinds of knowledge. Performance depends on
how these actors relate to each other as elements of a collective system of
knowledge acquisition, creation, and use. These actors are primarily private
enterprises, universities and public research institutes – and the people in
them. The linkages can take the form of joint research, personnel exchanges,
cross-patenting, technology licensing, equipment purchases, and a variety of
other channels. 26
27
28
However, whereas the concept of a national innovation system is concerned with
performance and economic efficiency, the 'state strategy' approach adopted here
focuses on the murkier realm of the politics of national advantage (Figure 1).
Performance and efficiency form part of this politics, but by no means the only part.
8
Figure 1
In deciding how to intervene and with what policies, the competition states of Europe
and North America have moved away from the national sponsorship of particular
firms and technologies and towards policies designed to foster „the conditions
necessary for innovation‟. The objective has become less one of specific structural
change and more one of stimulating a dynamic that enables the knowledge production
process to become self-sustaining. It has become part of the established policy
orthodoxy that regional governments should initiate programmes to foster cluster
developments in sectors such as biotechnology;29
that commercialisation can be
facilitated through academic-industry collaborations and high profile, publicly funded
R & D centres acting as magnets for venture capital investment; 30
31
32
that networks
of science and industry should be enabled; that regulation should be facilitative rather
than restrictive;33
and that intellectual property rights (IPR) should favour the
operation of the market. As with all orthodoxies, there is the expectation of policy
convergence between states characterised by assumptions regarding „best practice‟ in
the field.34
However, although competition states may agree on the list of policy components that
support participation in the global knowledge economy, they differ considerably on
the relative significance they attach to each component, the resources to be committed
to individual policies and the interrelationship between the components. As always,
political factors such as scarce resources, ideological preference, global and regional
position and cultural constraint will influence what policy choices are made. As a
result states have different strategies on the bioeconomy, or their strategies may be
partial with some policy components present and others missing. For example, the
study by Benner and Löfgren comparing the biotechnology sector in the three
groupings of Finland and Sweden, the USA and the UK, and Australia concluded that,
whereas there was some convergence in the area of public investment, there were
differences in the approaches to market regulation, industrial support, venture capital
and ethical restrictions. Differences, furthermore, that did not follow the dichotomy
between „liberal‟ and „coordinated‟ models of capitalism.35
The idea that there is a global wave of neoliberal policies sweeping uniformly and
remorselessly across the political planet is therefore challenged by the evidence that
competition states make distinctive choices about their involvement in the
bioeconomy in general. In addition, the high level of uncertainty that characterises
regenerative medicine science and its therapeutic applications means that competition
states are also likely to have different views about the commercialisation of this
particular field. There is no accepted commercial model for its development on which
they can draw, no package of policy components that can be applied. Indeed, the
technological novelty of the field challenges the skills and inventiveness of the
business community as much as those of science. Both are aware of the value of the
speculative future of regenerative medicine yet neither can be sure of how, or
whether, it will be achieved or of what kind of science-market relationship is
appropriate at what point in the commercialisation process.
In terms of its therapeutic outcome, the commercialisation of regenerative medicine is
designed to achieve a „product in which human cells are administered to the body for
9
the purpose of replacing, repairing, regenerating or enhancing function of tissues‟. 36
Such a broad definition of the cellular and tissue based products on which
regenerative medicine is founded succeeds in spanning the two dominant business
models of the health products field, pharmaceuticals and medical devices, and, in a
theoretical sense, can be seen to result in a third hybrid business model that
incorporates features of both (Figure 2 – 37
). Whereas the pharmaceutical model
recoups the high costs of its up-front
Figure 2
investment and long development times (typically 15-20 years) through high gross
margins and large markets, the medical devices model can tolerate lower gross
margins and smaller, more focused markets because it has lower development costs.
Unfortunately for its market appeal, the theoretical hybrid business model of cell-
based products includes the negative characteristics of the other two models: high up-
front investment, medium/long development times (10-15 years), low gross margins
and markets focused on a range of separate diseases. In this pure form, it is therefore
unlikely to move from theory to reality.
The decision making by states on whether to intervene to render the regenerative
medicine business model more tenable is made more complicated by the fact that the
model is not static but rapidly evolving. As Figure 3 shows, commercial
opportunities are being identified in the regenerative medicine field that are driven by
products other than the therapies themselves. For example, in the short to medium
term, cell lines from human embryonic stem cells (hESCs) could be used as disease
models to explore the pathology of a disease, as drug screening assays to demonstrate
efficacy, and as the means for the toxicity testing of candidate drugs. Such
intervening usages in the overall business model would generate an early cash flow to
nurture the development of the field.38
Figure 3 39
The need to adapt a business model to the characteristics of the new health technology
markets that are situated between the basic research and the therapeutic product is not
peculiar to regenerative medicine. Genomics companies have also recognised the
importance of refocusing their research efforts: in their case, downstream within the
drug innovation cycle.40
Employing proprietary technology or knowledge based
assets protected by patent, research based genomics companies have formed alliances
with pharma and biotech partners to generate the all important cash flow through
licensing arrangements and/or subscription fees. Admittedly this strategy has been
facilitated by pharma‟s need to bolster drug pipelines through a focus on the upstream
stages of the drug innovation cycle but genomics companies have still had to make
their business models work. For states anxious to promote regenerative medicine, the
experience of the closely related genomics sector shows that the mode of state
intervention may need to be as adaptive as the business models they seek to support.
10
The adaptable developmental state
Like competition states, the states of the developing world are responding to the
global opportunities of regenerative medicine through strategic interventions in the
knowledge production process (Figure 1). However, the literature on developmental
states suggests that they approach this task from a perspective shaped by a different
historical experience of globalisation. Focusing in the main on South Korea, Taiwan,
Japan, and to some extent Singapore, in the 1980s and early 1990s, the earlier work
highlights the role of the developmental state in the promotion of rapid economic
development through the targeting of particular industries with large global markets.
The markets were already there. The political task was to penetrate them. To achieve
this goal, the state protected their chosen industries using a range of policies such as
import and credit controls, promoted them through state investment, guided private
capital through incentive schemes, and measured their progress in terms of export
achievements. 41
42
43
Backed by a strong, professional and autonomous bureaucracy,
the state sought to define the specific path of industrialisation through the
„government of the market‟.44
45
46
As with the competition state, there were
substantial variations on the model of the developmental state. Nonetheless, given
where they were starting from, the simple fact remains that the developmental states
of the Asia Pacific had more in common with each other than with the competition
states of Europe and North America.
