Swiss Turkish Economic Forum

Innovation in Biotechnology: The Human Factor

Işıl Güney, Ph.D.

9th Swiss Turkish Economic Forum

Istanbul, 10 December 2013

Contents

I: Components of an Innovation Ecosystem

II: Turkey’s Innovation Targets & Human Capital

III: Human Capital: Singapore and Israel examples

IV: Summary for Turkey

Components of an Innovation EcosystemPart I

Innovation – The Basic Elements

Innovation

Government Policy Basic and translational research;

Development of human talent, entrepreneurship and competition; Immigration policy; Patent policy; Start-up support; Fund and follow-up projects with clear deliverables; Incentivize R&D investment; Stable

and consistent policies overall

Financial CapitalPublic funds; Philanthropic

funds; Angel funds; Venture capital

financing

Human CapitalQuality of education

and access to training resources; Intellectual fulfillment and financial incentives; Opportunity for career development

Technology & Knowhow

Internal build up and/or import from outside

Innovation Cities – General TraitsChatterji, Glaeser, KerrClusters of Entrepreneurship and Innovation, 2013Innovation Policy and Economy Forum

High Education of Workforce

Higher the education => higher the entry rate in innovation sectors (not the case for manufacturing sector)

Local human capital levels are important to the development and growth of areas

Rich Supply of Entrepreneurs

Entrepreneurs will migrate at the very high end of startups (e.g. Silicon Valley) but generally more inclined to establish their companies in their hometowns

=> policy efforts to promote entrepreneurship is important

Physical Infrastructure

Roads, airports, broad band internet access, etc

=> entrepreneurial cluster projects often launched with city revitalization projects

Innovation Cities – General Profile of Companies Chatterji, Glaeser, KerrClusters of Entrepreneurship and Innovation, 2013Innovation Policy and Economy Forum

Presence of Incumbent Firms

10% higher base of incumbent firms => 6% higher number of start-ups many entrepreneurs leave incumbent firms to start their companies start ups draw resources and knowledge from incumbent firms, with former

employees as conduit, all who are attracted to places that have been hospitable to the industry in the past

Optimal mix of large and small companies

At least one large innovative company (draws on past experiences of company and being less explorative in R&D efforts) & many small innovative firms, often founded by former employees of anchor tenants

Turkey’s Innovation Targets and Human CapitalPart II

Turkey – population 75 million

16th largest economy in the world

Production driven, low-medium tech

Objective: Transform into a knowledge-based economy for smart growth

2023 Targets

Become one of ten largest economies of the world

Become a leading country in R&D; raise R&D expenditure from 0.8% to 3% of GDP

Health declared priority area

Medicines export: 595m TL; import: 5b TL

Develop first Turkish drug by 2023

Government Incentives

From R&D infrastructure all the way to product marketing, attractive incentives from government agencies, including MoDev, MoSIT, MoEcon, TUBITAK, KOSGEB.

Turkey – R&D strategies

Research clusters, technoparks, consortia and centers under development

Teknopark Istanbul, Catalca Biovalley, Bio Istanbul, Inovita, Inoviz, ITAM, Bosphorus University Life Sciences Center, Dokuz Eylul University Cluster…

Government incentivizing local industry to do research

Call for biosimilars proposals

Government wants foreign pharma to do research in Turkey

Foreign pharma not encouraged by patent policy and reference pricing

Turkey – Human Capital

Brain Drain

Large number of successful Turkish PhDs opting to work abroad

Thousands of Turkish students leave Turkey to receive education; many do not return

TUBITAK providing grants to researchers who come back

Turkey – Number of Researchers

Who will advance science in Turkey?

Turkey – Building Human Talent

Target 2023, Supreme Council of Science and Technology

Increase number of FTE researchers from 64,341 in 2010 to 300,000

National Science & Technology Human Resources Strategy & Action Plan

(2011-2016)- Increase the number of personnel in Human Resources in Science and Technology

(HRST) and improving the distribution of HRST across sectors - Develop the research culture, the capabilities and experiences of researchers - Improve the work environment of the HRST- Increase the mobility of researchers- Develop the recruitment capacity of R&D personnel

Human Capital: Singapore and Israel ExamplesPart III

Singapore – population 5.4 million

Singapore previously had no biomedical research infrastructure or industry

Government decided in 1980s to develop country into a biomed innovation hub

Entire value chain, from basic research to clinical trials, product development, manufacturing and delivery

Coordinated establishment of major initiatives to jumpstart cluster

Major research centers, research funds, clustering, consortia, etc.

