TECHNOLOGY, lnnovation and POLICY 7 Series of the Fraunhofer Institute for Systems and Innovation Research (ISQ
U l r i k e B r o s s A n n a m á r i a I n z e l t T h o m a s R e i ß Bio-Technology Audit in Hungary Guidelines, Implementation, Results In Co-operation with Rainer Bierhals, Doris Holland, Stefan Kuhlmann, C h r i s M a h l e r - J o h n s t o n e, S i l k e J u s t a n d C h r i s t i n e S c h ä d e l A n i k ó B a r i c z, G y ö n g y i K ü r t h y, Z o l t á n N é m e t h, B a l á z s P o z s o n y Á r p á d K i r á l y, N o e r n i T 6 f a l v y a n d G á b o r K u l c s á r With 21 Figures and 30 Tables Springer-Verlag Berlin Heidelberg GmbH
Ulrike Bross Dr. Thomas ReiB Fraunhofer Institute for Systems and Innovation Research (lsi) Breslauer Str. 48 D-76139 Karlsruhe, Germany Dr. Annamaria Inzelt Innovation Research Centre (IKU) Budapest University of Economics Muzeum u. 17 H-1088 Budapest, Hungary ISBN 978-3-7908-1092-9 Cataloging-in-Publication Data applied for Die Deutsche Bibliothek- CIP-Einheitsaufnahme Bross, Ulrike: Bio-technology audit in Hungary: guidelines, implementation, results I Ulrike Bross; Annamaria Inzelt; Thomas Reil3. (Technology, innovation, and policy; 7) ISBN 978-3-7908-1092-9 ISBN 978-3-642-52472-1 (ebook) DOI 10.1007/978-3-642-52472-1 This work is subject to copyright. All rights are reserved, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilm or in other way, and storage in data banks. Duplication of this publication or parts thereof is permitted only under the provisions of the German Copyright Law of September 9, 1965, in its current version, and permission for use must always be obtained from Springer-Verlag Berlin Heidelberg GmbH. Violations are liable for prosecution under the German Copyright Law. Springer-Verlag Berlin Heidelberg 1998 Originally published by Physica-Verlag Heidelberg in 1998 The use of general descriptive names, registered names, trademarks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. Cover design: Erich Kirchner, Heidelberg SPIN 10664806 88/2202-5 4 3 2 1 0-Printed on acid-free paper
Preface This book offers a guideline for "Technology Audit" exercises for the transforming innovation systems of Central and Eastern European Countries (CEECs). Furthermore, the book presents the results of an exemplary application of this guideline in the field of biotechnology in Hungary. The authors - a group of innovation researchers of the Fraunhofer Institute for Systems and Innovation Research (lsi), Germany, and of the Innovation Research Centre (IKU), Hungary - provide a sound concept for the identification of technological strengths and weaknesses of the CEECs' industrially oriented research systems as a basis for the design of advanced innovation policies. After the Organisation for Economic Co-operation and Development (OECD) had proposed a "Technology Audit" of Hungary in 1993, a pilot audit was carried out under their auspices. In parallel, the German Federal Ministry of Education, Science, Research and Technology (BMFT) put forward the idea of developing the audit concept further in order to make it applicable also in other Central and Eastern European Countries. They asked lsi to utilise the running OECD audits as a learning source and to work out a comprehensive audit approach. On the basis of the observation and analysis of the OECD audit in Hungary, under critical application of the methodological approaches used hereby, and taking the experience with the practical use of the audit results into consideration, lsi developed a concept containing several core elements: (1) differentiation between general methodological aspects applicable to "all" potential audits in Central and Eastern European countries and those which will usually have to be re-designed country by country; (2) definitions and concepts for the identification of a country's "strategic" sectors or technological competencies; (3) concepts of "competitiveness" in terms of different markets; (4) concepts for "macro" analyses taking into account a probable lack of comparable and reliable data and statistics; (5) concepts for "micro" analyses regarding the specific dynamics and the speed of the ongoing transformation processes and their consequences for the prospects of single companies or R&D labs; (6) and concepts to secure the practical "policy relevance" of the audit results. The resulting transferable Audit Guideline is documented in the first part of this book. In order to check the reliability of the Audit Guideline it was applied to the Hungarian biotechnology infrastructure. This case study "Biotechnology" was carried out jointly with IKU, Budapest. It is documented in the second part of this book. This project serves as a good example of how Western experiences in various research areas, here especially methodological knowledge of lsi in the fields of the analysis of technological competitiveness and innovation potentials, evaluation research and international developments in biotechnology, can be fruitfully combined with specific expertise and know-how of countries in transition contributed by IKU.