In essence, their commonality is that they sought to challenge the control exercised by
the developed world over the dynamic of globalisation. If they were to access the
wealth of global markets, if they were to „catch up‟ with Western countries, then the
power of the state was required to make globalisation work for them. However,
having caught up using the targeting of known markets as a primary policy objective,
developmental states faced the problem of „keeping up‟ in the context of future
markets such as the life sciences that were either unknown or decidedly uncertain.47
At the same time, the forces of global economic integration and the liberalisation of
capital markets appeared to threaten the advantages conferred by their policies of
protection and promotion. Through the propagation of international economic
governance measures such as the World Trade Organisation‟s (WTO‟s) Agreement on
Trade Related Aspects of Intellectual Property Rights (TRIPS), Agreement on Trade
Related Investment Measures (TRIMS) and General Agreement on Trade in Services
(GATS), countries such as the UK and the US sought to diminish the developmental
states‟ room for manoeuvre by forcing them to adopt neo-liberal, fiscally conservative
policies.48
It seems to have been assumed that greater liberalisation was in the
interests of the developed countries because it exposed the weaker economies of the
developing world to global market pressures. The Asian financial crisis of 1997-98 is
often quoted as proof that this strategy was impacting on the developmental states.
However, the view of developmental states as global victims underestimates the
capacity of all states to adapt their strategies in the light of both threats and
opportunities in the international economy.49
50
Developmental states are no
exception and, to varying degrees, have demonstrated their ability to evolve their
apparatus of economic government. In reporting this phenomenon, observers have
consequently been obliged to evolve a new nomenclature including „adaptive state‟,
„flexible state‟, „post-industrial developmental state‟, „transformative state‟ and
„catalytic state‟ in their studies of Japan, South Korea and Taiwan. 51
52
53
11
As we have already seen, developmental states are as committed as competition states
to the belief that health biotechnologies, and regenerative medicine in particular, are
industries of the future. They are also aware that their traditional modes of direct state
intervention do not suit the innovation requirements of what is an elusive science with
a speculative future, an uncertain market and a difficult path to commercialisation.
Knowledge based economies require more subtle forms of developmental support
across the range of policy arenas summarised in Figure 1 in order to generate, as
Wong observes of biotechnology in Taiwan, „the right mix of public policies aimed at
facilitating technology innovation and knowledge-based interventionist strategies‟.54
For example, „cutting edge technologies can no longer be borrowed; rather they must
be created‟ – which means a change in state direction and an investment in, or access
to, basic science.55
In moving from borrowers to innovators, developmental states are
obliged to review the extent of their autonomy and the style of the bureaucracy that
implements their policies. Can they transform the autonomy of the developmental
state into a more relevant bureaucratic form characterised, for example, by
collaboration between administrative and business elites, or will bureaucratic change
simply result in administrative confusion and inefficiency?56
Perhaps unsurprisingly, the mode of state adaptation varies and is dependent on local
political conditions, the regional context, and decisions regarding the strategic entry
points on the biotechnology value chain of innovation that a state deems appropriate.
In Singapore, the state retains tight control in its pursuit of economic prosperity
through the promotion of the biomedical industry. It remains a single party state with
a high level of state ownership that still prohibits public demonstrations, exercises a
tight labour control scheme, and limits public debate.57
Yet at the same time its
bureaucracy has adapted itself in order to „enable‟ the emergence of its health
technology economy by providing research facilities, funding, and a supportive
regulatory climate responsive to international requirements58
. It may have moved
towards a more liberal economy, but on the state‟s terms. Contrast this with the
situation in Taiwan where, in the promotion of biotechnology, the earlier cohesive
bureaucracy has been replaced by a proliferation of government agencies
characterised by overlapping and competing jurisdictions.59
Or again, South Korea
where the growth of working class and bourgeoisie opposition combined with the
divisions between the chaebol (family controlled corporate groups) and the state to
reduce the traditional autonomy of the latter.60
61
Nonetheless, despite their
considerable differences, all three developmental states have taken the view that their
national innovation strategies on health biotechnology should form part of a larger,
global enterprise. With the effects of the WTO‟s initiatives on international economic
governance feeding through the global system, developmental states are obliged to be
proactive in their approach to globalisation regardless of their earlier leanings towards
protectionism.
As relatively recent emerging economies, China and India bring a different
perspective to the evolving nature of the developmental state. Unlike Singapore,
South Korea, Taiwan and Japan, they did not experience the rapid economic growth
of the 1980s and early 1990s. For China, the massive shift from a centrally planned to
a market influence economy that commenced in 1978 required a seismic change in the
role of the state that only gathered real momentum in the mid-1990s. Membership of
the WTO and exposure to the pressures of global competition in the early 1990s
12
caused what Saich has described as „the internationalisation of the reform process‟
and an intensification of demands for the state to move from a directive to a
facilitative role.62
In practice, although the level of administrative intervention has
diminished, the state has retained many of its old monopoly functions whilst
simultaneously expanding its role into the new regulatory policy arenas needed for
China to participate effectively in the global knowledge economy. 63
64
65
Its
infrastructure needs as a player in the global knowledge economy remain considerable
and, as a developmental state, it is still in important respects playing „catch up‟. 66
India, meanwhile, is a revealing example of a country that initially took the traditional
developmental state path characterised by direct state intervention and a top-down
bureaucracy but, by the early 1990s, had clearly failed to meet its economic
objectives.67
68
With impressive adaptability, the Indian state subsequently
reconstructed itself as the enabling vehicle for a deregulated economy that has
produced the explosive growth of the last 15 years.69
70
State capacity and strategic speculation in the Asia Pacific region 71
The degree of adaptability of developmental states is a critical political factor in their
response to the bioeconomic possibilities of regenerative medicine. Lacking the
resources to compete for global advantage across the full range of policy components
that shape the knowledge production process in this field (Figure 1), developmental
states must necessarily be selective, choosing their points of policy intervention in the
light of how they seek to position themselves in the global game. As the World Bank
report China and the knowledge economy: seizing the 21st century observes,
„developing countries do not have to reinvent the wheel: there are many ways for
them to tap into and use the knowledge created in developed countries‟. 72
In this
respect a state‟s territorial jurisdiction of knowledge is less important than its strategic
capacity for global access to the components of knowledge production.
Working within the context of the developmental states of the Asia Pacific and
drawing on the policy components of Figure 1, in this section I review the extent to
which China and India, the emerging giants of the region, have developed a capacity
for state speculation in the global political market of regenerative medicine. This
capacity is analysed in terms of the global significance of selected key indicators of
the knowledge production process in China and India: scientific infrastructure
(investment, workforce and outputs); patenting; and inward flows of foreign
investment from pharma, other multi-national companies (MNCs) and venture
capitalists. What do these indicators tell us about the ability of China and India to
become global players in regenerative medicine?
Scientific infrastructure – investment, workforce and outputs
The commitment of China and India to regenerative medicine science documented
earlier forms part of their broader intent to increase research spending to levels
comparable with Western states. R & D investment is seen as an essential platform
for effective global competitiveness in new technologies where access to basic
scientific knowledge provides an initial market advantage. In China, R & D spending
has more than doubled from 0.6 per cent of GDP in 1995 to just over 1.2 per cent in
2004. Predicted to spend over USD 136 billion in 2006, China will then overtake
Japan as the second largest investor in R & D in the world after the United States
13
(USD 330 billion)73
. India‟s government R & D expenditure is much more modest
but in 2005 dramatically rose by 25% to USD 4.5 billion. This was followed by an
announcement in October 2006 by India‟s Prime Minister Manmohan Singh that it
would increase from 0.8 to 2 per cent of GDP in the next five years – a clear signal of
global intent and, if achieved, of state adaptability.74
Both nations have a large scientific workforce. According to OECD figures, China‟s
stands at 926,000 (the second largest worldwide) and India‟s is also substantial.75
76
But perhaps more significant in terms of their future scientific capacity are the trends
in their training and retention of scientists relevant to the regenerative medicine field.
