Michelle Gittelman

Does Good Science Lead to Valuable Knowledge? Biotechnology Firms and the Evolutionary Logic of Citation Patterns

This study looks at the United States biotechnology industry as a community of practice caught between two evolutionary logics by which valuable scientific knowledge and valuable innovations are selected. We analyze the publications and patents of 116 biotechnology firms during the period 1988--1995. In models that link scientific capabilities to patent citations, we show that scientific ideas are not simply inputs into inventions; important scientific ideas and influential patents follow different and conflicting selection logics. Publication, collaboration, and science intensity are associated with patented innovations; however, important scientific papers are negatively associated with high-impact innovations. These results point to conflicting logics between science and innovation, and scientists must contribute to both while inhabiting a single epistemic community. We identify individuals listed on patents and scientific papers and find they effectively integrate science with innovation, leading to more successful innovations. Our findings suggest that the role of the small, research-intensive firm is to create a repository of knowledge; to act as an organizational mechanism to combine the capabilities of versatile scientists within and outside the boundaries of the firm; and to manage the selection of scientific ideas to produce valuable technical innovations.

Patent Citations as a Measure of Knowledge Flows: The Influence of Examiner Citations

Analysis of patent citations is a core methodology in the study of knowledge diffusion. However, citations made by patent examiners have not been separately reported, adding unknown noise to the data. We leverage a recent change in the reporting of patent data showing citations added by examiners. The magnitude is high: two-thirds of citations on the average patent are inserted by examiners. Furthermore, 40% of all patents have all citations added by examiners. We analyze the distribution of examiner and inventor citations with respect to self-citation, distance, technology overlap, and vintage. Results indicate that inferences about inventor knowledge using pooled citations may suffer from bias or overinflated significance levels.

Applicant and examiner citations in U.S. patents: An overview and analysis

Prior art patent citations have become a popular measure of patent quality and knowledge flow between firms. Interpreting these measurements is complicated, in some cases, because prior art citations are added by patent examiners as well as by patent applicants. The U.S. Patent and Trademark Office (USPTO) adopted new reporting procedures in 2001, making it possible to measure examiner and applicant citations separately for the first time. We analyzed prior art citations listed in all U.S. patents granted in 2001-2003, and found that examiners played a significant role in identifying prior art, adding 63% of citations on the average patent, and all citations on 40% of patents granted. An analysis of variance found that firm-specific variables explain most of the variation in examiner-citation shares. Using multivariate regression, we found that foreign applicants to the USPTO had the highest proportion of citations added by examiners. High-volume patent applicants had a greater proportion of examiner citations, and a substantial number of firms won patents without listing a single applicant citation. In terms of technology, we found higher examiner shares among patents in electronics, communications, and computer-related fields. Taken together, our findings suggest that firm-level patenting practices, particularly among high-volume applicants, have a strong influence on citation data and merit additional research.

How do I Know what you Know? Patent Examiners and the Generation of Patent Citations

Analysis of patent citations is a core methodology in the study of knowledge diffusion, and forward citations are used as a measure of impact of innovations. However, citations made by patent examiners have not been separately reported, adding unknown noise to the data. We leverage a recent change in the reporting of patent data showing citations added by examiners. The magnitude is high: examiners add 40 per cent of all citations and two-thirds of citations on the average patent are inserted by examiners. Furthermore, 40 per cent of all patents have all citations added by examiners. We analyse the distribution of examiner and inventor citations with respect to self-citation, distance, technology overlap, and vintage. Results indicate that inferences about inventor knowledge may suffer from bias or overinflated significance levels. For a cohort of very highly-cited patents, examiners and inventors select different patents for citation, with the majority of the cohort cited by inventors. Over time, inventor and examiner forward citation streams converge, suggestive of a learning process that has not been previously considered in the literature.

Knowledge Spillovers in Biotechnology

The geographic localization of knowledge spillovers in biotechnology is largely driven by the ways in which knowledge produced in public-sector research laboratories is transferred to and absorbed by firms. Spillovers in this sector therefore entail transfers of valuable knowledge across the boundaries of very heterogeneous organizations—namely, university or other public-sector research laboratories and private firms. The heterogeneity of the organizations involved anchors innovation in biotechnology in very localized processes of knowledge exchange that shows a great deal of geographic variation. The United States is unique in fostering the emergence of a new industrial sector, populated by entrepreneurial firms, from the basis of scientific discovery. In this chapter, I study differences in institutions governing the transfer of knowledge from laboratories to firms to explain why two countries, United States and France, have had such different experiences in innovating in commercial biotechnology.

Biomedical R&D: Exploring New Organizations and New Paradigms

In this symposium we explore emerging paradigms and new organizational forms in the RD from non-traditional funding sources; and technology transfer from Academic Medical Centers. One sub theme of this symposium is the translation of biomedical research to the clinic and its dispersal to people around the world. We also explore the translation of “demand” and “need” knowledge from consumers, patients and clinician to the biomedical research bench. This second line of transfer occurs not only in the usual clinical setting but also through new institutions that influence the direction of biomedical research such as foundations that sponsors academic medical research in neglected diseases and fund new ventures emerging from such research. These path breaking new institutional arrangements have not been previously explored and need to be discussed so that they can inform important future res...

