Examination of Witnesses (Questions 20-39)|
OBE, PROFESSOR SIR
CBE, PROFESSOR JULIA
GOODFELLOW CBE, AND
MONDAY 11 MARCH 2002
20. Yes. One accepts that we have to address
the volume as well as the equality and we are falling behind there,
but you would expect to in view of the resources that we have
available? I was listening to the radio this morning and I heard
someone from Edinburgh, you possible did, who has been doing stem
cell research there in relation to diabetes and he was saying
that now he has reached the stage where as much as he loves Edinburgh,
he loves living there and he loves the university there, he is
having to leave Edinburgh to go to Singapore because he cannot
raise thethe figure he was quoting was £40 million
needed to go to the next stage. Is that a fair description of
the situation he has found himself in?
(Professor Sir George Radda) Could I say that the
individual you refer to, of course, works not in the academic
environment but in a biotechnology company and has found a better
opportunity in Singapore. If you talk to our academic researchers,
particularly in the stem cell area, actually the conversation
is the other way round, we have already attracted one of the top
clinical stem cell researchers from the US to the United Kingdom.
I am in conversation with a number of others, both at a junior
and senior level, and they are all hoping to come to this country
to do this sort of research, where the opportunities are excellent.
21. You have this base between what the Chairman
referred to as blue sky research and you have what they describe
as a university achieving a sort of platform but not a product,
how do we manage to finance between developing the intellectual
platform and developing the base on which you hope to derive commercial
products? How adequately would you deal with that?
(Professor Sir George Radda) I can respond from the
MRC's point of view. You obviously need seed funds at three different
levels. You, first of all, need seed money, which we are providing
to our commercial funds up to the tune of £1 million for
what is called filling the development gap, that is going from
the results of basic science to a stage where you realise that
there are commercial opportunities. The second area that we have
put in seed funds is what he we call the collaborative centre,
which we set up many years ago at Mill Hill and also in Edinburgh.
These collaborative centres carry on the research programmes to
the stage where the product can be specifically identified. These,
again, are now funded from the commercial income and not from
public funds. Of course the third area where you need the seed
money is when you set up a new spin out company. Our venture capital
company, as I mentioned coming entirely from private funds, does
that. We are covering the whole range of how to go from the basic
science to a commercial product with different ways of putting
in seed money.
22. When we get to the stage of moving to commercial
production is the quality of our work force at present adequate
to meet the demands? We see in general industrial terms the problems
of skill shortage, is there a problem of shortages in the relevant
and appropriate workforce back-up able to turn the idea into a
(Professor Sir George Radda) I am sure that is also
sector dependent. Answering from the biomedical and the medical
research point of view, I think we have the quality of people.
23. In sufficient quantities?
(Professor Sir George Radda) In sufficient quantities,
in the spin-off companies and the biotechnology companies that
we have set up. In many cases these people have been brought in
24. Why have we needed to do that?
(Professor Sir George Radda) Movement in science is
global, people move in both directions. People will move where
the good opportunities are. We have certainly managed to move
people round like that.
25. It must also be a function of the reluctance
of young people in this country to pursue the appropriate subjects
at A-level and university?
(Dr Taylor) I think, first of all, this whole question
is being looked at very intensively by Sir Gareth Roberts, who
is looking at a review of the whole question of the supply of
science right the way through from schools to post graduates and
post-doctorates. That is due to report in two or three weeks.
I will just reinforce that science is a hugely international affair
and, by the way, technology transfers wonderfully on the hoof.
One of the most important technology transfer mechanisms is people
moving round and coupling to each other the activities they know
about. We only fund five per cent of the world's research in the
United Kingdom and we need to make sure we tap into the other
95 per cent to find the pieces we do not have and to find the
patents and the intellectual property we do not have. International
mobility is absolutely crucial. We are not the only country by
any means that has a deficit of people. As I said earlier, if
you go to France, Germany, America and Japan if you go to any
of those places they are intensively campaigning to fill their
own deficits of talented people.
Mr Williams: You come to use the term "deficit"
rather different from the tone of your initial answer to me, where
you omit there was a deficit. I do not want an answer to this,
I understand where we are going. I find it a rather interesting
transposition, your assessment of our innate capabilities.
26. I thought the days when the DTI went round
picking winners had long gone. Reading this Report, is that not
what you are really doing through your various research councils?
(Mr Young) No. If by picking winners you mean choosing
between lame ducks and live ducks, if you are referring to that
debate the days have long gone for that. What we are doing here
is seeking to encourage the research council to stick to their
core mission but also in order to get to that core mission quicker
and better to maximise the opportunities for commercialisation
here. We are encouraging them to maximise the opportunities listed
here for all of the various things that can be commercialised
without, in any sense, tarnishing their core mission.
27. If I can look at a specific example in paragraph
2.3, the Babraham Institute, here is government money being used
for a "Bio-incubator" site which attracts 19 fledgling
companies to get going. Surely there, in effect, you are making
a decision about which private companies you are going to use
public money to help get off the ground, are you not?
(Mr Young) I would say in general we are asking this
particular research council, Julia's one, to maximise the opportunities
to hit their core mission under the commercialisation heading.
Whether we are hitting it or not I do not know.
(Professor Goodfellow) Really very small amounts of
money have gone in directly to the institute to set it up. Most
of it has come through specific DTI initiatives to get it going.
The idea is also to support science and innovation in the United
Kingdom. They are performing a very important regional role in
that area and they have been very successful. The Cambridge Science
Park is more than full. They have planning permission in a difficult
area of Cambridgeshire. They have been very successful and this
allows them to take their science forward as well as supporting
the local economy.
