[R&D POLICY IN KOREA (42)] Building global knowledge networks through brain circulation in bio, pharmaceutical industry

This is the 42nd in a series of articles introducing the Korean government’s R&D policies. Researchers at the Science & Technology Policy Institute will explain Korea’s R&D initiatives aimed at addressing major socioeconomic problems facing the nation. ― Ed.

To bring back and utilize human resources that have gone overseas has been a goal of companies and governments of developing countries for a long time.

This is because these highly skilled human resources, who have world-class ability, can play a very important role in a company’s growth and national development. Therefore, if they remain abroad, their countries will suffer a “brain drain.”

Recently, highly skilled migrants from some developing countries have made vital contributions to the industrial development and economic growth of their homelands. They have built knowledge networks between their home countries and their new countries of residence, which have been increasingly significant in recent knowledge-based economies.

Thus, a “brain circulation” model that takes advantage of human resources abroad to build global knowledge networks has been given attention by most developing countries as a new strategy.

New argonauts

A typical example of this model is shown in the IT industries in Taiwan and India. In Taiwan, skilled workers who were educated or worked in the Silicon Valley returned to their home country, launched IT parts companies in the Hsinchu Science Park and grew these companies fast, supplying their manufactured parts to U.S. assembly companies. The cluster that formed as a result was important to the development of Taiwan’s IT industry. The global network that these workers established played an important role in this process. Consequently, the IT industry in Taiwan was able to enter the international market through the global knowledge networks that these workers were part of, and Silicon Valley’s venture system was transplanted at the same time, boosting Taiwan’s venture ecosystem.

The IT industry in India got its start while supplying simple services such as software coding to advanced countries. Highly skilled engineers who were educated or worked abroad returned to India, improved the level of IT services, and expanded the scope so that it played a fundamental role in creating worldwide software companies in India. IT companies such as Wipro have enhanced the knowledge network with markets in advanced countries through returning skilled workers and have entered the U.S. market.

In addition, some Taiwanese and Indian businessmen set up companies or local offices both in the U.S. and their home countries.

Saxenian (2006) called them the “New Argonauts,” to indicate the skilled workers from developing countries who live abroad and build knowledge networks in various ways between advanced countries and developing countries, which contribute to industrial development in their home country.

The establishment of global knowledge networks by these workers has developed domestic industries and upgraded them to the global level.

Global networks

Biotech and pharmaceutical industries recently showed the same phenomenon that Saxenian found in the IT industry. WuXi PharmaTech (WuXi) in China, for example, is a contract research organization (CRO) that supplies the chemicals that are necessary in drug discovery, and it has recently grown rapidly and changed the landscape of the CRO market.

This company continues to grow, almost doubling annually since its establishment in 2000, and it has grown into a large enterprise with 4,135 employees as of the end of 2009 (3,230 research staff) and sales of $270 million (net sales of $5.3 billion). 

The reason WuXi was able to achieve rapid growth was due to the capabilities of those familiar with global standards, combined with the capabilities of scientists in China, which made it possible to deliver high quality services at a low price.

WuXi was founded by Dr. Ge Li who received a Ph.D. in organic chemistry from Columbia University and served eight years at Pharmacopeia in the United States. It employs over 100 scientists who were educated and had work experience from the United States.. Knowledge networks created by the scientists who returned home from the U.S. played an important role in the growth of WuXi.

Since the 1980s, global knowledge networks have developed in the pharmaceutical industry. Large pharmaceutical companies in advanced countries faced problems with R&D productivity and they looked externally for sources of innovation. Despite an increase in research funds, fewer new drugs are released every year, and large pharmaceutical companies in advanced countries have tried to reduce their research funds and raise R&D performance by way of outsourcing non-core R&D activities and licensing-in drug candidates from outside. This process has brought venture companies and CROs to supply promising drug candidates.

It is noteworthy that increasing numbers of bio venture companies and CROs in developing countries have become partners with global pharmaceutical companies as their level of science and technology has risen.

In the background of the expanding role of developing countries in the world’s pharmaceutical industries, as shown in the case of WuXi, the transnational knowledge community that has formed between developed countries and developing countries plays a critical role.

Transnational knowledge communities in Korea

In Korea, since 2005, dozens of the leading scientists who worked in the U.S. pharmaceutical industry returned and were recruited as chiefs of research institutes in Korea, and they have had a positive impact. Green Cross, Daewoong Pharmaceutical, ChoongWae Pharmaceutical, and Yuhan Corporation have recruited some of the United States’ leading researchers as R&D chiefs. However, the number of researchers brought in is small compared to China and India, and their impact on the pharmaceutical industry in South Korea is limited.

To investigate any possibility as to whether or not the Korean biotech and pharmaceutical industries can grow by taking advantage of skilled Korean workers abroad, STEPI carried out a survey with Korean scientists who are active in the U.S. biotechnology and pharmaceutical industry. Currently, more than 500 Korean scientists work in the U.S. for companies in the biotechnology and pharmaceutical fields.

They organized Korean associations such as the Korean American Society in Biotech and Pharmaceuticals, the Bay Area Korean-American Scientists Society in Biotechnology and Pharmaceuticals, and the BioPharma Association to exchange information, network, etc. The number of members in these organizations combined is about 700.

Additionally, the Korean Life Scientists in the Bay Area and the New England Bioscience Society are Korean associations that consist mainly of a total of 700 university professors, researchers and students (Table 1). A total of 214 people responded to the survey that was conducted with these associations and 57 of these respondents worked for companies.

In the following table, the opinions of the 57 respondents were analyzed.

First, when asked about the 10-year outlook for the biotechnology and pharmaceutical industries in Korea, the respondents were very negative. They were less negative on the 20-year outlook and it was thought that the industry would grow slightly. The reasons cited were: negative prospects for the development of Korea’s biotechnology and pharmaceutical industries; lack of experienced workforce, especially director-level research staff.

Meanwhile, Respondents were highly interested in getting a job in Korea and showed a strong willingness to work. Sixty percent of the respondents expressed interest in the possibility of working in Korea, and if already employed in Korea, they preferred working in public sector enterprises. However, the expected barriers while working in Korea included low funding levels, the rigid organizational culture of Korea and relatively low wage levels.

When the Korean government or agencies established local institutions in the United States, the willingness to work was 75 percent ― higher than that of working in Korea. Regarding a preferred employer, most respondents preferred companies and government-affiliated research institutions but respondents who worked in universities and public institutes showed high preferences for government-affiliated research institutions.

For job types, the majority of respondents preferred research work (55 percent), but planning services (35.3 percent) also showed significant numbers.