Discovering the original tech stocks

In a sense, scientists have it easy. To get their point across, they don’t have to make it up as they go along. There are rules, procedures, and standards—falsifiability and replicability among the most important—designed to allow others to judge the merits of their scientific claims. When it comes to selling a new business idea, the process is a lot murkier. Resources need to be mobilized, people need to be convinced to part with their money, employees need to be recruited, advisors and supporters need to be lined up. But in a new or emerging business sector there are no established and long-cherished metrics, as there are in science, on which to base one’s claims. Instead, the task of selling a new business idea is open to anyone with the fervor (or guile) necessary to convince outsiders that this is a worthy place to spend their attention, money, and time. From Alchemy to IPO is about selling the business of biotech. It is pitched as a primer for investors new to the industry but savvy to the world of investing in high-tech stocks. The biotech sector has the distinction of having pioneered the business model of the New Economy, whereby firms spend large sums of other people’s money and may never show a profit for it. Biotech firms have been doing this since the early 1980s, and during many lean years struggled to raise investor interest in their mission to bring revolutionary science to a commercial marketplace. In these days of giddy stock market returns, the biotech sector has found new appeal among investors who have cut their teeth on Internet startups. Now, educated on the new business model by dot-coms, they are looking to invest in something new. This book is ready for them, with a quick overview of biotech’s history, its major players, the ins and outs of product development, financing modes, and pointers for a successful investment strategy. This raises the question: can you teach an outsider to invest in a very complex business that is run by insiders? To the extent that this is possible, the book does a good job, and largely succeeds in laying out major guideposts for the uninitiated. The author, a former scientist and now an industry consultant, knows the business, and she knows the science. Apart from the occasional lapse into rousing cheers (“Biotechnology is poised to explode in the next decade, in products and in profits”) and page-filling tributes to the awesomeness of it all (an entire chapter is a speech by NASA’s chief on the potential of biotechnology for space exploration), readers are in the hands of a reliable and careful instructor. She duly points out the risks inherent in drug discovery, and doesn’t neglect to discuss the abject failures along with the breathtaking successes. Although she never quite spells out just how frightening the financials can be in this industry, she doesn’t gloss over the fact that investing in biotech, despite a history of positive returns, is not for the faint of heart. Readers new to the industry will be grateful for the introduction to its basic vocabulary, from the business potential of a protein-binding receptor to the scientific import of stock options. The book is written with the flavor of a text; the author carefully avoids journalistic editorializing or academic pondering on deeper meanings. But she appears to be more interested in probing the issues than she lets on, and several intriguing nuggets of insight can’t help but leak through the sometimes rather dry descriptions. The degree to which financing and technology strategy are intertwined is a theme that recurs throughout the book. One of life’s basic lessons, painfully familiar to many adolescents, is that when your survival depends on other people’s money, they have a powerful say over what you can do. The biotechnology industry has never fully escaped this. Shifts in the technological focus of the industry—from its early promises of new cancer drugs to the current wave of firms based on data mining and biochips—are as much a reflection of the clout of the investment community as they are of the landscape of scientific opportunity. The story of Amgen’s early days, presented in the first part of the book, tells how the company’s broad-based research program reflected the disparate needs of investors in the oil, chemicals, and agriculture businesses. Amgen succeeded, largely through lucky draws that led to two unexpected blockbusters, in becoming into a large integrated pharmaceutical firm. But “[t]oday, you would never find a funded company this broadly spread.” The author laments that few investors are “visionary,” unwilling to pay for far-reaching projects or a broad-based technology strategy: instead, “risk reduction...has led to a spate of ‘tool’ companies ... and the infamous ‘accelerated commercialization’ in which research companies tried to in-license niche products rejected by other companies in the hopes of generating product revenues much earlier in their evolution.” This is not the kind of information an investor can use to pick up a phone and call a broker, but it hints at the kind of knowledge that makes for a deeper understanding of what drives shifts in the competitive and technological landscape. Without more emphasis on the underlying dynamics and relationships that drive the industry, the book remains a handbook for investors new to biotech. Readers of this publication won’t gain much from the basic science tutorials, but might find useful the nutsand-bolts information on how new companies are built out of the science, both financially and managerially, although intellectual property issues are strangely missing here. But perhaps the best information for wouldbe investors is found in the first part of the book, which provides brief histories of major biotechnology firms and their founders (for an excellent and more complete history of the industry, readers can still turn to Martin Kenney’s Biotechnology: The University– Industry Complex, Yale University Press, 1986). To the extent that these stories give readers an appreciation for the importance of that illusive quantity—social capital—in creating value in this industry, they provide the best insider information that a handbook can hope to convey. /// BOOKS