Recently I had the good fortune to get to meet for a consultation with a young and talented chemistry professor (Prof X) from a state university elsewhere in the US. Prof X has an outstanding pedigree and reached tenure rather rapidly at a young age. This young prof has won a very large number of awards already and I think could well rise to the level of a Trost or a Bergman in time.
Not long ago this prof was approached by one of the top chemical companies in the world to collaborate on some applied research. What is interesting about this is that the company has begun to explore outsourcing basic research in the labs of promising academic researchers. I am not aware that this company has done this to such an extent previously. They do have an impressive corporate research center of their own and the gigabucks to set up shop wherever they want. Why would they want to collaborate like this?
R&D has a component of risk to it. Goals may not be met or may be much more expensive that anticipated. Over the long term there may be a tangible payoff, but over the short term, it is just overhead.
The boards and officers of public corporations have a fiduciary obligation to maximize the return on investment of their shareholders. They are not chartered to spread their wealth to public institutions. They have a responsibility to minimize their tax liability while maximizing their profitability. Maximizing profit means increasing volume and margins. Increasing margins means getting the best prices at the lowest operating expense possible.
Corporate research is a form of overhead expense. Yes, you can look at it as an investment of resources for the production of profitable goods and services of the future. This is what organic growth is about. But that is not the only way to plan for future growth. Very often it is faster and easier to buy patent portfolios or whole corporations in order to achieve a more prompt growth and increase in market share.
The thing to realize is that this is not a pollenization exercise. The company is not looking to just fertilize research here and there and hope for advances in the field. They are a sort of research squatter that is setting up camp in existing national R&D infrastructure in order to produce return on investment. Academic faculty, students, post-docs, and university infractructure become contract workers who perform R&D for hire.
In this scheme, research groups become isolated in the intellectual environment of the university by the demands of secrecy agreements. Even within groups, there is a silo effect in that a student working on a commercial product or process must be isolated from the group to contain IP from inadvertant disclosure. The matter of inventorship is a serious matter that can get very sticky in a group situation. Confidential notebooks, reports, and theses will be required. Surrender of IP ownership, long term silence on ones thesis work, and probably secret defense of their thesis will have to occur as well.
While a big cash infusion to Prof X may seem to be a good thing for the professor’s group, let’s consider other practical problems that will develop. The professor will have to allocate labor and time to the needs of the benefactor. The professor will not be able to publish the results of this work, nor will the university website be a place to display such research. In academia, ones progress is measured by the volume and quality of publications. In a real sense, the collaboration will result in work that will be invisible on the professors vitae.
Then there is the matter of IP contamination. If Prof X inadvertantly uses proprietary chemistry for the professor’s own publishable scholarly work, the professor may be subject to civil liability. Indeed, the prof may have to avoid a large swath of chemistry that was previously their own area.
This privatization of the academic research environment is a model contrary to what has been a very successful national R&D complex for generations. Just have a look in Chemical Abstracts. It is full of patent information, to be sure, but it is full of technology and knowledge that is in the public domain. Chemical Abstracts is a catalog and bibliography that organizes our national treasure. Our existing government-university R&D complex has been a very productive system overall and every one of us benefits from it in ways most do not perceive. We should be careful with it.
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May 6, 2012 at 3:25 pm
Coffee Lover
Hi Gauss – lets say there is a lithium chemist at Cornhill university and Megabucks pharmaceuticals has a new HIV drug that has a difficult organolithium step involving an alkynyllithium of all things. It was about 15 years ago and they went straight to him – who knows “corporate fellow”, unlimited research grant, but they asked him to figure it out. I was a little surprised they bypassed the midwesterner who knew a lot more about it.
May 7, 2012 at 6:53 am
gaussling
Hi, I’m a little confused. Could you elaborate a bit? Thanks.
May 6, 2012 at 5:50 pm
Joe Q.
At our shop (big multinational with some chemistry R&D) we have a few different ways of funding university research, from the completely hands-off to something more like contract research. In our case, though, we keep even the latter category as “fundamental” as possible — we try to avoid teaching our technology to outsiders, even after they’ve signed agreements with us. The process seems to work well in our case, at least most of the time. There is almost never an issue with publishing or giving talks. Not sure that many other companies take this approach, though.
