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The Big Business of Research

Research universities are finding new ways to leverage their intellectual capital.
University Business, May 2007

YOU COULD EASILY miss the small office suite as you travel the bare fourth floor corridor in an all-concrete building on the MIT campus-were it not for the dazzlingly blue wall around the next corner announcing the DuPont-MIT Alliance (DMA).

Alongside a bright logo stand several huge color photographs of breakthroughs to emerge from the seven-year university/ corporation partnership. One shows a shiny silver metal and glass cylinder fermenting ethanol fuel from yeast. Another provides a blown-up view of a high-tech "liver chip"; it allows scientists to test the toxic effects of chemical compounds on liver tissue.

In a well-worn lab one floor below, Robert Cohen, a chemical engineering professor and DMA's associate director, stares through plastic goggles at a contraption about the size of a large microwave oven. The robotically controlled "dipping machine" allows him to cover glass slides with layers of ultra thin coatings for potential new products, from fuel cells to self-cleaning windows.

For all of its modest surroundings and microscopic outcomes, DMA has become the Next Big Thing at a university that over the past 60 years has practically written the book on working with industry. "This is another animal altogether," Cohen says. "We've never had anything on this scale and with this systematized an approach."

U.S. universities have long collaborated with companies, from automakers to drug makers. But in an era of dwindling government and foundation funding and with the increased opportunity they've discovered in the private sector highered leaders have been ratcheting up their relationships with corporations. They're also changing the way they're doing business, from redefining their partnerships to expanding their professional services to revising their long held approach to intellectual property.

It's all for good reason. University research has become a big business. In an annual survey of 228 universities, AUTM, The Association of University Technology Managers, found that in FY2005, respondents received a total of $42.3 billion in research funding. Of that total, 7 percent-a record $3 billion-came from industry.

These institutions also reported more than 28,000 licensing agreements for intellectual property that generated over $1 billion, they introduced more than 500 new products, and they filed 15,000 patent applications. Thinking in terms of a five-day workweek, that means nearly two new products were introduced and close to 58 patent applications were filed per day. How's that for productivity?

Starting in 1980 with the federal Bayh-Dole Act, the profitability of university based research has been growing. The act allowed nonprofit schools to retain the title to any innovations generated in their laboratories through federally funded research.

Karl Koster, director of MIT's Office of Corporate Relations and its Industrial Liaison Program, points to another seismic change a decade later the trend of corporate restructuring. "With the downsizing during the 1980s and '90s of their own research departments, a lot of companies have looked at what is the role of knowledge centers"-so much so that they have outsourced about 20 percent of research and development. Over that time, the number of companies with which his office works has risen to 200, and their funding of MIT research has ballooned from $60 million to $100 million annually. That's nearly 17 percent of the school's research budget. MIT isn't alone, and other research institutions have been chasing the same R&D dollars. Koster says, "The level of competition has gone up. A lot of universities including foreign institutions are looking to develop relationships with industry. They all see the major economic impact that research universities can have regionally and nationally."

"Over the years I've watched these places learn from how MIT has worked with industry," agrees Cohen. "And it's becoming harder to sustain that special position and to stay ahead of the curve."

Over the past decade, MIT has turned to long-term, well-heeled relationships with individual companies, including Microsoft, Amgen, and Ford. Starting in 2000, DuPont anted up $35 million in research funding over five years and added $25 million more through 2010. The money supports as many as 20 simultaneous projects, which rotate as older studies are phased out.

The joint effort took wing when former MIT President Charles Vest, who sat on DuPont's board, pursued the idea of working together on bio-based processes and products, a growing source of chemicals useful to DuPont. DuPont received extraordinary access to the university's laboratories and faculty, who could identify research projects that the company may not have considered.

Cohen labels the arrangement a "win-win-win." For MIT professors, the massive infusion of cash far exceeds past DuPont contributions of fellowships or grants to support particular studies. Graduate students involved in DMA projects, meanwhile, get unprecedented attention from DuPont executives. "You can't imagine the thrill of DuPont's chief technology officer listening to you discuss your research," Cohen says of the situation for grad students.

