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      Public R&D Investments and Private-sector Patenting: Evidence from NIH Funding Rules
      11 Nov 2015Working Paper Summaries

      Public R&D Investments and Private-sector Patenting: Evidence from NIH Funding Rules

      by Danielle Li
      By tracing the often-circuitous path from National Institutes of Health (NIH) funding to patented innovations, this research examines the effects of public science on private sector innovation in the life sciences.
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      Author Abstract

      We quantify the impact of scientific grant funding at the National Institutes of Health (NIH) on patenting by pharmaceutical and biotechnology firms. Our paper makes two contributions. First, we use newly constructed bibliometric data to develop a method for flexibly linking specific grant expenditures to private-sector innovations. Second, we take advantage of idiosyncratic rigidities in the rules governing NIH peer review to generate exogenous variation in funding across research areas. Our results show that NIH funding spurs the development of private-sector patents: a $10 million boost in NIH funding leads to a net increase of 2.3 patents. Though valuing patents is difficult, we report a range of estimates for the private value of these patents using different approaches.

      Paper Information

      • Full Working Paper Text
      • Working Paper Publication Date: October 2015
      • HBS Working Paper Number: 16-056
      • Faculty Unit(s): Entrepreneurial Management
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