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The effect of federal research funding on formation of university-firm biopharmaceutical alliances

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Abstract

The National Institutes of Health (NIH) is the largest funder of health and life science research in the United States. The research sponsored by the agency has continued to aid in the development of new biopharmaceutical therapies, many of which are commercialized via alliances between universities and biopharmaceutical firms. In this paper, we examine this commercialization pathway more closely, evaluating the effects of NIH research funding on US universities’ alliance formation. Based on results from instrumental variables models, we estimate that, on average, producing one additional university-firm alliance requires a sustained increase of $294 million in universities’ total NIH research funding over the preceding five-year period. In addition, a sustained increase in funding of $100 million over 5 years increases the probability of a university forming at least one alliance by 0.54, or 54 percentage points.

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Notes

  1. According to data reported on the NIH’s REPORT website: http://report.nih.gov/index.aspx.

  2. Author’s calculation using 2012 General Social Survey data, collected by the National Opinion Research Center (NORC) at the University of Chicago: http://www3.norc.org/gss+website/.

  3. The records were limited to funding that was awarded as part research project grants that were not affiliated with the Small Business Innovation Research (SBIR) and Non-Small Business Technology Transfer (STTR) programs. Funding tied to SBIR and STTR programs is intended to promote the development of university research spin-off companies and small businesses. The focus of this study was to examine the effect of the extramural funding that comprises the bulk NIH budget that is meant to promote.

  4. The original data included 694 unique university entries. However, for 12 of the university entries, the names were spelling variants of universities that were already accounted for.

  5. Interestingly, with Duke being one of the eight founding institutions to receive funding from the National Cancer Institute as a Comprehensive Cancer Center since 1973, this alliance may also serve more generally as an example of potential for federal R&D funding to encourage non-federal investment in university research alliances. See Duke University’s press release dated 20 January, 1998, last accessed 24 September 2014: http://www.eurekalert.org/pub_releases/1998-01/DU-TADC-200198.php.

  6. We also compared these results with those obtained using cluster-bootstrapped standard errors on 400 replications and found very similar results.

  7. Marginal effects for the Poisson regression are presented as percentages because the link function for the Poisson model involves the exponentiation of the linear model.

  8. See NIH website: http://www.nih.gov/about/mission.htm.

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Acknowledgments

This material is based upon work supported by the National Science Foundation’s Science of Science and Innovation Policy (SciSIP) program, Grant awards 1064215 and 1355279.

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Authors and Affiliations

  1. New Mexico Consortium, Albuquerque, NM, USA

    Margaret E. Blume-Kohout

  2. RAND Corporation, Santa Monica, CA, USA

    Krishna B. Kumar

  3. Pardee RAND Graduate School and Genentech, Santa Monica, CA, USA

    Christopher Lau

  4. University of Southern California, Los Angeles, CA, USA

    Neeraj Sood

Authors
  1. Margaret E. Blume-Kohout
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  2. Krishna B. Kumar
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  3. Christopher Lau
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  4. Neeraj Sood
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Correspondence to Margaret E. Blume-Kohout.

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Blume-Kohout, M.E., Kumar, K.B., Lau, C. et al. The effect of federal research funding on formation of university-firm biopharmaceutical alliances. J Technol Transf 40, 859–876 (2015). https://doi.org/10.1007/s10961-014-9374-7

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