Impact of Tech Transfer Thus Far
On July 26, AUTM released some highlights of the AUTM Licensing Activity Survey Summary: FY2010, set to be published this fall. The 183 AUTM-member universities, colleges, hospitals, and research institutions that responded to the survey saw their “running” royalties earned on the sale of products drop 14.6% from last year to $1.4 billion. Total licensing income rose 3% from 2009 to reach $2.4 billion in 2010.
To one tech transfer professional, the licensing numbers are a poor return on the $53.5 billion spent by Washington on university research. “If university research was a business, it would be bankrupt,” declared Vivek Wadhwa, senior research associate at Harvard Law School and director of research at Duke University’s Center for Entrepreneurship, in a June 10 Washington Post column. Rasor countered, “If universities were run like businesses, they would not perform basic research designed to push forward the frontiers of learning.”
Interestingly, AUTM members are seeing sizeable gains in other, albeit much smaller sources of income: A 160% year-over-year jump in cashed-in equity from hospitals and research institutes to reach $63.4 million and a 25% annual gain to reach $452.3 million in all other sources of income including license issue fees, payments under options, termination payments, and annual minimums not supported by product sales.
The royalty and income numbers would shrink if portions had to be diverted to Washington, and with them so would one of the nation’s few engines for economic growth in recent years. Rasor pointed to a 2009 study issued by the Biotechnology Industry Organization (BIO) to quantify the economic benefits of life science research.
According to “The Economic Impact of Licensed Commercialized Inventions Originating in University Research, 1996–2007,” the contribution made to the U.S. GDP by university licensing based on product sales ballooned from $2.6 billion in 1996 to $16.8 billion in 2007 under the most conservative estimate, which assumes a 5% royalty rate.
Under a 2% royalty rate—“less conservative but realistic,” according to BIO—those numbers zoomed from $5.9 billion in 1996 to more than $38.8 billion in 2007. Less realistic, by inference, under a 10% royalty rate the figure is projected to have risen from about $1.5 billion in 1996 to $9.4 billion in 2007.