The data on the number of doctoral degrees in the physical and biological sciences
awarded between 1983 and 2001 shows that although India has a higher absolute
number (3727) than either South Korea or China, the rate of increase in PhD
production is much higher in the case of the latter and, indeed, China may have now
overtaken India (Figure 4). To an extent this may be because the lack of training
opportunities in Indian universities in the life sciences encourages postgraduate
students to leave India to complete their PhDs abroad.77
At the Indian Institute of
Science, 90% of those who finish PhDs choose to move overseas – an indicator of
India‟s difficulty in sustaining the important middle tier of postdocs required for
successful scientific teams and laboratories, particularly in a highly competitive field
such as regenerative medicine. 78
Figure 4 79
In assessing the significance of these figures, it has to be remembered that scientific
training, like other aspects of science, is an international as well as a domestic activity
and a source of future research networks as well as current knowledge. If we now
examine the ability of Indian students to access the largest sector of the international
graduate education market, the United States, we find that India dominates other
Asian countries in terms of both absolute numbers of graduate students and the rate of
increase in these numbers (Figure 5). Between 1987 and 2004, while the number of
Indian graduate students in the US has quadrupled from 15,600 to 63,000, Chinese
students have increased at a lower rate from 20,400 to 50,800. However, if we focus
the lens on the top end of the science and engineering market we find that here China
predominates: in 2003, doctoral students from China gained 2501 (25 per cent) out of
the total 9846 doctorates in this field awarded to foreign students in the US.80
14
Figure 5 81
However, these figures do not necessarily translate into a global advantage for Indian
or Chinese science since the majority of graduates choose to remain in the US once
they have gained their degrees. Between 1992 and 2003, the proportion of Indian
graduates with science and engineering doctorates and biological/agricultural
doctorates who had „definite plans‟ or „plans‟ to stay in the US was consistently
around 90%.82
In China‟s case, between 1998 and 2001 the actually stay rate of
qualified science and engineering PhDs was 60 per cent. To put this in an Asia
Pacific perspective, the equivalent figure for South Korean PhD students was below
30 per cent.83
Overall, China‟s Ministry of Personnel estimates that about 580,000
students have gone abroad since the late 1970s with only about 160,000 (27%)
returning. These figures are highly significant for the development of health
biotechnology in China: of the nearly 300,000 Chinese students overseas in 2004, a
third were involved in the biotechnology field.84
The net effect of this brain drain is that in 2003 there were 448,700 Indian born
residents in the US with degrees in science and engineering or related subjects though
only 41,300 (9%) of these had doctoral degrees. In comparison, the equivalent
numbers of Chinese born residents in the US was 294,800, 62,500 (21%) of whom
had doctoral degrees.85
The Chinese government in particular is well aware that if it is to develop its health
biotechnology capacity to innovate then it must at least stem and preferably reverse
this drain on its scientific workforce. Incentive measures include salaries that are
competitive in the international domain (particularly for top scientists), government
financing for scientists who wish to set up laboratories in China, support programmes
and business incubators for entrepreneurs wishing to launch start-up companies, and a
special fund to finance the Chinese side of international S & T collaboration projects
(100 million RMB (US $12.5 million) initially but can be increased as necessary).86
Two recent examples of initiatives taken to promote the inward flow of international
scientists in the health biotechnology field are the establishment of Beijing Life
Sciences Research Institute (December 2005) and of the China National Academic
Centre for Biotechnology (May 2006). An alternative strategy is for a state actively
to build its capacity by attracting high quality scientists from the international labour
market. For example, Singapore has decisively entered this market with policies
expressly designed to attract stem cell scientists from the US and the UK through
financial support and a liberal regulatory regime. 87
These policies exploit the
relatively high global mobility of scientific labour in regenerative medicine science.
(One survey reports that stem cell principal investigators are 5.3 more times likely to
receive at least one international job offer than PIs in other biomedical fields).88
It is to an extent surprising that if we employ a more interactive measure of global
scientific position, the geographic scope of international collaborations, a picture
emerges of India as marginally ahead of its Asian emerging economy rivals. Based
on 2003 data, the US had the broadest network of international collaboration with US-
based researchers co-authoring articles with researchers from 172 other countries.
The UK followed with co-authored articles with researchers from 158 other countries.
Amongst low and middle income countries, India ranked first with 107 co-authoring
countries, ahead of China (102).89
15
However, a country‟s proportion of the global output of science and technology
publications measured over time provides a surer indication of its control of important
intellectual resources necessary for the first stages of the commercialisation process.
In the Indian case, between 1988 and 2003 this proportion has remained static at 2%
(Figure 6). This compares unfavourably with China (a dramatic rise from 1% to 4% -
more than a doubling of the articles published) and South Korea (a rise from 0% to
2%). Thus it is principally China and South Korea that have expanded their global
knowledge base at the same time as the US share has declined from 38% to 30%.
Figure 6 90
Patenting
Intellectual property rights (IPR) are an essential component of a knowledge economy
because they commodify the intangible capital of knowledge, generate value and
facilitate trading (see eg 91
92
). Without IPR, and in particular patent protection,
emerging markets would find it difficult (or more difficult) to develop since the
tangible product has yet to appear and economic value is embedded in the potential
application of the knowledge. This problem is particularly acute in high-tech and
research based Small to Medium Enterprises (SMEs) for whom their IPR is their main
asset. The economic significance of patents is further enhanced by the need for new
forms of knowledge to compete for attention in an increasingly global venture capital
market with its own clear demands: investors, often institutional investors, make their
decisions in the light of the patents held by companies. 93
94
95
For capitalisation of a
new knowledge market to occur, then, investors need to be reassured that the value of
the knowledge, as opposed to the value of the eventual product, is in the hands of the
company concerned. Investors are likely to be particularly sensitive to the patenting
issue in high risk areas such as the early stage development of health biotechnologies
where the science is very new and the potential therapies very distant.
Patenting therefore provides a useful global indicator of a country‟s innovation
activity. What capacity does a state have to exploit the knowledge produced through
trading in the national and international markets of IP? If the IP issue is neglected, a
state will find it difficulty to move from the knowledge base to the subsequent stages
of commercialisation. A crude but valuable indicator of inventive activity is the use
of the patent system by a state as manifest in its resident and non-resident patent
filings.
Figure 796
China (557 per cent) and India (365 per cent) have easily the highest rates of increase
in the number of resident patent filings between 1995 and 2004 when compared to
other nations but both lag behind South Korea; and India in particular started from a
very low base (Figure 7). Importantly, neither is yet a significant global player in
terms of non-resident filings in the patent offices of other countries – a useful
indicator of a country‟s ability to penetrate the knowledge economies of other states.
