A Global Biotechnology Survey [ Worldview Scorecard ]

by Yali Friedman

Countries around the world bolster biotechnology programs in hopes of raising their economic success and to enhance the quality of life and health of their people. With so many earnest efforts dedicated to growing domestic biotechnology industries, the central question remains: Who is doing what, and how well are they doing it? To shed light on this issue, I, along with a team of advisors working with Scientific American, sought to identify the global leaders in biotechnology and to provide a framework that could measure the progress and potential of countries—especially ones that are not currently regarded as world leaders. This was our guiding objective in creating the Scientific American Worldview Scorecard.

Although numerous broad regional rankings exist, often comparing the United States, Europe and Asia, this project’s goal was to dig deeper into the innovation potential of individual nations and the multiple factors that should be taken into consideration. For example, size must be considered and contextualized (especially as the United States is larger than any single European nation). Moreover, regions such as Europe and Asia consist of numerous politically and economically distinct countries. So rather than simply comparing gross productivity—the population and economic differences among countries limit the relevance of such a crude measure—this report investigates and enumerates the factors promoting and impeding biotechnology innovation. Furthermore, biotechnology activities are not restricted to the manufacture of products; many companies are active in services such as contract research, clinical-trial management, consulting and other activities with nontangible outputs. As a result, the data in this report come from diverse measures—including educational attainment of a nation’s population and research and development (R&D) funding and activity—to capture the broad array of biotechnology activities and factors supporting innovation.

In the following pages we assess the biotechnology innovation strength in various countries. The results are not a mere ranking of the countries—a basic comparison of national revenues would have accomplished that task. Instead, these results dig more deeply into the elements that impact overall biotech innovation. When examining these data, it is important to consider that a high innovation score does not necessarily mean that a country is producing a lot of biotechnology products. These measures indicate the capacity for biotechnology innovation. This analysis also includes innovation-output measures, which were not used in determining the innovation score. Nonetheless, these outputs—such as public-company performance and market-size measurements—help frame the innovation score. We believe most readers will find some surprises in the results.

Basic Data Methodology

A key challenge was deciding what to measure, and how to gauge performance. Poor selection of metrics can yield outputs that are difficult to interpret and lack utility. For example, focusing on gross revenues correctly identifies the global biotechnology leaders, but diminishes the important contributions by smaller nations or those with rapidly growing biotechnology industries. Dividing gross numbers by a country’s population or gross domestic product (GDP) can identify nations with relatively strong biotechnology industries, but might under-represent the activities of larger nations. To resolve this conflict, these data include both gross and relative metrics to provide a balanced viewpoint. Desiring to also identify countries with strong opportunities for biotechnology growth, we looked at several fundamental measurements such as the strength of intellectual-property protection, government support of R&D, educational attainment and others. To collect the data and compile the final list of countries, we relied on an objective approach. Rather than focusing on surveys, polls or existing lists of leading nations, we decided to let the data guide the way. We started with lists that ranked all the world’s countries in broad topics, such as ease of doing business and capital availability, and these were combined with numerous biotechnology-specific data sets. Counting the data gaps for each country, and eliminating those with the most gaps, made it possible to cull the list to arrive at a set of global biotechnology–innovation leaders. Excluding countries for which data were unavailable (because of a lack of transparency, or a general lack of biotechnology activity) was necessary, as these deficiencies would have made it impossible to fairly compare them against the others.

Adding It All Up

Compiling all the individual metrics into the overall innovation score created another dilemma. What is the relative importance of each factor? Is the number of patents granted more or less important than the availability of funding or workers? Is patent enforcement more important than having a business-friendly environment? If so, by how much? The weighting of these factors is dynamic and hard to objectively measure; the relative weight of factors is also subject to change based on context. Rather than assigning a weighting to each of the factors, which would imply that the relative importance is measureable and known, we decided to put all the measures into discrete categories and compare them on par. Examining the individual category scores makes it possible to independently evaluate the rationale for a country’s innovation score.

Two factors that were not directly measured are market access and regulatory burdens. These factors are difficult to objectively measure, but their impact can be assessed by evaluating market data. The measurement of therapeutics market size, for example, reflects the revenues from drug sales in a given country. This value is influenced both by the size of the patient population in a country as well as pricing influences. Likewise, measuring the hectares of biotechnology crops planted reflects the ability to grow and sell biotechnology crops in a given market. These are important measurements of innovation capacity, because companies will often locate their R&D and other operations in proximity to the most lucrative markets.

As described in the Methods (page 55) at the end of this section, each country’s performance in the individual metrics was ranked on a scale from 0 to 5, with the lowest-ranked country scored as 0 and the highest-ranked country scored as 5. Next, the individual category means were calculated and then averaged to derive the overall innovation score. The purpose of this normalization and two-step averaging was to consider the measurements on equal weighting and to isolate any biases due to data gaps in individual categories.

Intellectual Property

Intellectual-property (IP) protection is very important in biotechnology. The great time requirements, financial costs, developmental-failure risks of innovative R&D and the relative ease of reverse-engineering make the scope and strength of IP protection strong determinants of biotechnology innovation. Nonetheless, some countries maintain weak IP protection to promote growth of domestic industries. This strategy, however, often discourages domestic investments by foreign firms.

Intensity

Measuring the intensity—public companies per capita, portion of overall R&D spending used for biotech, and so on—of a country’s biotechnology activities balances some of the size-related differences between countries. Simply counting the gross sum of companies, patents or revenues generally favors the largest countries, which win largely because of their size. Comparing the intensity of biotechnology activities, on the other hand, makes it possible to fairly compare large countries with each other, and to identify small countries with strong biotechnology activities.

Enterprise Support

Enterprise support promotes growth of domestic biotechnology start-ups and encourages foreign companies to establish facilities domestically. To assess enterprise support, this report looks at factors such as how "business friendly" a country was perceived to be and the availability of various forms of capital, which are essential to support the growth of emerging biotechnology firms.

Education / Workforce

Biotechnology is a technically complex field, requiring skilled scientists and other workers for R&D and supportive activities. Moreover, many managers at biotechnology companies have advanced degrees, making education an important measure of a country’s capacity for biotechnology innovation. The data used here examine educational attainment at undergraduate and doctorate levels, and also enumerate the number of R&D personnel and biotechnology workers in addition to publication of scientific papers. Together, these measurements provide a robust assay of a country’s scientific potential and output.

Foundations

Beyond general national statistics, this study includes some broad measurements of the foundations for biotechnology innovation. So this category focuses on more-general factors that can support activities at biotechnology companies.

Worldview In Context

In general, an objective comparison of statistical indicators should not be expected to provide a complete picture of any one country’s innovation. Subtle differences in political environments, economic strength, social influences and technological capacities have profound impacts on biotechnology innovation. The individual country reports throughout Worldview are important complements to this global ranking, and provide additional context and details.