But the key to DMA's success so far, Cohen adds, is the new role of MIT researchers. "We took what started as a top down initiative and flipped it over," he explains. "I asked DuPont to be patient and see what the MIT community of faculty had to offer. I'm sure at $7 million a year they had some ideas, but they didn't push anything on us. 'Ideas that have merit' has been the key [term], so we've gotten all of our research projects bubbling up from the MIT community."

DuPont has the final say, but a considerable number of faculty proposals have received funding-producing such innovations as a water-repellent material that could be used in self-cleaning fabrics and bacteria resistant plumbing fixtures. Recently, DuPont and MIT have branched into the realms of biofuels and nanotechnology.

"Most of our funding comes from government agencies, so plenty of people like me are doing things in an academic vacuum," Cohen says. "It's different when your corporate partner has a strategic interest. By definition, DuPont is interested in what's going on in our projects. In many ways, it's natural to work with an industrial sponsor of research."

MIT has also beefed up its Industrial Liaison Program, which steers private companies into smaller scale research partnerships in areas such as artificial intelligence and biomedical engineering. A similar office has long existed across the country at Stanford University, but Koster observes others getting into the business more seriously. "We get a lot of visitors," he reports. Public universities such as The University of Wisconsin- Madison, The Pennsylvania State University, and the University of Illinois at Urbana-Champaign are moving aggressively in forming research partnerships.

"Corporations are looking for profound partnerships where we both succeed. There's a much more mature relationship than in the past," notes Rob Melnick, associate vice president for Economic Affairs at Arizona State University. Along those lines, ASU researchers have worked closely with semiconductor manufacturers such as Intel and Motorola and aerospace company Boeing.

And at the University of California, San Diego, Jacobs School of Engineering counts 150 members in its corporate affiliates program, including a consortium of companies that provides $2.5 million a year to the 12- year-old Center for Wireless Communications. Jacobs School spent nearly $140 million on research last year, with a quarter of the funds coming from those affiliates.

Dean of Engineering Frieder Seible sees even greater possibilities in cross-disciplinary research. "It's this convergence of different technologies, across different academic disciplines but also across industries, that really is the new exciting frontier," he says. "A biotech company can visit our California Institute of Communications and Information Technology, and they see new 3-D visual displays that we're working on, and suddenly they understand how they could use that technology in their field."

UCSD developed an engineering and medicine initiative last year. In the past, collaborations often meant two faculty members pairing up, Seible says. "Now we're trying to foster these collaborations by having affinity group meetings between faculty from the School of Medicine and the School of Engineering. Just the other day, we [paired up] 20 of our surgeons with engineers. The new collaborative ideas were absolutely amazing, and as soon as we told them to our industry partners, they said, 'We'd like to participate in these meetings.' "

Seible is exploring synergies with UCSD's Scripps Institution of Oceanography, too. "It's a no-brainer that we have to come up with new ideas on the energy and sustainability fronts," he continues. But hiring faculty between departments and really fostering this multidisciplinary research are crucial.

The University of Pennsylvania Medical School entered its own brave new world of enterprise four years ago by forming its Office of Corporate Alliances (OCA), the first major U.S. medical institution to do so. "Penn was ahead of the pack," says Managing Director Terry Fadem, adding that a dozen other universities have followed suit.

'For [corporate] alliances to do well, I believe the quieter they are, the quicker they can succeed.'
-Terry Fadem, University of Pennsylvania Medical School

Penn's approach-which capitalizes on a large medical faculty and four nearby hospitals-relies on the models of greater centralization, multiple projects, and multidisciplinary approaches.

"It was a tremendous opportunity not being pursued in a more organized way," says Fadem, who previously worked at UPenn's Wharton School of Business. "We're able to organize and focus research in ways we couldn't before. Now you can call and get access to a researcher you may not have known existed. We can pull cardiology, neurology, and oncology into a discussion."

There's been a lot to talk about. OCA focuses on getting drugs from development to bedside faster, offering pharmaceutical, biotech, and medical device companies a gamut of research services, from basic science to clinical human trials. It has attracted 200 clients. Last year a more extensive alliance with large drug manufacturer AstraZeneca was launched. "For alliances to do well, I believe the quieter they are, the quicker they can succeed," says Fadem.

