Driving Technology Transfer in Greater Philadelphia

In today’s innovation economy, regions that are able to translate research discoveries into viable products and services are poised to capture significant growth. With Greater Philadelphia’s world class academic and medical research institutions, converting promising ideas and technologies to the marketplace – a process known as technology transfer – is a crucial pathway for growing jobs and wealth in our region.

Given the region's sluggish job growth numbers, long-standing concerns have been raised about whether Greater Philadelphia is adequately capitalizing on its research and innovation assets for business growth. Over the past decade, there has been greater collective focus on technology transfer as a priority strategy for the region, and positive trends for key metrics indicate that these effort may be starting to pay off.

SIGNS OF TECH TRANSFER PROGRESS

There are many ways to measure tech transfer activity corresponding with the many steps involved with converting research to marketable products and services. Critical tech transfer metrics include research funding, invention disclosures, patent awards, and licenses issued, among others. But the most telling metric to gauge ultimate marketplace success for tech transfer efforts is licensing revenues.

Between 2008 and 2012, area institutions took in almost $595 million in licensing revenues for technologies that achieved marketplace success as a result of license agreements with businesses, ranking our region 5th among U.S. metros. Given that Greater Philadelphia ranked 8th in total federal R&D funding over the same period, this suggests that our region is holding its own compared to other metros in capitalizing on its research resources for commercial success. While Greater Philadelphia’s licensing revenues are still significantly lower than those for the four metros in front of us – one-half of Boston’s total, one-third of Los Angeles' and Chicago's, and one-quarter of New York City's – these regions also receive substantially more federal R&D funds.

Licensing revenues at Philadelphia-area institutions are predominantly focused on life sciences technologies, corresponding with the region’s emphasis on biomedical innovation. More than 70% of Greater Philadelphia’s $1.1 billion in federal R&D funding received in 2012 was devoted to life sciences research. Given the somewhat spiky nature of licensing revenues with sharp increases driven by specific technologies achieving widespread success, some of Greater Philadelphia’s success can be explained by licensing “home runs.” One such recent major tech transfer success is the production of the rotavirus vaccine developed by CHOP and Wistar Institute researchers and sold by Merck that now saves the lives of thousands of children in developing nations annually.

The region’s biomedical strength brings with it a particular set of commercialization challenges, as efforts to bring promising life sciences research to market have become increasingly expensive and risky and take significantly longer to move from research to a marketable invention. This stands in contrast with more diversified regions like Boston, where 45% of federal R&D funding is for life sciences.

Institutional Investments and Collaborations Leading the Way

The greatest impact on commercialization outcomes in our region is coming from academic and research institutions that are expanding their approach to technology transfer and working to build an institutional culture that supports entrepreneurship. In recent years, leading area universities and research centers have increased resources devoted to their technology transfer offices, made it easier for faculty to pursue business ventures, and elevated tech transfer’s importance within the university’s core mission.

Research institutions are at the core of successful technology transfer efforts due to intellectual property laws that grant them control of technology that they develop through federally funded research. Created under the Bayh-Dole Act of 1980 to manage intellectual property and licensing for research universities, technology transfer offices (TTOs) have struggled to balance the interests of the many parties involved in making a deal: faculty trying to make invention disclosures, university administrators seeking to maximize licensing revenues, and entrepreneurs and potential industry partners looking to access technologies with commercial potential. While TTOs across the country frequently suffer from lack of resources, several local universities have made an explicit effort to increase their technology transfer capabilities and funding, be more proactive in their outreach to faculty and researchers, and realign incentives to ensure that invention disclosures and licensing agreements are on par with licensing revenues and IP protection as TTO priorities.

Drexel and Penn are two universities that have placed significant TTO changes at the center of more ambitious efforts to boost commercialization of faculty research. Drexel has made innovation and entrepreneurship a cornerstone of its strategic plan. Last year, Drexel established the region’s first stand-alone school of entrepreneurship, opened a new building for its LeBow School of Business, and created a new Drexel Ventures subsidiary to boost tech transfer and entrepreneurship supports on campus. The location of Drexel’s new ExCITe Center and the growing Westphal College of Media Arts and Design on the easternmost edge of the University City Science Center’s campus are providing a crucial opportunity for University City to expand beyond its historical life sciences strength and build a more diversified base of startup activity based on Drexel’s IT and communications strengths. The university’s most ambitious entrepreneurship-fueled vision will take several years to unfold, as President John Fry leads the charge to create an entire new “innovation neighborhood” on properties adjacent to – and possibly over the railroad tracks at – 30th Street Station.

The University of Pennsylvania, long known for its basic research prowess alongside its applied medical and engineering strengths, unveiled a new UPstart company formation program in 2010 that focuses on helping its diverse faculty form new companies based on their inventions and discoveries. UPstart has been credited with starting to improve awareness and change the culture among Penn faculty about entrepreneurship opportunities – no small feat at such a large university with so much tenure – and has had three times the national success rate on commercialization grant awards. Building off the work of UPstart, the university recently launched the Pennovation Center, a business incubator and lab space located in Penn’s new South Bank campus in Grays Ferry. Penn also reorganized its TTO under a new name – the Penn Center for Innovation – to reflect its broader mission beyond patents and licensing to also focus on launching startups and building corporate research alliances.

Greater Philadelphia also boasts strong off-campus commercialization infrastructure and leadership to facilitate critical tech transfer connections between researchers, entrepreneurs, and businesses. The region’s many capable and effective tech-based economic development organizations include the University City Science Center, Ben Franklin Technology Partners of Southeastern PA, New Jersey Technology Council, Delaware Technology Park, BioAdvance, and the Greater Philadelphia Alliance for Capital and Technologies (PACT), among others. These and other organizations’ efforts were aided by a 2007 Economy League analysis that laid out priorities for accelerating technology transfer in Greater Philadelphia. The Science Center has taken on two priority strategies to support and connect area researchers, entrepreneurs, and investors by creating the QED proof-of-concept fund and the Quorum clubhouse space. There also has been an increase in research institutions and economic development stakeholders coming together to compete for major research prizes, resulting in collaborative commercialization efforts such as the Coulter Translational Research Partnership, Philadelphia Pediatric Device Consortium, Consortium for Building Energy Innovation, and PA ENGN advanced manufacturing partnership.

Convertng Innovation Stregths into Job Growth

This sustained attention to tech transfer has contributed to a spike in licensing activity in the area. The number of license agreements executed annually within Greater Philadelphia almost doubled from 83 in 2008 to 161 in 2012 – the largest growth rate among top R&D regions. Similar growth has occurred over the same period at area research institutions for invention disclosures (from 682 to 860), patents awarded (from 78 to 167), and spinout companies formed (from 6 to 25).

The number of technology transfer license and option agreements executed annually by area research institutions to facilitate commercialization of promising ideas and technologies almost doubled between 2008 and 2012 from 111 to 216. Other key licensing activity indicators also grew significantly over this period.

How can the region build on this momentum and convert its innovation assets into job growth? Experts point to a lingering gap in critical proof-of-concept funding as well as seed and early-stage capital to advance promising technologies. They note that while some universities have taken great strides to elevate tech transfer within their institutions, others still have a way to go in making it a priority among institutional leadership and to increase connections between academia and industry. In addition to pursuing cross-institutional research prizes, there are opportunities to better coordinate across research institutions via standardized licensing agreement procedures and a shared clearinghouse for information on area research.