Transformative Technologies and the

Internationalization of R&D

Geoff Nimmo

Industry Canada

Geoff Nimmo – Six Countries Program – Helsinki – June 17-18, 2004

Central Thesis

Transformative technologies do more than change industrial processes. They change entire infrastructures, including governance and regulation.

They do this in uneven ways, leaving some sectors unchanged, while destroying and replacing others.

This results in a need to develop perspectives that elicit relevant nuances for industrial strategy.

Geoff Nimmo – Six Countries Program – Helsinki – June 17-18, 2004

Outline

• Technology Dynamics

• Diffusion of Innovation

• Institutional Roles• Local – Global

• Developed – Developing

Issues Landscape

•Considerations•Roles and Activities•Conclusions

Geoff Nimmo – Six Countries Program – Helsinki – June 17-18, 2004

Basic Questions

• How to manage the ‘public good’ aspects of science?

• In what way will biotechnology (and other technologies) be transformative?

• Are radical changes in public policy needed, or will incremental changes work?

• Where does burden of proof lie – with the status quo, or with potential future benefits?

• How will interactions between transformative technologies and existing institutions merge to produce benefits?

Geoff Nimmo – Six Countries Program – Helsinki – June 17-18, 2004

Industrial Technologies (Dynamics I)

1775 1800 1900 2000

Te

ch

no

log

y I

nte

ns

ity

60 Years 55 Years 50 Years 40 Years

Waterpower, Textiles,

Iron

Steam, Rail, Steel

ICE, Electricity, Chemicals

Aviation, Petrochemicals,

Electronics

ICT

BIO

Nano

Geoff Nimmo – Six Countries Program – Helsinki – June 17-18, 2004

Growth•Standardization•Wide acceptance•Impacts understood

Developing•Rapid development•Increased acceptance•Growing support structure

Early•Competing concepts•High implementation risk•Unknown impacts

Industrial Technologies (Dynamics II)

Mature•Commodity pricing•Low risk•Full support infrastructure

Transformation Zone•New vs. Old•Risky vs. Safe•Unknown vs. Known•Opportunity vs. Stagnation

Geoff Nimmo – Six Countries Program – Helsinki – June 17-18, 2004

Diffusion of Innovation

Commercialization – Continuity of Interest Value

Innovation Production Use

Process Flow

Information Flow

Research Development Manufacturing Marketing Customer Support End UserValley of Death Sales Chasm

Geoff Nimmo – Six Countries Program – Helsinki – June 17-18, 2004

Stakeholders

Government•Economic development•Regulations•Intellectual property•Conflict resolution

Business•Research and development•Market Development•Infrastructure and support•Financing

Non-Government Organizations•Represent specific public interests•Rely mainly on influence•Can (and do) appear anywhere•Driven by principles rather than practical issues

Local National Regional Global

Geoff Nimmo – Six Countries Program – Helsinki – June 17-18, 2004

Issues LandscapeG

ove

rnm

ent

Bu

sin

ess

No

n-G

ove

rnm

ent

Org

aniz

atio

ns

Loca

lN

atio

nal

Reg

iona

lG

loba

l

Research Develop Manufacture Market Support Use

•Science as public good•Global projects (Genome)•Regions (ERA)

•Nat’l science agendas•Academic support

•Academia

•SMEsIn

cen

tive

s fo

r g

lob

al o

uts

ou

rcin

g

TENSION

•Scale•Spread R&Dcost

•Culture &customs

•Source ofbusinessmodel

•Source ofIdeas

Geoff Nimmo – Six Countries Program – Helsinki – June 17-18, 2004

Big Science

Considerations•Global impacts – new life forms, pandemics•Implications for global orgs: WTO, WHO, FAO, OECD•Large-scale projects (Human Genome)•Global assessment tasks – risk management, environment, systems•Global problems – security, climate, communications & transportation

Roles and Activities•Joint priority setting•Provide adequate funding•Extend/modify treaties

Geoff Nimmo – Six Countries Program – Helsinki – June 17-18, 2004

National R&D Agendas

Considerations•Specific national requirements

•Security, environment, skills, international competitiveness•Specific national impacts

•Environment, legacy industries•National values & ethics may differ (EU vs. NA)•Regulatory process built into legislation & jurisprudence•Temptation to use standards to create dominance

Roles and Activities•Identify national priorities•Co-ordinate R&D efforts•Create country linkages within innovation cultures

Geoff Nimmo – Six Countries Program – Helsinki – June 17-18, 2004

Academic Support

Considerations•Essential for moving science forward

•Primary domain of pure research

•Specific areas of expertise

•Necessary for skills development & economic growth

•Springboard for national positions in international debates

Roles and Activities•Participate in local technology clusters

•Need greater sensitivity to end use of research

Geoff Nimmo – Six Countries Program – Helsinki – June 17-18, 2004

SMEs

Considerations•Primary vehicle for new technology exploitation

•Engine of technological progress

•Accept costs and risks of product development

•Subject to threats due to loss of competitive advantage

Roles and Activities•Need to participate in cluster formation•Need to support infrastructure development•Maintain & support entrepreneurial posture

•Focus on business model

Geoff Nimmo – Six Countries Program – Helsinki – June 17-18, 2004

Global Manufacturing

Considerations•Very cost conscious and competitive•Requires availability of labor, skills, resources

•Takes place locally and globally•Offshore manufacturing a major issue

•Pharmaceuticals exemplify a special case•Full supply can be produced in one production run•… but there could be many products

•International co-operation needed to rationalize drug development

Roles and Activities•Production for global markets a nat’l strategy•May require new patent regimes•Integrate with other sectors for bio-economy (energy, agriculture)

Geoff Nimmo – Six Countries Program – Helsinki – June 17-18, 2004

Global Markets

Considerations•Area of considerable conflict and tension:

•Local customs, standards and regulations•Need to accommodate many interests in one business model

•Need economies of scale & distribute R&D costs•Grey markets, IP protection an issue•Strong NGO presence

•May impact regulations, limit profit potential

Roles and Activities•Participate in global regulatory regimes•Foster adaptability, agility•Work with NGOs

Geoff Nimmo – Six Countries Program – Helsinki – June 17-18, 2004

Conclusions

• Biotechnology experience demonstrates that the evolution and impact of transformative technologies on science and its internationalisation cannot be projected as a straight line from the past

• Possible long term institutional shifts that will lead to increased internationalisation in regulatory science, and perhaps large scale public good projects

• Incentives for the private sector to engage in many of the core areas of human health and agriculture have been reduced and the costs increased

• Despite being the targets of resistance, MNEs are more likely to benefit from the institutional shifts than SMEs

• Developing countries could leapfrog up the development ladder more rapidly through superior institutional readiness for transformative technologies

• This could lead to a rethinking of the role of R&D in the acceleration of economic development in the the developing world