VI Furthermore the co-operation offered the opportunity to engage in a mutuai"learning process between partners from Western Europe and from economies in transition on which further co-operation and exchange can build. We owe many thanks to all participants in the various stages of this comprehensive "Audit Exercise"; they contributed lots of valuable ideas: in particular, we want to thank our former colleague Dr. Doris Holland for her engagement during the early stages of the project, the authors of the above mentioned sectoral audits, the audit initiators at the OECD, in particular Mr. Jean-Eric Aubert, the initiator of the studies presented in this book, Mr. Michael Szeplabi of the German Federal Ministry for Research and Technology (BMBF, successor to BMFT), the supporters of our work at the Hungarian National Committee for Technological Development (OMFB), in particular Mr. Sandor Bottka, and last but not least, the many Hungarian experts in the field of biotechnology without whose collaboration the biotechnology audit would not have been feasible. Frieder Meyer-Krahmer, Director Stefan Kuhlmann, Head of Department "Technology Analysis and Innovation Strategies"
Contents Summary... 1 I. Technology Audit Guidelines for Central and Eastern European Countries... 13 1. Introduction... 15 2. Situation in Central and Eastern European Countries... 17 2.1 Political Transition and Economic Performance... 17 2.2 Modernisation of Science and Industry... 20 3. Principles of Technology Audit... 23 3.1 Technology Audit as an Instrument of Innovation Policy... 23 3.2 Contemporary Research... 25 3.2.1 Introduction... 25 3.2.2 Evaluation Research... 26 3.2.3 Innovation Potential of a Region... 27 3.2.4 Technological Competitiveness of a Country... 28 3.2.5 Technology Audit of Enterprises... 30 3.2.6 Summary and Methodological Implications... 31 3.3 Research on Technological Strengths in CEECs... 33 3.3.1 Introduction... 33 3.3.2 Selection of Literature... 33 3.3.3 Aggregate Analysis... 34 3.3.4 Research on Enterprises, their Internal Organisation and Inter-firm Relations... 35 3.3.5 Research on the Knowledge Infrastructure... 37 3.3.6 Summary and Methodological Implications... 37 4. Pilot Technology Audits in Hungary... 41 4.1 OECD Technology Audit in Hungary....41 4.1.1 Background and Concept ofthe OECD Audit......41 4.1.2 Experiences of the OECD Audit......43
VIII 4.1.2.1 4.1.2.2 4.1.2.3 4.1.2.4 4.1.2.5 4.1.2.6 4.1.2.7 4.2 4.2.1 4.2.2 4.2.2.1 4.2.2.2 4.2.2.3 4.2.2.4 4.2.2.5 4.2.2.6 4.2.2.7 Introduction... 43 Audit Objectives... 44 Selection of Auditors... 44 Data Collection... 45 Data Analysis... 48 Generation of Results and Recommendations... 49 Dissemination and Implementation of Results of the Audit... 50 Biotechnology Audit Hungary... 51 Background and Concept of the Biotechnology Audit...... 51 Experiences of Biotechnology Audit... 51 Introduction... 51 Audit Objectives... 52 Selection of Auditors... 52 Data Collection... 53 Data Analysis... 55 Generation of Results and Recommendations... 55 Dissemination and Implementation... 56 5. Guideline for Technology Audit in CEECs... 57 5.1 Introduction... 57 5.2 Audit Objectives... 57 5.3 Selection of Auditors... 59 5.4 Data Collection... 60 5.4.1 Interdependence between Selection of Indicators, Data Sources and Methods of Analysis... 60 5.4.2 Selection of Indicators... 61 5.4.3 DataSources... 65 5.5 Data Analysis... 70 5.6 Generation of Results and Recommendations... 72 5.7 Dissemination and Implementation of Audit Results... 74 5.8 Concluding Remarks... 74