The extraordinary growth of corporate funding for medically related research has also raised red flags. Pressure from clients to produce favorable outcomes in the laboratory can often put researchers at odds with their academic mission, observers say.

"Not every researcher generates the results that the other party wants," warns Anthony Robbins, a professor of public health and family medicine at Tufts University (Mass.). In fact, a 1999 article published in the Journal of the American Medical Association found that cancer drug studies funded by nonprofits produced unfavorable outcomes eight times more often than studies paid for by private companies.

"Data has been badly skewed in many instances," adds Jennifer Washburn, whose book, University Inc.: The Corporate Corruption of Higher Education (Basic Books, 2005), highlights numerous questionable practices. At other times, she points out, researchers have to watch silently as their corporate patrons manipulate or selectively use their findings. And when those conducting research at universities develop medical treatments that actually are beneficial, rather than rushing to publish, researchers often must keep their work under wraps to suit their sponsors' schedules.

The medical and academic communities have taken note. A national conference on biomedical conflicts of interest hosted in 2006 by the Cleveland Clinic included sessions on "Research, Innovation, and Safety: Doing the Right Thing" and "Guiding Principles: Where Are We Headed?"

ASU's Melnick says the ethical dilemmas go further. "What about the ethics of holding back information on a new chip that could create jobs?" he notes. "That certainly has an impact on the human condition."

In March, students and faculty at the University of California, Berkeley, protested the planned $500 million dollar collaboration (along with the Lawrence Berkeley National Laboratory and the University of Illinois at Urbana-Champaign), with petroleum giant BP to develop biofuels. Opponents have criticized the environmental consequences of using bioengineered crops, the school's overdependence on corporate funding, and the secrecy of negotiations.

Several of those complaints fueled a more famous campus protest in 2000 over a partnership with the pharmaceutical firm Novartis, which brought national attention to the way Berkeley and other research institutions were doing business. "So many people are saying, 'We haven't learned anything since then,' " says Washburn.

Many universities have progressed during this decade, but they still have a ways to go, she says. "The more I've spoken to university groups, the more people come up and say to me that the problems are real in the conflict of interest issues and in the conflict of trying to extract profit and serve the public good at the same time. It's taken a long time for the university community to manage the gravity of the problem."

Those involved with the proliferation of industry funded research have plenty of suggestions for succeeding on the financial, and ethical, fronts. A starting point, says MIT's Karl Koster, is publishing clear intellectual property and conflict of interest policies.

"We don't do any proprietary research on campus. All results are published openly. And we keep individual professors out of the negotiating process," Koster says. That last step preserves neutrality. MIT also turns down companies that demand rights to intellectual property or seek to cap the school's royalties. "I've heard there are universities that trade IP for research funding," he says. "I think that would be a mistake."

Koster acknowledges that MIT's 50 person liaison office is a luxury, but says that even a small staff of liaison officers can understand the needs and capabilities of corporate partners. "The best lesson is to stop talking and listen," adds ASU's Rob Melnick. "Universities are places that have been historically better at talking than listening. We're now in a very different role."

Tufts' Anthony Robbins also thinks that schools can take a more active role in drawing ethical boundaries for health-related research. "Universities need to make sure that life-saving products are available," he emphasizes. "They might create a joint strategy to never obstruct the development or use of things that would save lives." He even envisions major universities creating a joint unit "directed at where our research could do the most good for human beings and make sure that money doesn't push the university too far from that objective."

Washburn suggests that these institutions standardize their contracts to guarantee that their medical research must be published and that university investigators get full access to all raw data, rather than a small part, from clinical trials. "It's important to have a sector in society not driven by market forces," she warns. "Don't sacrifice the autonomy and values of your institution for a bag of gold."

For now, ASU's Melnick says the best safeguard is a personal responsibility. "I have a mission of a fairly high order to protect the integrity of the research. At the end of the day, it's all about integrity."

Ron Schachter is a Boston-based freelance writer.