A Global Biotechnology Survey--Worldview Scorecard

Biotechnology around the world changes constantly. Modification of government policies, such as in patent protection, or in the financial environment, such as the availability of new funding, could spur growth and progress. Just as likely, certain changes in policies or funding could slow down opportunities in biotechnology. And, of course, advances in science continue to push the field forward, paving the way for new and innovative products in medicine, agriculture and sustainable energy. This dynamic state of flux, this ever-shifting landscape of "innovation potential" necessitates a thorough, annual examination of the factors stimulating or impeding advancement around the world.

In this second edition of the Worldview Scorecard, we continue to ask the vital question of global biotechnology development: Who is doing what, and how well are they doing it? Like last year, I, along with a team of advisors working with SCIENTIFIC AMERICAN, went in search of the global leaders as well as the would-be leaders in biotechnology innovation. The rationale for this project bears repeating: biotechnology can enable countries to improve their economies while enhancing the quality of life and health of their citizens.

In the pages ahead, we provide an overall scorecard that ranks the leading countries according to their capacities to develop biotechnology. Moreover, we present data on a wide range of other topics, including figures that reveal the impact of public policies on biotechnology. In response to comments and suggestions on last year's ranking and because of newly available data sets, we have also adjusted the focus of several areas in the scorecard—adding some data sets and removing others. For example, this year's section includes several new elements, including a corruption index and a compelling "brain gain/brain drain" index. As in last year's scorecard, we use a variety of approaches to dig deep into the innovation potential of individual countries. This also allows the results to incorporate the fact that biotechnology is not restricted to manufacturing products; indeed, many companies are active in services such as contract research, clinical-trial management, consulting and other activities with non-tangible outputs.

As the Worldview Scorecard matures, it will provide a record of change for the global biotechnology enterprise. As you shall see in the pages ahead, some countries have retained similar relative positions since last year, and a few surprises have also emerged. Thus, this year's report, as a second incarnation, provides the ability to evaluate the elements behind a country's current score, in addition to the opportunity to examine the factors driving change over time.

Basic Data Methodology

Deciding what to measure, and how best to gauge performance, poses an ongoing key challenge in developing the Worldview Scorecard. Poorly selected metrics can yield outputs that are difficult to interpret at best, and irrelevant at worst. 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. Additionally, to identify countries with strong opportunities for biotechnology growth, several fundamental measurements, such as the strength of intellectual-property protection, government support of R&D, educational attainment and others, were also considered. Finally, an objective approach was used to collect the data and compile the published list of countries. Instead of focusing on surveys, polls or existing lists of leading nations, and building on last year's report, we let the data guide the way. Lists that ranked all the world's countries in broad topics, such as ease of doing business and capital availability, 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 to make fair comparisons.

Adding It All Up

A second dilemma arises in compiling the individual metrics into the overall innovation score. What is the relative importance of each factor? For example, is the number of papers published more significant than the "brain drain" or "brain gain" of a region? If so, by how much? Moreover, weighting these factors is dynamic and difficult 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 measurable and known, all the measures were placed into discrete categories and these categories were compared on par. Examining the individual category scores makes it possible to independently evaluate the rationale for a country's innovation score.

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 10, with the lowest-ranked country scored as 0 and the highest-ranked country scored as 10. Next, the individual category means were calculated and then summed to derive the overall innovation score. This normalization equally weights the measurements and isolates any biases due to data gaps in individual categories. This slight alteration of methodology, and scale, produces different absolute scores than last year's scorecard.

Intellectual Property

Biotechnology depends on intellectual-property (IP) protection. 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 of a country's biotechnology activities—such as public companies per capita and portion of overall R&D spending used for biotech—balances some of the size-related differences between countries. Simply counting the gross sum of companies, patents or revenues generally favors the largest countries. Comparing the intensity of biotechnology activities, on the other hand, makes it possible to more objectively compare large countries and to identify small countries with strong biotechnology activities.

Enterprise Support

Enterprise support encourages growth of domestic biotechnology startups and lures 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 feed the growth of emerging biotechnology firms.

Education / Workforce

The technical complexity of biotechnology requires 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. Two important new factors were added to this category: talent retention (or a measure of "brain drain") and talent attraction (or "brain gain"). Decisions by international science and engineering doctoral students to emigrate post-graduation can serve as a vital indicator of a country's innovation climate, as measured by individuals with firsthand knowledge of that climate. Talent attraction, on the other hand, was measured as the share of the world's international science engineering students choosing to pursue doctoral studies in a country. This collection of measurements provides a robust assay of a country's scientific potential and output.

Foundations

Beyond national statistics and measures of current productivity, this category includes some broad measurements of the foundations for biotechnology innovation. This category focuses on more-general factors that can support activities at biotechnology companies. A new measure, the Legatum Innovation and Entrepreneurship index was added this year.

Keeping In Context

An objective comparison of statistical indicators cannot provide a complete picture of any one country's innovation. Subtle differences in political environments, economic strength, social influences and technological capacities profoundly impact biotechnology innovation. The data tables following the scorecard—as well as the individual country reports and other articles throughout Worldview—complement this global ranking and provide additional context and details.