IX II. Biotechnology Audit of Hungary...... 77 1. Introduction... 79 2. International Development of Biotechnology... 83 2.1 USA... 83 2.1.1 Introduction... 83 2.1.2 Commercial Activities... 84 2.1.3 Framework Conditions... 86 2.1.4 Conclusions... 88 2.2 Japan... 88 2.2.1 Introduction... 88 2.2.2 Research Institutions... 89 2.2.3 Commercial Activities... 91 2.2.4 Framework Conditions... 92 2.2.5 Conclusions... 94 2.3 Germany... 95 2.3.1 Introduction... 95 2.3.2 Research Institutions... 95 2.3.3 Commercial Activities... 96 2.3.4 Framework Conditions... 98 2.3.5 Conclusions... 99 2.4 United Kingdom... 100 2.4.1 Introduction... 100 2.4.2 Research Institutions... 101 2.4.3 Commercial Activities... 105 2.4.4 Framework Conditions... 106 2.4.5 Conclusions... 107 2.5 Israel... 107 3. State and Development of Hungarian Biotechnology... 111 3.1 Legacy of the Socialist System in the Field of Biotechnology... 111 3.2 Framework Conditions for Biotechnology in Hungary... 114 3.2.1 Financingissue... 117
X 3.2.2 3.2.3 3.3 3.3.1 3.3.2 3.3.3 3.3.4 3.3.5 3.3.5.1 3.3.5.2 3.3.5.3 3.3.6 3.3.7 3.3.7.1 3.3.7.2 Legal Framework... 119 Public Acceptance and Information on Biotechnology... 121 Empirical Analysis of the Present Situation... 122 Audit as a Method... 122 Basic Features of the Sample... 128 Biotechnology Activities... 131 Market for Hungarian Biotechnology... 135 Innovations... 137 Innovation System... 138 Innovation in Firms... 140 Patent Activities... 144 Business Network... 147 Competitiveness... 152 Strengths and Weaknesses and Opportunities and Threats... 153 Competitive Position and Strategic Orientation... 162 4. Comparison of International and Hungarian Development of Biotechnology... 169 4.1 Success Factors for Biotechnology -Lessons from the International Experience... 169 4.2 Performance of Biotechnology in Hungary in International Comparison... 171 4.2.1 Research Base and Manpower... 171 4.2.2 Know-how Transfer and Interdisciplinary Networking... 176 4.2.3 Market Orientation... 181 4.2.4 Financing... 183 4.2.5 Legal Framework... 185 5. Conclusions... 187 6. References... 193 ANNEX... 209 Annex 1: Methodological Notes... 209 Annex II: Revised Hungarian Intellectual Property Rights... 213 Annex III: List of Investigated Institutes and Firms... 217
List of Figures Part I Figure 2.1-1: Figure 2.1-2: Figure 4.1-1: Figure 5.2-1: Figure 5.4-1 : Figure 5.4-2: Figure 5.5-1: Part II Figure 2.1-1: Figure 2.3-1: Figure 2.3-2: Figure 2.4-1: Figure 2.4-2: Figure 3.3-1: Figure 3.3-2: Figure 3.3-3: Figure 3.3-4: Figure 3.3-5: Figure 3.3-6: Figure 4.2-1: Figure 4.2-2: Figure 4.2-3: GDP Growth Rate... 18 Share of Private Sector of GDP in 1995... 19 Process of Technology Audit..... 43 Defming the Objectives of Technology Audit in a Country... 58 Interdependence between Indicators and Methods of Analysis... 61 Indicators for Technology Audit in CEECs... 62 SWOT Analysis... 71 Market Segments of US Biotech Firms... 