28. As a judgment as to which companies you
support and which you do not, are they essentially commercial
judgments that this company is going to be a great success or
not commercially, or is it what we really need is a bit of this
science done in the United Kingdom?
(Professor Goodfellow) It is mainly companies that
are in the area and companies that can benefit from the knowledge-base
of Babraham. They are using the good quality science of Babraham
and they also have accessthey pay for their platform technologyto
29. Presumably more companies apply to you than
you can cope with?
(Professor Goodfellow) Not all Bio-incubators are
successful, this one has been unusually successful and very clean.
Of course what they are planning now is a public private partnership
to go ahead to expand so that more people in the area can come
in. That would be a public private partnership that is under discussion
at the moment.
30. The same is the true for the Medical Research
Council with its venture fund, you are making a judgment about
which companies to invest in and which ones not to?
(Professor Sir George Radda) MVM Ltd, which has its
own board independent of the MRC, will make the decision on the
basis of a detailed evaluation and the proposals it sees, where
they should put in their start-up fund, whether it is a spin-off
company or not. Consideration will be no different from what any
other venture capital company does. Officially the agreement with
the MRC, because they largely use some of the MRC technology for
spin offs, is that in the first agreement it was something like
75 per cent of their investment had to be to in MRC-related work.
The second round of raising funds have been relaxed a bit more,
they can actually give venture capital to any venture.
31. The point I am getting at, Mr Young, is
when should the public be investing in research that is of commercial
benefit and when should private companies be putting that research
in? Astra Zenica's headquarters happen to be in my constituency
and they spend hundreds of millions of pounds a year on medical
research, that is fine because they make money out of that, they
are a private company. Why should I as a taxpayer be competing
with Astra Zenica?
(Professor Sir George Radda) You are not paying towards
any of this because it comes from the commercial income that we
made out of the company's licensing and also patents. The initial
seed funds went in from public funds and then we have recovered
those funds from the income that has been generated.
32. Originally it was taxpayers' money.
(Professor Sir George Radda) There was a small amount
of taxpayers' money in setting up the MRC technology group and
in setting up collaborative centres and providing initial seed
funds. That has now generated the much expected income, it takes
a long time of generated income to recover all of this, plus more.
(Professor Goodfellow) The Bio-incubator, for instance,
in Cambridge, the people there are paying commercial rents and
they are paying for the service that Babraham can offer of very
specific technical services which might not be found in other
places. That is what they are paying for.
33. I do not doubt this is extremely good work,
I am just wondering whether the taxpayer should be paying for
(Professor Goodfellow) We are saying the taxpayer
is not, in that companies are paying for services and our institutes
are offering a service. There may have been a bit of money to
set it up, they have development fund money, possibly through
the local region or possibly from DTI for knowledge transfer/mentoring.
Most of the money is coming in from these companies.
(Mr Young) I do not know whether it helps but the
missions of the research councils are set out on page 17, that
is the published mission normally set out in the Royal Charter
of these three particular councils. The issues we are discussing
is the extent to which they carry out that mission solely supported
by public sector funds or whether they seek to supplement that
with carefully managed commercialisation techniques, and that
is what this Report is about. It and the Baker recommendations
have encouraged us to go further in supplementing conventional
public sector finance with commercialisation exploitation, and
that is what we are trying to do whilst taking your point. The
basic mission is set out on page 17.
34. Are there some commercial companies you
would not work with, for example tobacco companies?
(Dr Taylor) I think this is very much, again, a matter
for the individual institutes and the individual research council
processes. Their overall requirement is to operate something like
the generic process, the diagram is on page 35, which says, first
of all, choose publicly funded research topics in the public interest
down the mainstream research agenda of your institute, and then
we are enjoined by Baker and this Report to be opportunistic in
understanding whether having done some research there may well
be commercial opportunities and to run and police a process something
along the lines of page 35, which hands off to the private sector
and private funds just as quickly as possible and not to spend
one more pound of public money in taking something to the point
where private investment is willing to go with it.
35. I quite like Table 4 because it says "without
trying to pick a winner too early".
(Dr Taylor) I would take a little more on ourselves
than you would think. I think what we are asking the research
institutes to do in the spirit of Baker and spirit of this Report
is to make some choices, to focus very limited public funds which
are available to take something to the threshold where it might
be able to attract private investment, and to do that you have
to make choices, you have to focus. If you spread it over every
possibility you would not have much success.
36. You do not make ethical choices, if that
is the right phrase, about tobacco companies, to use my example.
Maybe Professor Radda would like to answer that, would the Medical
Research Council welcome tobacco companies?
(Professor Sir George Radda) Ethical considerations
will precede any commercial consideration. The Council will look
at it very carefully and where there is an ethical issue they
would not like allow commercialisation if they found there was
something unethical or not right.
37. Do you do any work with tobacco companies?
(Professor Sir George Radda) We do not to my knowledge.
38. You personally would not wish to see that
(Professor Sir George Radda) I personally would not
wish to see that happen.
39. Could I just pick up on something that both
the Chairman and Mr Williams touched on, the retention of key
staff, and brain drain to America, and so on, Professor Radda
was optimistic about the fact we are encouraging people back,
however in the Report on page 23, paragraph 2.24 it says there
you are confident your retention problems have been resolved.
What were the retention problems that were resolved?
(Professor Sir George Radda) This is the retention
of staff who are involved in our commercial activities, that refers
to that. These are professional staff that we employ in MRC technology
who having been trained to do a certain type of job in commercialisation
are very open to offers from all sorts of sectors in the company.
We have a salary structure within that because it has its own
salary structure which is competitive on that basis.