Science in the Triangle

Forget about the Bay Area and Boston. North Carolina’s Research Triangle, anchor of the third largest U.S. biotech hub, needs to look beyond continental shores if it wants to measure itself against some of the most innovative regions in the world. In China, India and Brazil, emerging biotech industries are stirring restlessly.

This came across so loud and clear at BIO 2011, the international biotechnology convention that from June 27 to June 30 brought companies, economic development recruiters, lobbyists and analysts from across the world to Washington, D.C., the message took on a measure of self-evidence.

The annual state-of-the-industry report, which Ernst & Young presented at the convention, provided supporting numbers:

• $61 billion, China’s drug market, which ranked second behind the U.S. last year and is projected to double in size by 2015.
• $1.8 billion, Brazil’s share of global investments in biofuel production last year. The U.S. ranked second and Europe was third.
• 70 percent to 75 percent, developing countries’ projected share of worldwide deaths from heart disease, stroke and diabetes in 2020.
• 25 percent, amount by which research and development investments in U.S., Europe, Canada and Australia decreased in the past two years.

Fareed Zakaria

What is happening, commentator and book author Fareed Zakariah said, is that “the landscape of innovation is shifting around the world.” Zakariah moderated a panel discussion with experts from India, Malaysia and China at BIO to explore the situation in those countries. Hundreds of BIO attendees came to listen.

To set the stage, Zakariah explained how the U.S. became the nation that sent the first man to the moon, developed vaccinations for childhood diseases such as polio and invented the personal computer.

In the 1920s and 1930s, Germany was the most innovative country, he said. During and after World War II, some of the brightest and most talented German scientists, many of them Jews, were part of a mass exodus that headed for the U.S.

“The U.S. benefited enormously from this inflow of talent,” Zakariah said.

The Immigration and Nationality Act of 1965 opened America’s gates to a similar mass inflow of talent from Asia. Buoyed by generous funding of basic sciences, nascent companies and public university systems during the Cold War, the U.S. became a worldwide dominating innovation power. But in the 1980s, the rest of the world started to catch up, Zakariah said. Economies developed, incomes and living standards rose - first in Japan, then in Singapore, Hongkong, South Korea and Taiwan, also known as the four Asian tigers, and most recently in India and China.

In the U.S., the housing market collapsed and the banking industry faltered. Research and development jobs started to move to low-cost countries, where many U.S. manufacturing jobs had already gone. Rising incomes and demand in developing countries convinced companies to pay more attention to consumers there.

“Now we face the question: Where does the U.S. go,” Zakariah said.

Anula Jayasuriya

Companies like the manufacturer that sells its portable EKG machine in India for a fraction of the price General Electric charges for its EKG machines is driving frugal innovation, said Anula Jayasuriya, an Indian life science investor and a member on Zakariah’s panel.

The Indian manufacturer is considering bringing its portable EKG machine to the U.S., Jayasuriya said.

Health care problems will be solved where the need is biggest, which is in developing countries, said Georg Baeder, Asia life science business leader of the strategic consulting group Monitor and also a member on Zakariah’s panel. And at costs that are customary in developing countries.

George Baeder

The Chinese government is spending about $125 billion to upgrade and stimulate life science research. In India, the government is trying to help early stage companies. In Singapore, the government is expected to invest $12.5 billion on life science research innovation over the next five years, according to the Ernst & Young report.

And about 80,000 researchers and entrepreneurs who left China for a college education in the U.S. and Europe are returning to China, Baeder said.

A score card that Scientific American magazine developed for BIO in concert with the biotech industry’s trade organization showed that China, India, Brazil still have some catching up to do before they become serious challengers to a still dominant U.S. But a ranking of the top 48 countries capable to generate innovation in biotech worldwide, the score card lists Singapore ninth, Malaysia 28th, China 30th, Brazil 42nd, and India 44th.