THE INDUSTRY’S TAKE: HIGHLIGHTS FROM OUR OPINION SURVEY-
Rating the innovation capacity of nations is bound to be a controversial exercise. Our debut Worldview Scorecard last year sparked endless debate among scientists, policymakers, investors and those working in the industry, whether at small companies or multinationals.

We conducted a survey of industry leaders to see what they thought of our ranking, and to see what factors they believed were the most important in driving innovation.

Not surprisingly, the question of pricing was paramount. If a government is unwilling to pay a fair price for innovative products it will never be able to sustain a thriving bioscience sector. For many on the commercial side, their interest in a country for its “innovation-friendly” assets—talent, R&D infrastructure, strong intellectual property (IP) protection—is often overshadowed by whether or not that country imposes strict price controls for biotechnology products.

The issue raises a larger question: Do the factors that drive science always coincide with those that drive business? The answer depends on whom you ask.

One VP of International Government Affairs for a fortune 500 bioscience company, did not mince words about our survey: “You did an adequate job of evaluating supply side innovation,” he proffered, “but the demand side—factors such as rapid regulatory approval, pricing that will support industry—is not given enough weight.” He continued with a specific example: “You give high marks to New Zealand … and they do a good job at generating biotechnology products, but they are exporting them…. They have very little interest in paying for them.” Taking this criticism to its logical next step, he proclaimed, “If every country acted like New Zealand, innovation would cease to exist. It could not be supported.”

Pricing and IP enforcement were the concerns of another large biotechnology company’s global affairs director (who requested anonymity for our survey): “Price controls and the undermining of IP are huge threats to our business, and to innovation,” she said. “We have worked with governments on a tiered structure for pricing our products … but now everyone is fighting for the lowest level possible, regardless of their economic need. This used to be for HIV and other acute infectious disease treatments … but now these governments want it for every category.”

John Steele, Director, International Government Affairs for Eli Lilly and Co., sees a balance of factors enabling a country’s “ecosystem for innovation.” The main players in this ecosystem (the “three legs of the stool”, as he calls them) are government, academia and the private sector. All have skin in the innovation game. For governments, the most critical factors, he believes, are the ability to deliver quick and transparent access to markets, a pricing system based on clear criteria that rewards innovation, and a reimbursement  that expands access to patients.  “IP is priceless …which includes strong regulatory data protection, patent linkage,  and patent term restoration.” 

When asked to identify a country that had under-tapped potential, Steele points to Turkey. “Last year they instituted a pricing decree … their savings fell disproportionately on innovation-based companies and currently they are not approving marketing authorizations without GMP site inspections which is blocking new product approvals. This is a place with great potential that can attract biopharmaceutical investment, but their actual policies are undermining this goal.”

Mark Walton, CEO of Viagen, a biotechnology company specializing in animal cloning, has an obvious problem with the EU, for the way they may potentially regulate his core product. “The EU is a hot zone for clones,” he states, pointing out the irony that Dolly, the first cloned sheep, was born there. He sees the company’s most promising markets in Brazil and China, not only for the demand for food and animal products, but because he believes they are very “tech-friendly, private enterprise-friendly, and have strong research institutions.”

Regarding the issue of IP enforcement in China (one that comes up a lot in the industry), he notes, “IP is important to us ...but it’s not first on our list when we talk to China. Our expectations for China are different. It is such a large opportunity from a business standpoint … the value proposition has to transcend IP.”

Allan Jarvis, VP Corporate Development at Sanofi Pasteur, has a similar take on IP protection: “IP laws exist in many countries … the lack of IP protection can be a barrier in some cases, but in many cases you can find a way to work with the situation to maximize ownership of your products.” Jarvis sees unmet medical needs driving their decisions on where to do business, and what countries represent the best opportunities.  Regarding the “complex fabric” of a nation’s innovation climate, he stresses the mindset of the citizenry. “The culture of the people is an important factor … where there is a thirst for new information, an innate desire to try new things … you find this in areas where innovation thrives.” Interpersonal relationships, and interdisciplinary connecting are also hugely important to him. “The path to innovation is almost never a straight line. The person working in area A may make a breakthrough in area B. Interpersonal relationships are extremely important.”

Like Jarvis, BioMarin CEO Jean-Jacques Bienaimé believes “the medical priorities of a country will ultimately dictate its commercial potential.” On the differences between factors driving good science and good business, he says, “Research decisions can be decoupled from commercial decisions. You need quality people. You need a good cost of labor, but also infrastructure … and you need a stable political environment.”

Joe Hammang, Senior Director, Worldwide Science Policy at Pfizer, agrees on the importance of a quality infrastructure and a stable government: “Political stability, infrastructure, security, a willingness to work with us to expedite licensing and certain approvals are all critical.”  But in the end, he says, sustaining innovation comes down to a willingness to pay for innovative products.  “Just look at the United States,” he continues, “every state wants to be a bioscience leader—and they set up incubators and financing to do it—but once the products are available, state governments so often artificially control prices and limit access to innovative medicines in an effort to control costs.” He asks: “Why invest in the first place?”