85 Structure of Biotechnology Companies in Germany... 96 Market Segments of German Biotech Firms... 97 Distribution of the BBSRC Budget by Scientific Areas... 103 Distribution of the MRC Budget by Research Areas... 104 Frequency of Used Biotechnology Methods and Processes... 132 Distribution of Products Targeted by Firms and Institutes Respectively... 133 Activities Progressed to Market..... 135 Target Markets of Biotechnology Products... 136 Biotechnology Position of Hungary in Relation to Groups of Countries... 162 Firms' Position in Relation to Competitors on the World Market... 164 Gross Domestic Expenditure on R&D as a Percentage of GDP... 172 Hungarian Gross Domestic Expenditure on R&D in Million US$... 173 Industrial Dynamics in Biotechnology... 177
List of Tables Part I Table 3.2-1: Table 3.3-1: Table 4.1-1: Table 4.1-2: Table 4.1-3: Table 5.4-1: Table 5.6-1: Part II Table 2.2-1: Table 3.1-1: Table 3.2-1: Table 3.2-2: Table 3.2-3: Table 3.3-1: Table 3.3-2: Table 3.3-3: Table 3.3-4: Table 3.3-5: Table 3.3-6: Table 3.3-7: Table 3.3-8: Summary of Methods to Analyse Technological Strengths... 32 Summary of Methods to Analyse Economic and Technological Position of CEECs... 38 Time Schedule of the OECD Audit in Hungary... 41 Analysis and Evaluation Methods in the Sectoral Studies of the "Technology Audit" in Hungary....46 Data/Indicators in the Sectoral Studies of the "Technology Audit" in Hungary... 48 Stages of Empirical Research... 66 Target Groups and Recommendations of the Audit... 73 Japanese Research Companies Active in the Field of Biotechnology... 90 Top and Down Governmental Programmes for Biotechnology... 113 Bottom-up Governmental Programmes for Biotechnology... 116 Breakdown of Funding and Performance of GERD... 118 Biotechnology-related Contracts in OMFB Bidding System by Sectors... 119 Outline of Interview Guides... 127 Size of Firms by their Turnover and Export Earnings... 129 Employment Situation: Size of Firms and Institutes... 130 Own Contribution to Biotechnological Methods... 132 Rank of Impeding Factors to R&D in Biotechnology... 139 Existing and Expected Capabilities... 141 Ranking of Objectives for Innovation in 1996... 143 Number of Patent Applications in Hungary... 144
XIII Table 303-9: Table 303-10: Table 303-11: Table 303-12: Table 303-13: Table 303-14: Table 303-15: Table 3.3-16: Table A1: Table A2: First Thirty Filers of Recombinant Biotechnology in Hungaryooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooo146 Ranking of Domestic Patent Holders 00 000000 00 00 0000 0000 00 0000 00000000 0000 14 7 Importance ofpartnersoooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooo148 Importance of External Co-operation in R&D 0000000000000000000000000 152 Self-evaluation of In-house Factors oooooooooooooooooooooooooooooooooooooooooo 157 Evaluation of External Factors of Competitiveness 00000000000000000 160 R&D Resources in Comparison to Main Competitorsooooooooooooo166 R&D Output in Comparison to Main Competitors 000000000000000000167 Common Methodological Principles and Structure for Sectoral Reports of the Technological Audit Hungary 0000 000000 00 211 Methodology of Technology Audit Oo 00 oooo 00000 00 00 000 0000 00 0000 00 0000 00 212