6.1 Sweden - UK
The Swedish public funding of knowledge development is characterised by a lot of funding sources with small amounts available from each of them. Even though co-financing is often required, the funding streams to individual projects and subject fields might be more scattered in Sweden than in the UK. In the UK, there has also been an important pooling of resources from different governmental departments in the UK funding structure. The OSCHR is one such example of public actors taking on the responsibility to increase co-financing. The OSCHR functions as an intermediary structure between Department of Health and the new
Department for Innovation, Universities and Skills. The UKCRC is another. In the Swedish approach to increased funding streams, it seems like
requirements of the individual research groups or companies to achieve co- financing are attributed more importance than governmental initiatives to increase collaboration in their funding.
In the UK, the relative share of industrial R&D expenditure has shown a decline the last decade. There again, public funding has increased and the trend is positive. In Sweden, the industrial R&D expenditure has also showed a decline but the public funders have not significantly increased their funding. The funding of Swedish and British life science research currently relies on different kinds of actors. In Sweden, the private funders defray a larger share.
The technological knowledge base within UK life science is ranked higher than the Swedish one and, considering the high political ambitions in this area as reflected in the increased public funding and efforts to increase industrial R&D expenditure, probably will remain that way.
Another interesting difference between the UK and Sweden is that there seem a stronger focus on licensing opportunities in the UK. It is an explicit strategy of the government to support licensing on the expense of spin-offs. The income as a percentage of R&D investment on licences has showed a rapid, strong increase in the UK.
For historical reasons, cultural barriers between academia and industry have been very strong in the UK but the situation has improved due to strong national policies and efforts. Also in Sweden, there are reports that the situation has been improved.
The access to venture capital is stronger in the UK, which is natural due to the much larger market. In particular, the UK business angel market is stronger and more mature than the Swedish one. Many Swedish actors agree there is currently a mismatch between small companies and investors in regard to investment size. The amount of venture capital needed by small Swedish biotech companies is much smaller than what the investors seek to go in with in a company. Also, the patent and product portfolios are often rather thin. A corresponding mismatch has been claimed in the UK as well. An equity gap has been identified in the UK for early-stage companies and companies in their early growth stage. The equity gap has achieved lots of attention from the UK government in past and current strategies and there are many important schemes in place to address the equity gap.
It has been recognised both in Sweden and in the UK that policies of nations are subject to competition, not least in regard to attracting world-class researchers and research-intensive industries. However, in the UK it seems that public funders subject industries to competition to greater extent. Their co-operation with national schemes and efforts aiming to address the global challenge, affect whether they remain priority industries or not.
In the policy evolution comparison, differences were found between UK and Sweden. First of all, the rearrangement that recently occurred in the UK departmental structure links innovation and universities more tightly
together and the knowledge transfer between industry and academia is more strongly sought after. In Sweden, the current departmental structure has been criticised as lacking the necessary co-operation between the Ministry of Education and the Ministry of Enterprise, Energy and Communications. In the UK, the industry has been attributed an increased policy impact in recent years by the elevation of the industry-led Technology Strategy Board (TSB) to the status of an executive body. The TSB assumed the
responsibility of the major research and business supporting programmes of former Department of Trade and Investment.
VINNOVA and several other Swedish actors are calling for greater collaborations between financers, private as well as public. In the UK, the public authorities have taken on the responsibility of creating
intragovernmental schemes which include several governmental funding bodies in funding collaborations.
The UK government and public authorities seem to have taken the selection of key technologies further than in Sweden. The dedication to prioritising research fields of strength is shown not only in policy documents but also in the actual funding flows, which are consequently less scattered than in Sweden. Focusing on key technologies has also been discussed widely in Sweden, but there are stronger concerns about who will do the pinpointing, how emerging technologies will be looked after and how the high quality of
basic research will be secured. This was not found to be an issue of concern in the UK selection process.
Addressing the global challenge in the UK is largely about what strengths we have and what opportunities are there to make the most out of them. Creating an attractive environment for research-intensive industry is a major overarching theme in UK policies and overall seems to be more present across a wide range of issues. Awareness of the global challenge is also high in Sweden and there is a globalisation council with general strategic
responsibilities.
Immediate access to the international market is very important for small life science research companies. The UK is ahead of Sweden due to its own large market and stronger links to other markets. The importance of critical mass is often pinpointed in Sweden. The critical mass issue is closely linked with the creation of links for small companies to access international
markets. Similarly, the creation of international visibility should be
addressed in the same context. There was a stated awareness of these issues and their interconnectedness in the Swedish Life Science Strategy.