On the flip-side, I often get the impression that academic researchers see us as an unlimited source of research funding. Professors are sometimes surprised when we don’t show the expected level of interest in their work, even when they present it in the context of future market opportunities for our company, as if we ourselves are unable to see what’s good for us. This may stem from a long-standing academic attitude that sees industrial research as less rewarding and perhaps less “meaningful”, and industrial researchers as inferior scientists or “sell-outs” who have sacrificed the pursuit of Truth for the pursuit of money. What professor would want to see his star graduate student give up academia to join Pfizer or Dupont?
Tying it all together is one of the fundamental asymmetries inherent to industry-academia interactions, at least in R&D-heavy companies: that the people most likely to participate on the industry side all have experience working in academia (as grad students and post-docs), while those on the university side generally have known no other life. This would tilt the playing field even if no money were involved.
Thanks for the opportunity to rant!
May 7, 2012 at 7:04 am
gaussling
I especially like your comment about the asymmetry between industry and academia. That is spot on.
Regarding your comment about a professor’s estimation of the value of a particular bit of work to the marketplace, my experience with such things is that they are operating totally in the realm of imagination. Just because some compound is offered in the Sigma Aldrich catalog at an astronomical price does not mean that a) there is a significant demand for the compound, or b) the catalog price is an accurate indicator of the value of the material at the scale of specialty chemical production. Aldrich prices are a terrible basis for writing a business plan.
May 7, 2012 at 8:50 am
Joe Q.
I wasn’t thinking in the context of Aldrich (we are not in the fine-chemicals business) but that’s an interesting angle. The bottom line is that market research is a tricky thing — difficult enough for a company already playing in the market, and almost impossible for an outsider.
May 7, 2012 at 9:43 am
gaussling
I just mentioned the Aldrich comparison because I often hear folks using it or the Strem catalog as a basis for estimating unit pricing. Catalog houses are a very special kind of business. They sell convenience and nearly instant access.
May 7, 2012 at 11:06 am
Joe Q.
Agreed — our estimation re: Aldrich pricing is that, for the stuff we typically buy, the price per kg would go down by an order of magnitude if we went to tank-car scale.
May 7, 2012 at 7:32 am
Milo
The differences between funding a project in a US lab v. an EU lab are staggering.
May 7, 2012 at 9:39 am
gaussling
Hi Milo, could you elaborate a bit?
Thanks.
May 7, 2012 at 9:47 am
Milo
there are two areas in my experience where the EU universities are far “better” to work with than the US. Cost and IP. For IP in the EU, I have had nothing but pleasent experiences, they are happy to let the company patent and will hold off on pubilcations until the patent is filed. US universities really like their IP. The initital negotiations are often very tough because the universities want to keep the IP.
Cost is another issue, the EU is typically cheaper than the US. I am not sure why…..
And lets face it, the competance of the European chemistry faculty is just as high as their US counterparts.
May 7, 2012 at 11:13 am
Joe Q.
Another major driver for university interactions (at least in our shop) is in recruitment and staffing. Engaging with grad students and post-docs in their “native habitat” as part of a research interaction is an excellent way to identify and “de-risk” possible future hires. It’s a lot cheaper than hiring someone “sight unseen” (or after a one-day interview, which is in some ways close to “sight unseen”) only to find out later that they just “don’t fit”.
May 7, 2012 at 12:09 pm
gaussling
I agree that there are many good reasons for business to befriend universities and forge relationships. I’m involved in several such relationships at present.
My criticisms relate more to the acquision of patents by universities. I think Bayh-Dole and the subsequent uptick in patents issued to universities has resluted in a situation where we pay for research to be done and then pay again for access to the right to practice it, if it is even available for licensing. Faculty inventors have ready-made labs and R&D infrastructure with low-cost labor (outside of OSHA) to produce IP that we in industry must subsidize one way or other, partially or in full, and compete with in the market place. It is poor public policy.
August 8, 2013 at 11:49 pm
ChristianPFC
There are two typos that occur twice: ones and inadvertant(ly) (change to one’s and inadvertent(ly)).
ChristianPFC