ROI from all that university research = x

The push by cash-strapped governments for more commercially focused scientific research has triggered a backlash among academics, who regard the unfettered pursuit of basic science as sacrosanct.

Their concerns are understandable, to a degree. After all, no one wants university labs to become mere appendages of giant pharmaceutical, energy or food-products companies, whose primary goal is to grow shareholder profits, not expand the frontiers of scientific knowledge.

Still, the fearmongering from academics seems a tad overdone. Typically, on most research projects, the relationship between industry sponsors and university scientists is clearly defined.

More importantly, there is a related issue that gets almost no attention, and it’s this: universities and research institutions have done a terrible job of measuring the economic benefits that flow to governments and to taxpayers from their well-funded research programs.

With Canada’s tech sector in tatters and this country’s track record on innovation drawing widespread criticism, it’s little wonder that governments want more accountability from scientists, and a clearer sense of how their research programs foster economic growth.

Billions of dollars flow into sponsored research programs at Canadian universities each and every year, including more than $500 million at the University of Alberta alone, according to data compiled by Toronto-based Research Infosource Inc., an independent consulting and tech research firm.

Yet, there is little data on what flows out the other end of the pipeline in the form of royalties, licensing revenues, equity in spinoff companies, or wealth that’s generated in the private sector.

Ironically, the only source of relevant national data for Canadian universities comes from the Illinois-based Association of University Technology Managers, a non-profit association of academic technology transfer professionals at universities, hospitals and research institutes. But even their data are far from complete.

Although TEC Edmonton — a joint venture between the U of A and Edmonton Economic Development Corp. — does a good job of measuring the success of the local startups that TEC Edmonton mentors and supports, there is no source of comprehensive national data.

“We’ve been working in this area for a long time, and trying to push the universities to do that, because there’s more and more pressure on the universities from their funders for a return on investment, or ROI,” says Jeffrey Crelinsten, president of Research Infosource.

“In some cases it’s wrongheaded on the part of governments who are demanding that. Nonetheless, when a university says, ‘We’ve created 40 startup spinoff companies in the last five years,’ I always ask them ‘So how are they doing?’ And they almost never know. Typically, they don’t track that stuff. It’s amazing.”

Measuring the net return on licensing revenue generated by the universities is another tricky area, he says.

“Universities will take the quantity of money they receive from licensing revenue — where they’ve licensed some intellectual property to a company and it gives a percentage back to the university — and what we’ve found is, the net return is minuscule, once you consider the costs to run the tech transfer office, the salaries and the money they spend to get the licences.”

Ironically, he says, the biggest payback comes in the form of contract research scientists undertake for corporate sponsors who are seeking to solve specific industrial problems, such as reducing water consumption in the oilsands, or curbing waste.

“We collected some data and looked at this a couple of years ago, and it showed the licensing revenue was meaningless, but the contract research revenue that year was about $2.1 billion. That’s a chunk of change. So the real value that industry sees in the universities is not so much their ideas — which is what the universities are always selling — but applying their knowledge to specific problems,” says Crelinsten.

“The problem is they’re not making that argument. They should make that argument, but because they want governments to keep funding basic research, they’ve been ‘selling a line’ a bit,” he adds.

“They’ve been saying, ‘Oh fund us to do the research we want to do, no strings attached, and the economy will improve, because industry needs our ideas.’

“That’s been their argument for years. So they’re right (that industry needs their research) but for the wrong reasons.”