In 2004, China managed only 3100 non resident filings and India 2400 compared with
30,900 by South Korea and 137,800 by Japan. 97
This pattern of weak penetration is
particularly evident in filings with the USA Patent and Trademark Office (USPTO)
16
and indicative of both countries‟ inability to access what, at present, is home to the
engine of biotechnology innovation (Figure 8). When assessed in terms of the
efficiency of the relationship between two components of innovation, R & D and
patent filings, India falls well behind its Asian competitors. In 2004, its resident
patent filings per million dollars of R & D expenditure was 0.23 (30th
in the world),
compared with 0.78 for China (12th
) and 4.60 for South Korea (1st) .
98
Figure 8 99
However, things may be changing. The most recent data from WIPO on its Patent
Cooperation Treaty (PCT – through which one „international‟ patent application can
be sought simultaneously in all WIPO member countries) show applications received
from the developing countries of north-east Asia in 2006 increased by 27.6 per cent
over the previous year, far higher than the overall growth of 6.4 per cent.
Commenting on these figures, the Deputy Director General of WIPO observed that
they showed the changing geography of global innovation with developing country
states capitalising on the tools of the intellectual property system for wealth
creation.100
The largest filings in this group were from South Korea (5,935) and
China (3,910) followed at a considerable distance by India (627) and Singapore (402).
Foreign investment
For emerging economies like China and India, the ability to attract pharmaceutical
companies in support of regenerative medicine biotech innovation is much less
problematic than it used to be as what has been termed „the second wave of
globalisation‟ is now taking effect in the biomedical as well as the IT industry.101
Propelled by the search for lower scientific and clinical labour costs in the context of
a perceived crisis in their profits, multinational pharmas are increasingly outsourcing
their R and D operations to developing countries. 102
103
Between 1995 and 1999 the
number of international human subjects involved in clinical trials grew one hundred
fold from 4000 to 400,000 and the number of clinical trial investigators conducting
multi-national drug research in low-income settings increased sixteen fold between
1995 and 2005.104
In April 2006, pharma companies were performing 838 ongoing trials in the US,158
in the UK, 81 in Russia, 49 in India and 31 in China. The prediction is that pharma
companies will double their clinical research activities in developing nations over the
next three years.105
The interest of multinational pharmaceuticals in emerging economies is also strongly
influenced by the global loss of their quasi-monopoly on leading-edge science and
discovery. By 2002, small biotechs had become a critical part of pharmaceutical
innovation and growth accounting for 70% of the drugs approved over the previous
six years. None of the top ten best-selling biotech products had been developed by a
pharmaceutical company, although six are marketed through big pharma.106
With
their own drug pipelines drying up, pharma are driven by a global search for the
intellectual property (IP) of potential products that can be acquired from small
biotechs during the various phases of clinical trials through mergers and acquisitions
or through joint ventures.
17
For their part, China and India are keen to exploit this need and to expand their
biotech development capacity by attracting attract inward investment from the pharma
industry. Employing tax incentives for Foreign Direct Investment (FDI), a non-
threatening regulatory environment, and an emphasis on their large and diverse
populations as both research subjects and potential markets for drug companies, both
countries have sought the outsourcing attention of pharmaceuticals and contract
research organisations (CROs). 107
108
Guidance produced for pharmaceutical
executives to inform their offshore decisions strongly suggests that this approach is
successful. The Country Attractiveness Index for Clinical Trials, which ranks
offshore locations in terms of patient availability, cost efficiency, relevant expertise,
regulatory conditions and national infrastructure, puts China and India at the top of
the table.109
Leading pharmas have already established a presence in China – Glaxo
SmithKline China (Beijing), Pfizer Pharmaceuticals (Beijing), Novartis
Pharmaceutical (Beijing) and Merck China (Shanghai). In addition, China has more
than 150 health biotechnology products in clinical trials and is increasing the number
of health biotechnology patents by about 30% per year.110
India, meanwhile has its
own well established pharmaceutical industry with overall sales in 2005 of US$ 8
billion and 20 per cent of the global market in generic drugs.111
More generally, following the accession of both countries to the WTO and their
agreement to the patent protection conditions of TRIPS, US based MNCs are
increasing their R &D investment in China and India. Between 1994 and 2002 R & D
MNC investments in China rose from US$ 5 to 646 million and in India from US$ 5
to 80 million (Figure 9). For South Korea the corresponding rise was from US$17 to
167 million. This investment is reflected in the rapid rise of multinational research
centres with China now hosting 750 such centres and India 150. However, an
important caveat is that if this investment is to provide increased developmental
capacity there has to be engagement between the multinational centres and the local
economy through spin-offs, labour mobility and partnerships with small companies
and universities. In practice, this does not necessarily happen.112
Figure 9 113
Where emerging economies like China and India are not yet advantageously placed is
in their access to the global financial markets that are essential to enable early stage
biotech companies to take forward the results of basic regenerative medicine research.
Although private investors and individual venture capital companies (VCs) can help
biotech startups it has been the long term capital flowing from the New York Stock
Exchange (NYSE), the American Stock Exchange (AMEX) and, most importantly,
the NASDAQ stock market that has played the pivotal role in making the US biotech
industry by far the largest in both market values and product sales. Bearing in mind
that 40% of all US venture investing is in the life sciences, in 2005 private biotechs
raised $7 billion in US capital, up from $5 billion in 2004, of which $3.5 billion was
by venture capitalists.114
In contrast to this, VC investment in Asia was miniscule and
barely registers when placed in the global context (Figure 10). Apart from Japan,
Asian stock markets do not have the liquidity and volume necessary to attract Western
VCs or biotech firms on any scale and the exit options for investors are limited.
Emerging economies in this region therefore have a funding gap in the life sciences
innovation process.
