50 whys to look for genes: 49. Biotech/Pharma funds it

The 1970s saw researchers in molecular genetics first argue that science progresses when free from outside direction–in the form of government restrictions on genetic engineering–and later argue that science progresses when scientists are free to receive funding (and often direction) from private corporations–including corporations started by academic researchers. In 1980 the Bayl-Dole act in the USA allowed private corporations to profit from commercializing products of research that had been funded by the government.

Universities began investing in biotechnology (biotech), whether by licensing results of research conducted by their faculty, building centers aimed at attracting partnerships with biotech corporations, or allocating parts of their endowments to biotech stocks (which were increasingly stocks of pharmaceutical companies that acquired biotech startups). Growth in the biotech sector (a term that came to be seen as more than research based on genetics) followed (history), with trends illustrated by this plot of market capitalization in the USA (where the vertical scale on the left is $billion and DJIA refers to Dow Jones Industrial Average on the right):

(source, 2011).
It is now difficult if not impossible to conceive of or get funding for biotechnology research without thinking in the terms of commercialization, as illustrated by leading journals such as Nature spinning off new journals, such as Nature Biotechnology, and the articles in the following 2012 special edition on Commercializing Biomedical Research: (table of contents). (For a more detailed history of corporate and government shaping of scientific innovation in biotech, see this entry point.)

By the early 1990s, the speculative dimension was evident in investment in biotech: Should one buy stocks based on optimism about a firm’s future profitability and aim to sell early if they begin to decline? (NY Times, 1991)

Moreover, a firm’s prospects may rise with a new innovation and fall when a competitor overtakes the speed the firm had achieved (Forbes, 2014)

Wall Street turned its back on biotech many times over the last 30 years. During those periods, capital was more expensive and difficult to obtain (source, 2011).

Universities have been pulled into the realm of technology maturation to fill a void in early stage investing (source, 2012)

The biotech investment community needs to look beyond the existing pools of funding and talent to galvanize biomedical innovation (source, 2012)


(Introduction to this series of posts)


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