Forward Together: Complementarity of Public and Charitable Research with Respect to Private Research Spending

Mestre-Ferrandiz, J. and Sussex, J.

Consulting Report
September 2009

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The debate continues as to whether public/charitable research replaces private research that otherwise would have occurred, or stimulates additional private research, or does neither. Given the extent of public and charitable biomedical research, the debate is particularly intense.

This report is based on an extensive review of literature about the synergies between research funded by charities/the public sector and that undertaken by the commercial private sector.  The literature tends to support the argument that publicly-funded research across all sectors is complementary to private sector research and development (R&D) activity. That is, public and charitable research stimulates private R&D that otherwise would not have been done. Such complementarity may be particularly important in the pharmaceutical and biotech sectors because of the characteristics of that R&D, including high uncertainty, high rates of failure and high costs.

The study reports on research that identified a number of mechanisms that facilitate the transmission of knowledge from the public to the private sector and also on studies that estimate the impressive size of this stimulus in the biomedical sector. Research also shows that public and charitable basic research appears to stimulate more private research than does public and charitable clinical research.