However, many of its important recommendations were never put into action. The attitude towards international research collaborations seems more positive in Sweden than in the UK which is important in assessing critical mass.
6.2 Sweden – Scotland
The share of the GDP allocated to research in Scotland is smaller than that of Sweden. The Scottish BERD-level is also relatively low, both compared to Sweden and to the rest of the UK. In Scotland, the level of HERD and the share that HERD makes out of the total research funding is relatively high. In both countries, it would be an interesting subject for further studies to examine the connection between levels of private and public funding. The funding situations differ significantly from each other although the high ambitions within life science research are very high for both countries. It is also interesting to note that the growth of private R&D investment in Scotland is predominantly explained by manufacturing firms and a shift towards a more specialised high-value sector. It could be reasoned that once the shift has occurred, Scotland would face a challenge to continue
increasing private R&D by means other than increasing the value added in existing sectors. There has indeed been stagnation in the BERD levels after the high-value shift and the ambitious policies of both governmental and non-governmental bodies to attract R&D-intensive foreign direct investment might be a consequence of this development.
It is difficult to compare the strengths of the technological knowledge bases in Sweden and Scotland within life science, since various ranking systems might be used. The profile areas of Sweden and Scotland coincide to some extent, in stem cell-, genomics- and diabetes research for instance. The regulation surrounding stem cell research is also very similar. Life science holds a strong position compared to other scientific fields in both Sweden and Scotland. The life science industry garners lots of attention in both countries and is in the focus of much debate, related to such issues as clinical research and what action needs to be taken to become
internationally competitive.
It should also be noted that some major investments have recently been made in Scotland in certain profile areas and it will be interesting to follow the scientific development after the establishment of these collaborative research centres. In particular, it would be interesting to examine their effect on industrial development and the attraction of foreign direct investments as well as skilled researchers and students. It seems there is more of a definite intention in Scotland than in Sweden to access the international knowledge base through these investments.
Deficient market-related knowledge may have received a stronger wake up call in Scotland than Sweden due to the development facing the company that cloned Dolly the sheep. It does at least appear to serve as an anecdotal warning from policy-makers and there are claims of an improvement among life science companies.
Knowledge transfer and making business out of research also seem to achieve more political attention in government policies and strategies in Scotland. The government is working closely with industry in major policy areas. The distinction between the tasks of public agencies and private actors overlaps more in Scotland and there seems a strong consensus among the broad range of actors. When it comes to revenue on IP, Scotland comes out very high compared to other UK regions. It is also particularly
interesting to note that university teachers in Scotland are very proactive in increasing the commercialisation of university research. The roles are somewhat reversed, since it is university teachers who are demanding more action from the industry in order to make practical use of the research. From a Swedish point of view, this discussion would be interesting to follow due to current debates regarding the levels of applied and basic research. It might be that universities in Scotland have acknowledged a somewhat different view of how society and individual university entrepreneurs could benefit from research.
It is claimed that the business angel market is more mature in the UK than in Sweden and this seems also to be the case for Scotland. When it comes to venture capital in general, the views regarding access diverge, just as in Sweden. The mismatch perceived in Sweden might be less severe in
Scotland due to the strong business angel market that reportedly invests predominantly in early stages of company development. Both Swedish and Scottish life science firms suffer from negative results though and it is highlighted that the number of firms that actually make a profit are far too low.
Perhaps the most prominent difference in governmental business support between Sweden and Scotland is the major focus on achieving critical mass in Scotland. This is reflected not only in governmental strategy documents but also in business support funding schemes. The attitudes towards direct funding of research-intensive foreign companies as an instrument of attraction also differ. The Cellartis case illustrates Scottish policies
regarding business support products regarding such things as the procedure to ensure benefits to the local environment. It also highlights the
collaborative efforts that are possible in Scotland. It might be fair to say that the Scottish life science industry has developed with a larger share of government support than the Swedish life science industry.
As a consequence of the higher focus on critical mass in Scotland, the focus on key technologies is also larger. However, there is awareness of the measures that need to be taken to ensure development of emerging technologies.
It might also be fair to say that Scottish life science policies and investments are more largely a result of a very high level of awareness of the global challenge and the competition it leads to in regard to government policies and attractive business environments. Since the decisions made in Scotland are the consequences of such a clear strategy which differs in many respects from Swedish policies, it is important to follow developments in Scotland and learn from their achievements as well as their mistakes.