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Creating a Silicon Valley for Life Science

Fariborz Ghadar, director of the Center for Global Studies at Smeal, writes in Harvard Business Review about the need for the “Silicon Valley” effect to take place in the life sciences industry. Ghadar and his coauthors suggest that in order for the study of human DNA to advance to its full potential, an industry cluster must be created with both technological and governmental support.
July 24, 2012
Creating a Silicon Valley for Life Science

Fariborz Ghadar

Research shows that having a high concentration of producers, suppliers, training centers, and people working on the same problems in the same location leads to faster progress in an industry. The most commonly known industry cluster is Silicon Valley, which describes the region in California that is home to the world’s largest technology corporations.

The idea of an industrial ecosystem has been observed in areas such as biotechnology, which has seen industry clusters arising in various regions around the world. Fariborz Ghadar, director of the Center for Global Business Studies at the Penn State Smeal College of Business, and coauthors John Sviokla, a principal in the Strategy & Innovation practice at PwC Consulting, and Dietrich A. Stephan, board member of the Personalized Medicine Coalition, write about the need for creating a cluster in the life sciences industry in a recent issue of Harvard Business Review. In the article, they suggest that with skillful management and luck, this new industry ecosystem will dominate the field of human genomics, and bring jobs and prestige to the region where it arises.

How is a cluster created? And how does one determine where to create one? While the how and the where aren’t completely scientific, Ghadar and his coauthors suggest there is one factor that seems to be important to cluster creation, and that is government support. Industries boost local economies and create jobs, which the government rewards with tax incentives and other forms of government cooperation. Beyond financial support, the government can also help in providing infrastructure, demand for products, and avenues for knowledge building, such as funding associations and networking organizations for industry participants.

The authors suggest that for human genomics in particular, the most important element the government could help provide is an accessible source of data. Such a database would ideally include a wide variety of information on DNA sequencing, disease outbreaks, patients’ family histories and environmental exposures, and even information on diet and lifestyle.

The authors write, “If the information is in a useable form, researchers will be able to mine it to identify the root causes of complex genetic diseases. But individual scientists and research institutions have few incentives to build data banks that merge their results with those of other researchers… A national government will have to play a big role.”

Advancements already made in the human genomics industry are paving the way for the Silicon Valley of the life sciences, according to Ghadar and his coauthors. Nine years ago, researchers with the Human Genome Project completed the first comprehensive map of a person’s genome at a cost of about $4 billion. Today, scientists can map a genome in a matter of weeks for the cost of about $2,000. And it isn’t long before a genome map for about half that price will be created.

Despite these early advancements, the authors maintain that for the industry to reach its full potential and for genome studies to be widely useful, it will require a physical location for inspiration and innovation to occur.

“The genomics cluster will include multinational corporations, research institutions, scientists, students, investors, related industries, and start-ups that haven’t been imagined yet,” the authors write. “And although the IT part of bio IT relies heavily on the internet, geography will be a crucial factor: The genomics cluster will have a physical location…The collaboration and inspiration necessary for innovation are much easier on the ground than in the cloud.”

The authors comment that the United States, United Kingdom, and Canada are well positioned to play host to the genomics industry cluster, but the window of opportunity won’t be open for long. “…As soon as one country or region makes a move, others will be at a serious disadvantage.”

Although the United States has played host to several dynamic industry clusters in the past, a few have diminished, including the computer chip manufacture, which has moved on to Taiwan and China.

“If America has the vision to lay the groundwork for a genomics cluster,” write the authors, “the result could be a compelling two-for-one deal – a new industry ecosystem that forever alters the course of medicine while bolstering the country’s economic health.”

The article, titled “Why Life Science Needs Its Own Silicon Valley,” appeared in the July-August 2012 issue of Harvard Business Review.

"At a Glance"

Fariborz Ghadar and coauthors write about the need for the “Silicon Valley” effect to take place in the human genomics industry. Studies have shown that having a high concentration of producers, suppliers, training centers, and people working on the same problems in the same location leads to faster progress in an industry. Key highlights include:

  • With skillful management and luck, the life sciences industry cluster will dominate the field of human genomics, and bring jobs and prestige to the region where it arises.
  • There is one factor that seems to be important to cluster creation, and that is government support.
  • For human genomics in particular, the most important element the government could help provide is an accessible source of data.
  • The United States, United Kingdom, and Canada are well positioned to play host to the genomics industry cluster, but the window of opportunity won’t be open for long.
  • Hosting a genomics cluster in America could alter the course of medicine, while bolstering the nation’s economic health.
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