New report details how university expertise and infrastructure are fuelling huge growth in research contracting

A new report that sheds light on the poorly understood but exploding area of contract research at Canadian universities and research hospitals concludes that the activity has a far greater economic impact than traditional technology transfer. Entitled Knowledge Transfer Through Research Contracting, the report indicates that governments at all levels account for nearly one half of all contracts signed with the 20 institutions that participated in the survey — eight medical/doctoral, three comprehensive and five undergraduate universities as well as four hospitals.

It also shows that is the largest single source of research contracting provides more money to universities and hospitals than any single granting council and "likely employs in excess of 11,000 highly qualified personnel" as well as contributing to overhead costs. Participating institutions entered contracts worth $257.5 million in FY08-09 — 18.9% of the total reported by StatsCan.

The steady increases in research contracting correspond to Canada's investment in research talent and infrastructure, which began in earnest in the late 1990s. Between 1998 and 2007, the value of research contracting jumped 441% from $288.6 million to $1,154 billion. (Since the report's completion, Statistics Canada has released new data showing a remarkable 55% increase in research contracting for 2008 alone, bringing the total to nearly $2 billion - see page 3). That contrasts with income derived from the sale or licensing of intellectual property, which in 2007 totaled $52.5 million, which is just 5.2% of the value of research contracting conducted that year.

"We know very little about research contracting. We've been focused on building the research base and not looking at other mechanisms for knowledge transfer," says report author Ron Freedman, a partner with The Impact Group and co-publisher of RE$EARCH MONEY. "Government is the biggest user which is no great surprise. There are diverse kinds of knowledge needed to run a knowledge society from criminality and law reform to toxins in the environment and climate change."

Whereas StatsCan's reporting of research contracting is highly aggregated, The Impact Group report contains considerable detail on the types and sizes of research contracts, disciplines involved and perhaps most importantly, the extent to which business engages with the post-secondary sector. It's this depth that convinced 10 organizations — including the federal granting councils and the Canada Foundation for Innovation (see chart) to support the report.

Industry Canada also contracted with The Impact Group to produce a qualitative side report on the business sector.

Canadian industry alone accounts for $178 million or 15% of the 2006 total, representing "a flow of highly relevant knowledge to companies that are ready to exploit it" — a fact that appears lost on most policy makers, the report suggests.

"The overwhelming focus of public policy currently is on measures that would expand the $53 million of tech transfer income, rather than increase the $1.2 billion if research contract activity," it states.

Governments' heavy usage of research contracting is due to a number of factors, not least of which is their lack of in-house technical facilities and expertise and lack of staff time.

While funding of government R&D operations has been largely stagnant in recent years, universities and hospitals have benefitted from billions in new investment, making them attractive partners for public organizations. For the private sector, global competition and resulting cost pressures have compelled companies to engage with post-secondary institutions for solutions needed to build expertise and grow revenues.

Foreign research contracting accounted for 28.7% or an estimated $330 million of the 2006 total, with the US far outstripping any other nation. Within the study sample, the US accounted for 12.3% of contracts but its value was 27.1% of the total.

In contrast, Canadian contracts were smaller in size on average, accounting for 83.8% of the total but just 68.6% of the overall value.

US contracting was strongest in the pharmaceutical and medicine and engineering and scientific services.

Within the study sample of 2,645, medical and doctoral universities performed 1,394 contracts valued at $173.5 million, with an average contract size of $124,500 — larger than the $118,080 average for all types of contracts. Canadian sources accounted for 84.1% of medical/doctoral contracts which equalled 65.5% of total contract value.

Hospitals performed 782 contracts with a value of $40.5 million, representing 29.6% of the total number but just $15.7% of total value.

Comprehensive universities performed 307 contracts (11.4% of the total) with a value of $30.3 million. Canadian sources funded 91.5% of all contracts in this category.

Undergraduate universities performed 168 research contracts worth $17.,4 million.

Overall, the vast majority of research contracts (91.5) are worth less than $250,000, with 36.4% valued under $25,000.

The report cautions that research contracting as captured by StatsCan may be over-estimated. This is due to universities including non-contractual data when they report their research contracting activity, resulting in some double counting.

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