18
Figure 10 115
Both China and India recognise that this vulnerability must be addressed if they are to
compete in the global knowledge economy of regenerative medicine and are seeking
to evolve domestic alternatives to the conventional (US) model of venture capital and
commercialisation.116
China has a number of venture capital firms that are publicly
supported through national and local government. National government in particular
is increasing its role in this area as witnessed by the recent loan by the China
Development Bank to the Ministry of Science and Technology.117
118
In addition,
there are corporate, university and foreign owned venture capital firms and hybrids
formed by joint ventures between different types of firm.119
In the field of
regenerative medicine, unconventional business models are emerging in response to
the idiosyncrasies of the Chinese economy. For example, the Union Stem Cell and
Gene Engineering Company Ltd (StemGene) was incorporated in February 2001 with
two principal shareholders: the Institute of Haematology in Tianjin and the Shanghai
Met Corp, an organisation involved in the import and export of textiles. Floated on
the Shanghai Stock Exchange with a value of $30 million, it does not fund stem cell
research directly but instead finances the building of a new hospital that will in turn
generate revenue for the research.120
The Indian government is also seeking ways of dealing with the paucity of Western
venture capital flowing into India. In 1999 it established the Technology
Development Board to support and finance promising new ventures. By 2003 this
had promoted 103 projects valued at a total of US $1.7 billion in biotechnology areas
that included health and medicine. At the same time India has introduced guidelines
to facilitate the emergence of venture capital funds (VCFs). In 1996, the Securities
and Exchange Board of India (SEBI) framed the SEBI (Venture Capital Funds)
Regulations. While only 8 domestic VCFs were registered with SEBI during 1996-
98, by 2003-04 more than 70 additional funds were registered, the majority located in
four major clusters – Bangalore, Hyderabad, Pune and Mumbai and Chennai – where
growth in the biotech industry is very fast.121
Overseas VCFs were given tax
exemption privileges in 1995. By 2000, figures from the Indian Venture Capital
Association show that the combined total for domestic and overseas venture capital
investment was about US $2.6 billion.122
However, despite these state initiatives and despite the increase in the inward flow of
VC funds, when placed in the context of the global VC industry, China and India still
have a considerable distance to progress to overcome foreign investors‟ reservations
regarding their regulatory infrastructures and the exit opportunities afforded by their
domestic markets. In addition, at present VC investment in these two countries tends
to avoid the early stage, high risk phase of biotech development where the funds are
most clearly needed.123
Conclusions – Towards the opportunistic state
In deciding what strategy, if any, to adopt towards the knowledge economy of
regenerative medicine, states have to confront a number of uncertainties. Although
the political belief that there is a future value for regenerative medicine is global, the
precise nature of that future when measured in terms of the path of the science, the
19
market demand, the cultural response, the commercialisation process and its
associated business models is obscure. States must therefore make essentially
speculative policy choices in their pursuit of the capacity to benefit from the
regenerative medicine future. Depending on their assessment of how the knowledge
production process is best supported, states may make policy interventions at any and
many points in the several phases of regenerative medicine innovation from the basic
science to the therapeutic product.
Given the speculative nature of the enterprise, the ability of states to diagnose the
optimum points of intervention and then to formulate and implement the necessary
supportive policies is dependent on both their available resources (eg funding,
scientific workforce) and their adaptability. The extensive literature on competition
states, developmental states and their many variants suggests that this quality is not
peculiar to one type of state or another but is instead a product of their governmental
traditions, domestic politics, and regional position. Even with their common
infrastructures of scientific and industrial development, the competition states of the
West differ widely in their response to the opportunities of the emerging knowledge
economies. Equally, the developmental states of East Asia vary considerably in the
adaptations made to the centralised bureaucracies which drove the earlier phase of
their development. Then there are China and India, one an authoritarian single party
state and the other a multi-party liberal democracy but both states adapting their
government of science and innovation in order to compete effectively in the global
knowledge economy.
It is a state‟s ability to respond to global opportunities, rather than the coherence of its
inward looking policies, that provides the key to its likely position in the regenerative
medicine future. Knowledge economies are invariably global and this is reflected in
the transnational movement of the scientific and financial capital that fuel them.
More so than ever, no state can afford to be a political island. Increasingly it is the
production of policies that facilitate an advantageous engagement with global forces
that will determine a state‟s effectiveness in innovative fields such as regenerative
medicine, not the pursuit of protective policies that are bound to be undermined by the
growing presence of international economic governance.
As adaptive states, neither China nor India is reticent in their policy support for new
health technologies that may generate future value. The analysis of their performance
with regard to three key policy components of the knowledge production process
(scientific infrastructure, patenting and foreign investment) showed how they are
making progress in all three areas with China on the whole moving faster. Both are
seeking access to global resources to support their innovation strategies: such as to
intellectual capital through scientific collaborations and to pharmaceutical investment
through clinical trials facilitation. But in order to benefit from engagement with the
global knowledge economy they must own the intellectual capital produced through a
judicious use of national and international patenting systems. As yet, neither China
nor India has registered the penetration of Western patents achieved by their Asia
Pacific rivals Japan and South Korea – though China in particular is accelerating its
efforts through WIPO‟s Patent Cooperation Treaty. Exposure to the international
knowledge economy also has its costs. The majority of Chinese and Indian scientists
who access Western knowledge markets through their training in the United States are
also captured by the allure of those markets and choose to remain there. An important
20
policy consideration for both states is how to make sure either that they return or, as
in the case of the Non-Resident Indian -community for example, they can be
encouraged to provide a continuing source of global business expertise.
It is one of the signal lessons of globalisation that the permeability of state boundaries
should where possible be turned to a state‟s advantage. In their review of the
opportunities for biotech companies in India and China, Goodall and colleagues
remark on the possibility that China and India are opening up a new model of biotech
development: „Call it the “modular model”, a kind of decentralised R & D system
where different aspects of R & D are distributed globally and conducted almost
autonomously in different locations‟. 124
Because their innovation needs are different
from those of the competition states of the West, China and India will inevitably push
the dynamic of globalisation in directions that suit their interests and their particular
strategies on the knowledge production process. In the case of regenerative medicine,
there are already strong indications that both countries will play to their knowledge
production strengths in terms of the availability of research materials (e.g. oocytes), a
large and diverse pool of human subjects for clinical experimentation (clinical
labour), and inexpensive scientific labour. In return they will want to obtain such
advantages as access to the basic science in the field, a division of the patenting
benefits, and a sustained supply of venture capital. At the same time we can expect
that their strategies on the emerging governance of regenerative medicine through
such mechanisms as TRIPS and international ethical guidelines will become
considerably more proactive.
Notes
1 Haseltine WA (2003). Regenerative medicine: An overview. Journal of
Regenerative Medicine. 4:15–18. 2 US Department of Health and Human Services (2006). 2020: A new vision. A
future for regenerative medicine. Washington: US Department of health and Human
Services. Available at: http://www.hhs.gov/reference/newfuture.shtml 3 Brown N (2003). Hope against hype: accountability in biopasts, presents and
futures. Science Studies. 16(2): 3-21. 4 Brown N and Michael M (2003). A sociology of expectations: retrospecting
prospects and prospecting retrospects. Technology Analysis and Strategic
Management. 15(1): 3-18. 5 Brown N, Rappert B, Webster A (eds) (2000). Contested futures: a sociology of
prospective technoscience. Aldershot: Ashgate. 6 US Academies of Science, Commission on Life Sciences (2002). Stem cells and the
future of regenerative medicine. Washington (D. C.): National Academy Press. 7 US Department of Health and Human Services (2006). 2020: A new vision. A
future for regenerative medicine. Washington: US Department of health and Human
Services. Available at: http://www.hhs.gov/reference/newfuture.shtml
21
8 British Standards Institution (2006). Guidance on codes of practice, standardised
methods and regulations for cell-based therapeutics from basic research to clinical
application. PAS 83. London: British Standards Institution.
BSI British Standards Website (2006). Available at:
http://www.bsi-global.com/en/Standards-and-Publications/Industry-
Sectors/Healthcare/Regenerative-Medicine-/?recid=819 Accessed 3 May 2007. 9 Biophoenix (2006). Opportunities in stem cell research and commercialisation.
Business Insights: London. p. 80. 10
US Department of Health and Human Services (2006). 2020: A new vision. A
future for regenerative medicine. Washington: US Department of health and Human
Services. Available at: http://www.hhs.gov/reference/newfuture.shtml
11
UK Stem Cell Initiative (2005). Report and recommendations. Department of
Health, London. p. 5.