500m USD for development of Biopolis, a physical hub for life sciences

Designed to foster collaborations between nearby universities, institutes, science parks

Singapore Economic Development Board (EDB) attracted DFI from pharmaceutical multinationals

BMS cluster largely dominated by foreign companies; companies given generous incentives from EDB to conduct research and benefit from Singapore’s manufacturing capacity

Singapore – Human Capital

Lack of local talent => IMPORT INTERNATIONAL TALENT

An integral part of government’s strategy

Singapore Biomedical Research Initiative advised by preeminent foreign scientists

Sir Richard Sykes, Rector, Imperial College, London

Dr. John Mendelsohn, President, MD Anderson Cancer Center, USA

Prof. Peter Gruss, President, Max Planck Society, Germany, and others…

Other world renowned scientist recruited to leading research positions

Sidney Brenner, Alan Colman, Sir David Lane, Nancy Jemkins, Edison Liu, and others…

=> attract younger scientists from their network to work under them

Build internal talent in the meantime…

Government sends top students to leading universities for graduate education; students must return to Singapore. Target of 1000 trained PhDs by 2015

Initiatives for promoting international multidisciplinary research

Singapore-MIT alliance

Singapore – Results (in progress)

Now home to 6000+ highly qualified researchers from around the world

In 2010, 5000 R&D employees, 14,000 biomed manufacturing employees

Over $1.2billion spent on biomedical R&D annually

Over 50 biomedical sciences companies, 30 research institutes

In 2011, Singapore manufactured over $22billion of medicines and medical devices for global markets

Committed to investing $13billion between 2011-15 for research, innovation and enterprise

Push to develop life saving medications: a couple of drugs now in phase III

Israel – population 8 million

Israel made strategic decision to jumpstart science-based sector in 1960s Financial support to commercial R&D => reduce risk of market failure and of operating in geographically isolated location

Chief Scientist’s grants program (high-risk loan)Firms submit R&D proposals; govt grants cover 66-90% of costs on competitive basisChief Scientist’s office reviews proposals according to technical and commercial feasibility, risks and potential to generate expertiseSuccessful projects pay back to the Office of Chief Scientist the funding it received from small percentage of annual sales

Yozma – govt program to establish venture capitalEstablished 10 VC funds (40% of total capital investment)Rest contributed by foreign funds attracted by risk guarantees (tax incentives to foreign VC investment and funds doubled by government)=> Between 1991 and 2000, Israel VC increased nearly 60-fold from $58million to $3.3billion

High number of angels investors, low start-up costs

Israel – Human Capital

Compulsory military service

Early training in sophisticated technologies

Collapse of the Eastern Block in the 90s

Influx of nearly 1million highly trained ex-Soviet Jewish immigrants

Jewish diaspora around the world

Large pool of researchers providing assistance and know-how from abroad

Government set up technological incubator program in 1991 (leverage human talent)

Provide skilled immigrants with funding and knowhow to become entrepreneurs 40% of companies that came out of incubator are active to this day Private sector has invested $2.5billion on graduate companies

Israel – Results

From 1996 to 2012, number of life sciences companies increased from 186 to 1,100

Number one in the world in medical-device patents per capita

Largest number of companies listed on NASDAQ outside of US

Highest level of venture capital as share of GDP

High-tech industries make up nearly 50% of industrial exports

Take compounds through Phase 2, then partner with big companies

Israel continues to leverage outside expertise

Summary for TurkeyPart IV

Summary for Turkey

Turkey has set ambitious targets to become a knowledge based economy

Turkey is supporting the development of new research centers and clusters

In order for these initiatives to advance, Turkey must invest heavily in developing the necessary human talent

Turkey has a strong scientific diaspora it needs to attract back

At the same time, it must invest in drawing foreign talent and knowhow, via recruiting top international talent to Turkey as well as building international collaborations (e.g. Product Development Partnerships)

Finally, significant efforts must go into improving quality of education and access to training resources in Turkey in order to locally develop top talent

Priority must go into building talent as opposed to physical structures