1. ESRC Genomics Network (archive)
  2. Gengage
  3. The Human Genre Project

Cesagen · Research

The Economics of Innovation in the Biotechnology Sector

Phil Cooke

Start date


Affiliated staff

David Knight


This flagship project strand had the key aim of understanding the dynamics of pharmaceuticals biotechnology in the post-genomic era. The research is set within a ‘systems of innovation’ perspective and is interested in national, regional and technological dimensions of post-genomic biotechnology’s innovation systems. Thus the research, which focused upon post-genomic biotechnology dynamics in the UK, identified the economic geography, industry organisation and structural dynamics of the sector.


First, it is a heavily clustered industry in that most of the UK’s incumbents are found within commuting distance of Cambridge, Oxford and to a lesser extent, Central Scotland. Incipient clusters exist in Cardiff, Manchester and York. In every case proximity to RAE5* or 6 bioscience research causes this. Proximity to sources of tacit knowledge is extremely important for businesses at the early establishment phase, and later, attracted by an emerging market, business services firms move to such locations, accordingly embedding mature firms.

Second, in industry organisation, the sector is a pioneer of ‘open innovation’ and influential on industry organisation in other sectors accordingly. ‘Open innovation’ characterises research conducted by smaller knowledge-intensive biotechnology laboratories and firms at the behest of large multinational pharmaceuticals companies. R&D outsourcing has thus grown – dramatically in the 1990s – as internal R&D capabilities of ‘big pharma’ have diminished.

Third, the structural dynamics of post-genomic biotechnology reveal small businesses and laboratories being the repository of ‘exploration’ knowledge, concentrated in regional innovation systems as specialised biotechnology clusters. Meanwhile, ‘examination’ knowledge firms specialising in clinical research, combinatorial chemistry and for ‘exploitation’ knowledge (commercialisation), industry financing, are found in close proximity within clusters or in easy reach of them from regional innovation systems. But the industry is also highly globalised and the technological system extends accordingly.

Further information

For further information, please contact Phil Cooke - cookepn@cardiff.ac.uk