12
German Federal Ministry of Education and Research (BMBF) (2007).
Regenerative technologies for medicine and biology – contributions for a strategic
funding concept. Berlin: Capgemini Deutschland. Available at: http://www.bio-
pro.de/en/life/meldungen/03415/index.html Accessed 9 May 2007. 13
Cookson C (2005). Country report: China. Financial Times. 17th
June. 1. 14
UK Stem Cell Initiative (2005). Report and recommendations. Department of
Health, London. p. 5. 15
Padma TV (2005). India plans stem cell initiative. SciDevNet. 13 January.
Available at:
http://www.scidev.net/News/index.cfm?fuseaction=readnews&itemid=1849&languag
e=1 Accessed 9 May 2007.
16
Gottweis, H. Triendl R (2006), South Korean Policy Failure and the Hwang
Debacle, Nature Biotechnology, 24: 141-143. 17
Kim TG (2006). $450 million budget set for stem cell research. The Korean
Times. 29 May. 18
Elias (2006). Singapore woos top scientists. ABC News. 29 June (2006).
Available at: http://abcnews.go.com/Technology/wireStory?id=1835594 19
Cerny P (1990). The changing architecture of politics: structure, agency and the
future of the state. London: Sage.
20
Cerny P (1997). Paradoxes of the competition state: the dynamics of political
globalisation. Government and Opposition. 32(2): 251-74.
22
21
Hay C (2004). Re-stating politics, re-politicising the state: neo-liberalism,
economic imperatives and the rise of the competition state. Political Quarterly 75(1):
38-50. 22
Hirsch J (1991). From the Fordist to the post-Fordist state. In B.Jessop (ed) The
politis of flexibility: restructuring state and industry in Britain, Germany and
Scandinavia. Aldershot: Edward Elgar. 23
Jessop B (2002). The future of the capitalist state. Oxford: Polity Press. 24
Messner D (1997). The network society: economic development and international
competitiveness as problems of social governance. London: Frank Cass. 25
Pierre J (ed) (2000) Debating governance. Oxford: Oxford University Press. 26
Dahlman C and Aubert J (2001). China and the knowledge economy: seizing the
21st century. Washington; World Bank. p.43. Available at:
http://info.worldbank.org/etools/docs/library/137742/ChinaKE.pdf
Accessed 4th
June 2007.
27
Nelson R (ed) (1993). National innovation systems: a comparative analysis.
Oxford: Oxford University Press.
28
Mazzucato M and Dosi (eds) (2006). Knowledge accumulation and industry
evolution. Cambridge: Cambridge University Press. 29
Asheim BT and Gertler MS (2004). The geography of innovation: regional
innovation systems. In Fagerberg J, Mowery DC and Nelson RR (eds). The Oxford
handbook of innovation. Oxford: Oxford University Press. 30
Cooke P (2003). The evolution of biotechnology in three continenets:
Schumpeterian or Penrosian? (Editorial). European Planning Studies. 11(7): 757-63. 31
Cooke P (2004). Regional knowledge capabilities, embeddedness of firms and
industry organisation: bioscience megacentres and economic geography. European
Planning Studies. 11(7): 625-41. 32
Hart D (2002). Private technological capabilities as products of national innovation
systems: four ways of looking at the state. Science and Public Policy. 29(3): 181-88.
33
Hansen A (2001). Biotechnology regulation: limiting or contributing to biotech
development? New Genetics and Society. 20(3): 255-71. 34
Laredo P and Mustar P (2001). General conclusion: three major trends in research
and innovation policies. In Laredo P and Mustar P (eds). Research and innovation
policies in the global economy: an international comparative perspective.
Cheltenham: Edward Elgar.
23
35
Benner M and Löfgren H (2007). The bio-economy and the competition state:
transcending the dichotomy between coordinated and liberal market economies. New
Political Science. 29(1): 77-95.
36
British Standards Institution (2006). Guidance on codes of practice, standardised
methods and regulations for cell-based therapeutics from basic research to clinical
application. PAS 83. London: British Standards Institution.
BSI British Standards Website (2006). Available at:
http://www.bsi-global.com/en/Standards-and-Publications/Industry-
Sectors/Healthcare/Regenerative-Medicine-/?recid=819 Accessed 3 May 2007. 37
Prescott C (2005). Investing in stem cells: a venture capital perspective. Avlar
Bioventures. Presentation to the East of England Stem Cell Network, 8th
March 2005.
Cambridge. 38
In September 2006 the Roslin Cells Centre in Scotland launched a public-private
initiative that brings together the Roslin Institute, Scottish Enterprise, Edinburgh
University and the Scottish National Blood Transfusion Service to develop human
stem cell lines that will be sold worldwide for drug testing and medicines
development. Interestingly, the Centre is described as „the first step in a supply chain
to support the development of the wider stem cell sector in Scotland, providing cells
that can be used by academics, NHS Scotland and commercial companies‟ (BBC
News 2006). 39
This figure is an adapted version of one by Perrin 2005. Perrin N(2005): The Global
Commercialisation of Stem Cell Research. London, UK Trade and Investment.
Available at:
http://www.chrismason.com/industry_library/assets/UKTI%20Stem%20Cell%20Res.
pdf Accessed 24th
May 2007. 40
Rothman H and Kraft A (2006). Downstream and into deep biology: evolving
business models in 'top tier' genomics companies. Journal of Commercial
Biotechnology. 12(2): 86-98. 41
Applebaum RP and Henderson J (eds) (1992). States and development in the Asian
Pacific Rim. Newbury Park CA: Sage. 42
Hawes G and Liu H (1993). Explaining the dynamics of the southeast Asian
political economy: state, society and the search for economic growth. World Politics.
45(4): 629-60. 43
. Onis Z (1991). The logic of the developmental state. Comparative Politics. 24(1):
109-26. 44
Amsden A (1989). Asia’s next giant. South Korea and late industrialisation. New York: Oxford
University Press
45
Johnson C (1982). MITI and the Japanese miracle. Stanford: Stanford University
Press.
24
46
Wade R (1990). Governing the market: economic theory and the role of
government in Asian industrialisation. Princeton: Princeton University Press. 47
Weiss L (2000). Developmental states in transition: adapting, dismantling,
innovating, not „normalising‟. The Pacific Review. 13(1): 21-55, 29. 48
Wade R (2003). What strategies are viable for developing countries today? The
World Trade Organisation and the shrinking of „development space‟. Review of
International Political Economy. 10(4): 621-44. 49
Mann M (1997). Has globalisation ended the rise and rise of the nation state?
Review of International Political Economy. 4(3): 472-96.
50
Wade R (1996). National diversity and global capitalism. Cornell: Cornell
University Press. 51
Weiss L (1998). The myth of the powerless state. Cornell: Cornell University
Press. 52
Kim YT (1999). Neoliberalism and the decline of the developmental state. Journal
of Contemporary Asia. 29(4): 441-62. 53
Wu Y (2004). Rethinking the Taiwanese developmental state. The China
Quarterly. 177: 91-114.
