Current Issue

2009-01-20

Current Issue: Innovation Strategies for Bridging Academic Research and SMEs in the Baltic countries

The Baltic Sea Region is challenged by a great level of diversity and the conditions for bridging academic research and SMEs differ widely resulting in different strategies. The anatomy of these regional strategies is analyzed and compared using a framework of the following five factors: academic performance; labour and access to talent; social and economic infrastructure; access to capital; and supportive research and development (R&D) environment. Several of the Baltic Sea Region’s countries are investing heavily on R&D, however, despite the impressive capacity, the universities situated east of the Baltic Sea lack focus on life science specific research and only a few projects are subject to technology transferring and commercialization.

Academic environment

There are two central measurements to take into account when evaluating a regions’ academic environment: the research performance and the capacity. The latter is relevant in terms of current and potential capacity (i.e. the number of potential applicants and the number of students enrolled) while performance is an obvious necessity for a successful commercialization. In terms of research performance, a number of different measurements are available; number of peer-reviewed publications, number of invention disclosures; patent applications; and documented success in terms of technology transferring. The data reveals that the Baltic countries and Poland have less than 1 annual biotech patent application per million inhabitants . When adjusting for population, the Baltic countries and Poland are all publishing less than 100 articles per 100 000 inhabitants.

Despite the low research performance, the Baltic countries and Poland have a relatively high capacity in terms of number students enrolled and size of faculty. However, when reviewing the number of life science dedicated researches (PhD students included) these countries fall behind the countries west of Baltic Sea. This tendency explains the low number of peer-reviewed articles and patent applications.

Labour and Access to talent

Access to talent is driven by two major factors: the number of specialists being educated and retained regionally as well as the ability for the region to attract foreign specialists. The first condition is connected to the academic environment, while the ability to attract foreign talent is associated with a number of different factors. Access to talent is a key element of innovation strategies, but different regions have various needs corresponding to their ongoing market situation.

The Baltic countries are subjected to a positive development with a well balanced unemployment rate and at the same time a relatively high number of graduated master students. The main challenge for the Baltic countries is the fact that they focus very little on life science research, technology transferring, and commercialization. For example, Poland is educating a considerable number of people and the main challenge will be to limit the unemployment rate and make use of these resources. Another important factor is the regions` ability to attract foreign talent, what is under influence of a number of different factors. For instance, the regions living conditions such as general quality of life, tradition for working hours, wages and salary level, and the levels of taxation.

Supportive R&D environment

As set by the Lisbon summit strategy, the EU has a goal of achieving a R&D intensity of at least 3% by the year 2010. Currently, the EU average spending on R&D is stable at 1.84% of the total GDP, thus still below the 2010 goal.

The structure and size of the domestic R&D environment is crucial for bridging academic research and SMEs. The R&D environment can be measured by a number of different factors. The number and size of research based life science companies is important for the creation and exploitation of synergies. One of the most important factors for R&D environment is access to capital and the amount of money invested in research ( governmental commitment to research, private investments and venture capitals).

The Baltic countries all report GBOARD( Governmental Budget Appropriations and Outlays for Research and Development, %GDP) data below the EU average. The tendency is very much in line with the previous measures within last three years, indicating the fact, that the Baltic countries and Poland have not increased their commitment to R&D over time.

Access to Capital

Access to capital is an obvious necessity for the successful development and commercialization of life science innovation. Access to capital varies from country to country depending on certain focus areas.

The Baltic countries are investing very little in life science- according to European Venture Capitals Association ( EVCA, 2008), in 2007 approximately EUR 1 million was invested as venture capital. This is despite the fact that the Baltic countries have experienced a blooming interest from international investors. In 2007, a total of EUR 363.6 million was invested by foreign private equity firms, unfortunately not associated with life sciences.

The main challenge for the Baltic countries is the fact that they focus very little on life science research, technology transferring, and commercialization. The Baltic countries all report GBOARD data below the EU average. This tendency is very much in line with the previous review measures and will become a major challenge if not improved upon. The countries are also challenged in terms of attracting specialists – primarily because of the low salary level, the level of annual working hours, and the low quality of life. Despite these challenges, Latvia, Lithuania, and Estonia have the potential to become major contributors to the European life science industry. The recent years’ growth has sparked interest among international investors. Poland has an established life science industry, but it is very small compared to the country size and economy. As with the Baltic countries, Poland lacks a focus on life science in terms of educated and employed scientists. Unlike the Baltic countries however, Poland has the opportunity to further develop the existing industry by initiating new partnerships between the academic environment and the private life science industry.

Izabela Klockowska
Based on the Report “Regional Innovation Strategies for Bridging Academic Research and SMEs “ published by Medicon Valley Alliance ( December 2008)