54
Wong J (2005). Re-making the developmental state in Taiwan: the challenges of
biotechnology. International Political Science Review. 26: 169-190. 55
Wong J (2005). Re-making the developmental state in Taiwan: the challenges of
biotechnology. International Political Science Review. 26: 169-190. 56
Weiss L and Hobson J (1995). States and economic development: a comparative
historical analysis. London: Polity Press. 57
Haque MS (2004). Governance and bureaucracy in Singapore: contemporary
reforms and implications. International Political Science Review. 25(2): 227-40. 58
Wong J (2004). The adaptive developmental state in East Asia. Journal of East
Asian Studies. 4: 345-62. 59
Wong J (2005). Re-making the developmental state in Taiwan: the challenges of
biotechnology. International Political Science Review. 26: 169-190. 60
Lee CS and Schrank A (forthcoming 2007). Incubating innovation or cultivating
corruption? The development state and the life sciences in Asia. Social Forces. 61
Minns J (2001). Of miracles and models: the rise and decline of the developmental
state in South Korea. Third World Quarterly. 22(6): 1025-43.
25
62
Saich T (2004). The changing role of government? Background Note for the
World Bank Report on China‟s 11th
Five Year Plan. p. 4. Available at:
http://ksghome.harvard.edu/~asaich/The_Changing_Role_of_Government.pdf
Accessed 2nd
June 2007.
63
Baum R and Shevchenko A (1999). The state of the state. In Goldman M and
MacFarquar R (eds). The paradox of reform of China’s post-Mao reforms.
Cambridge MA: Harvard University Press.
64
Saich T (2000). Negotiating the state: the development of social organisations in
China. The China Quarterly. 161: 124-141.
65
Saich T (2003). Reform and the role of the state in China. In Benewick R et al
(eds). Asian politics in development. London: Frank Cass. 66
Dahlman C and Aubert J (2001). China and the knowledge economy: seizing the
21st century. Washington; World Bank. p.43. Available at:
http://info.worldbank.org/etools/docs/library/137742/ChinaKE.pdf
Accessed 4th
June 2007. 67
Chibber V (2003). Locked in place: state building and late industrialisation in
India. Princeton: Princeton University Press. 68
World Bank (1997). India: Five Years of Stabilization and Reform and the
Challenges Ahead. New York: World Bank. 69
Dahlman C and Utz A (2006). India and the knowledge economy: leveraging
strengths and opportunities. Washington: World Bank. Available at:
http://info.worldbank.org/etools/docs/library/145261/India_KE_Overview.pdf Accessed 4
th June 2007.
70
Winters A and Yusuf S (2007). Dancing with giants: China, India and the global
economy. Singapore: Institute of Policy Studies. 71
This section draws on data from two articles; Salter B, Cooper M, Dickins A
(2006). China and the global stem cell bioeconomy: an emerging political strategy?
Regenerative Medicine. 1(5): 671-83, and Salter B, Cooper M, Dickins A, Cardo V
(2007). Stem cell science in India: emerging economies and the politics of
globalisation. Regenerative Medicine. 2(1): 75-9. 72
Dahlman C and Aubert J (2001). China and the knowledge economy: seizing the
21st century. Washington; World Bank. p.43. Available at:
http://info.worldbank.org/etools/docs/library/137742/ChinaKE.pdf
Accessed 4th
June 2007. 73
OECD (2006). China will become world‟s second highest investor in R & D by
end of 2006 finds OECD. 2649_ 34273_37770522_1_1_1_1,00.html Accessed
5th June 2007.
26
74
Bound K (2007). India: the uneven innovator. London: Demos. p. 12.
75
OECD (2005). OECD science, technology and industry scoreboard. Paris, OECD.
P. 62-3. 76
Shukla R (2005). India science report: science education, human resources and
public attitudes towards science and technology. New Dehli: National Council of
Applied Economic Research.
77
Sur M (2005). Breathing life into biology. Nature Outlook: India, Nature. 436, 28
July: 487 78
Jayaraman KS (2005). Among the best. Nature Outlook: India, Nature. 436, 28
July: 483. 79
NB 2002 figure for South Korea, no 2001 figure available. Source: National Science
Board 2006: A2-43. 80
OECD (2005). OECD science, technology and industry scoreboard. Paris, OECD.
P. 62-3.
81
National Science Board (2006). Science and Engineering Indicators 2006. Volume
2, Arlington, VA: National Science Foundation. A2-17 82
National Science Board (2006). Science and Engineering Indicators 2006.
Volume 2, Arlington, VA: National Science Foundation. A2-33 83
OECD (2005). OECD science, technology and industry scoreboard. Paris, OECD.
P. 62-3. 84
Li Z, J Zhang J, K Wen, H Thorsteinsdóttir, U Quach, P A Singer & A S Daar
(2004). Health biotechnology in China: reawakening of a giant. Nature
Biotechnology. 22, Supplement, DC13-18.
85
National Science Board (2006). Science and Engineering Indicators 2006.
Volume 2, Arlington, VA: National Science Foundation. A3-55. 86
Department of Trade and Industry (2006). Global Watch Service. Science and
Technology Statistics. China. Available at:
http://www.globalwatchservice.com/Pages/ThreeColumns.aspx?PageID=362 Accessed 3 July 2006
87
Arnold W: Singapore fills stem-cell void created by a US ban. International
Herald Tribune. Business. 17 August (2006). Available at:
http://www.iht.com/articles/2006/08/17/business/stem.php Accessed 4 June 2007. 88
Levine AD (2006). Research policy and the mobility of US stem cell scientists.
Nature Biotechnology. 24(7): 865-6.
27
89
National Science Board (2006). Science and Engineering Indicators 2006.
Volume 2, Arlington, VA: National Science Foundation. A5-41. 90
National Science Board (2006). Science and Engineering Indicators 2006.
Volume 2, Arlington, VA: National Science Foundation. A5-41. 91
European Patent Office and OECD (2005). Intellectual property as an economic
asset: key areas in valuation and exploitation. Available at:
http://academy.epo.org/schedule/2005/e02/prog_2005_e02.pdf Accessed 6 June 2007.
92
OECD (2005). OECD science, technology and industry scoreboard. Paris, OECD.
P. 62-3. 93
Florida R and Smith D (1990). Venture capital, innovation, and economic
development. Economic Development Quarterly. 4: 345-60. 94
Florida R and Samber M (1999). Capital and creative destruction: venture capital,
technological change, and economic development. In M.Gertler and T.Barnes (eds).
The new industrial geography: regions, regulations and institutions. London:
Routledge. 95
Haemmig M (2003). The globalisation of venture capital. A management study of
international venture capital firms. Bern, Stuttgart: Verlag Paul Haupt. 96
World Intellectual Property Organisation (2006). WIPO Patent Report. Statistics
on Worldwide Patent Activity 2006 Edition. Geneva: p. 10, 16, 7.
97
World Intellectual Property Organisation (2006). WIPO Patent Report. Statistics
on Worldwide Patent Activity 2006 Edition. Geneva: p. 10, 16, 7.
98
World Intellectual Property Organisation (2006). WIPO Patent Report. Statistics
on Worldwide Patent Activity 2006 Edition. Geneva: p. 10, 16, 7.
99
National Science Board (2006). Science and Engineering Indicators 2006.
Volume 2, Arlington, VA: National Science Foundation. A6-13. 100
Science Business (2007). South Korea and China transform the geography of
patents. Science Business. 14 February. 101
Kenney M (2005). India, China and Offshoring (2004-05). Available at:
http://hcd.ucdavis.edu/faculty/kenney/articles/indiachinaoffshoring.htm Accessed 6
June 2007. 102
Ross A (2006). Fast Boat to China: Corporate Flight and the Consequences of
Free Trade; Lessons from Shanghai. New York: Pantheon.
28
103
Ernst and Young (2006). Progressions 2006. Capturing Global Advantage in the
Pharmaceutical Industry. New York: Ernst and Young Global Pharmaceutical
Centre. 104
Petryna A (2005). Ethical variability: drug development and globalising clinical
trials. American Ethnologist. 32(2): 183-97. 105
Kearney AT (2006): Fishing for opportunities: successful clinical trials
management. Pharmaceutical Executive. 1 June. Available at:
http://www.pharmexec.com/pharmexec/article/articleDetail.jsp?id=333301 Accessed
6 June 2007. 106
Enriquez J (2006). Might a bell toll for US pharma? Progressions 2006.
Capturing global Advantage in the Pharmaceutical Industry. Ernst and Young
Global Pharmaceutical Centre, 65-66. 107
Smith RD (2006). Foreign direct investment and trade in health services: a review
of the literature. Social Science and Medicine. 59: 2313-2323. 108
Petryna, Adriana (2006) „Globalizing Human Subjects Research.‟ In Global
Pharmaceuticals: Ethics, Markets, Practices, APetryna (ed), A Lakoff and A
Kleinman. Durham: Duke University Press, 33-60. 109
Kearney AT (2007). Making your move: taking clinical trials to the best location.
AT Kearney Inc. Available at: http://www.atkearney.com/main.taf?p=5,1,1,116,3,1
Accessed 13 June 2007. 110
Xinhua News Agency. China rapidly developing biotechnology and bioindustry.
Beijing. 4 January, 4 (2003). Quoted by L Zhenzhen, Z Jiuchun, W Ke, et al. (2004).
Health biotechnology in China: reawakening of a giant. Nature Biotechnology. 22,
Supplement, DC15. 111
Bound K (2007). India: the uneven innovator. London: Demos. p. 12.
112
Leadbetter C and Wilsdon J (2007). The atlas of ideas: how Asian innovation can
benefit us all. London: Demos. 113
National Science Board (2006). Science and Engineering Indicators 2006.
Volume 2, Arlington, VA: National Science Foundation. A5-51. 114
Fitzgerald M (2006). Where the money is. Nature Biotechnology. 24: 240-242.
115
Clark B (2006), Life Sciences Partnering China and Europe. 11 October, London
(2006). Available at:http://www.e-
unlimited.com/LSPCE/Event/London2006/default.asp?mp=presentations.asp
Accessed 6 June 2007. 116
Ernst and Young (2006). Transition. Global venture capital insights report 2006.
New York: Ernst and Young.
29
117
Ministry of Science and Technology of the People‟s Republic of China (2006).
Agreement on Developmental Financial Cooperation in Support of Indigenous
Innovation Signed Between Ministry of Science and Technology and China
Development Bank. Press Release. 23 March. Available at
http://www.most.gov.cn/eng/photonews/t20060323_29887.htm Accessed 4 June
2006. 118
The China Development Bank is a „policy bank‟ owned and operated by the national government
119
Wang SQ Wang CG (2002). Report on the development of venture investment of
2002. Beijing: China Financial and Economical Publishing House. 120
UK Stem Cell Initiative (2005). Global positions in stem cell research. China.
Available at: http://www.advisorybodies.doh.gov.uk/uksci/global/china.htm
Accessed 9 May 2007.
121
Sethi S (2001). Venture capital reforms: give me more on the platter. The
Economic Times, 31 January. 122
Chaturvedi S. Dynamics of Biotechnology Research and Industry in India:
Statistics, perspectives and Key Policy Issues. Statistical Analysis of Science,
Technology and Industry Working Paper 2005/6. Directorate for Science,
Technology and Industry, OECD, 41, (2005). Available at:
http://www.oecd.org/dataoecd/43/35/34947073.pdf 123
Ernst and Young (2006). Transition. Global venture capital insights report 2006.
New York: Ernst and Young. 124
Goodall S, Janssens B, Wagner K, Wong J, Woods W, Yeh M (2006). The
promise of the East: India and China as R & D options. Nature Biotecnology, 24(9),
1064.
Figure 1
States and the politics of the knowledge production process: policy components
1. The cultural acceptability of the aims, conduct and materials of the basic science and, in the event of cultural conflict, the regulation required to ensure compatibility with the dominant social values.
2. The training, retention and, if necessary, acquisition of the scientific labour necessary for the required knowledge production to take place.
3. Investment in, and organisation of, the science. 4. Ownership of the new intellectual property: the balance to be struck
between the needs of the knowledge market, the freedom of science to access research results, and the cultural status of the new knowledge.
5. Stimulation of the market response through support for the venture capital function, public-private partnerships and pharma engagement.
6. The protection of citizens, consumer confidence and the integrity of the potential product through the regulation of the application and testing of the new knowledge on human subjects.
Figure 2
Cell based products: a hybrid business model
Pharmaceuticals • High up-front
investment • Long development
times • High gross margins • Large markets
Cell based products • High up-front
investment • Medium/long
development times • Low gross margins • Focused markets
Medical devices • Lower up-front
investment • Short development
times • Low gross margins • Focused markets
Figure 3 (39)
Refining the commercial model
Figure 4 (79) Numbers of PhD degrees in Physical/biological sciences
the total 9846 doctorates in this field awarded to foreign students in the US (67).
PhD Degrees in Physical and Biological Sciences
0
10,000
20,000
1985 1987 1989 1991 1993 1995 1997 1999 2001
India China Japan South Korea United Kingdom United States
Figure 5 (81)
Figure 6 (90)
% share global S&T publications, 1988-2003
0
10
20
30
40
50
60
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
United States United Kingdom Australia Japan Singapore South Korea India China
Foreign graduate students in US
0
100,000
200,000
1987 1993 1999 2004
Elsewhere
Japan South Korea
India China
Figure 7 Patent Filings by Residents 1995 to 2004 (96)
Figure 8 (99)
US patent applications by origin of first-named inventor, 1990-2003
0
20,000
40,000
60,000
80,000
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
China (incl Hong Kong)
South Korea
India
Singapore
Japan
Australia
United Kingdom
Figure 9 (113)
R&D performed by foreign affiliates of US MNCs (US$millions)
0
2000
4000
6000
8000
1994 1995 1996 1997 1998 1999 2000 2001 2002
Missing data: China 2001, India 2000 and 2001
United Kingdom Australia Japan Singapore India Korea China
Figure 10 (101) Global biotech venture capital investment