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The eureka formula
U.S. innovation is exploding because of an embarrassment
of riches from government, the private sector and philanthropists.
But it's not only money that is fuelling the boom,
there's also the American drive to succeed,
JOHN STACKHOUSE finds in Palo Alto, Calif.

Research by Rick Cash; Sources: U.S. National Science Foundation, OECD,; Council on Competitiveness, Computer Industry Almanac,; U.S. Department of Commerce.
Wednesday, October 18, 2000

From his medical lab basking in the California sun, Harvey Cohen does not have to look far to see science's new golden age, because everywhere one looks at Stanford University there is gold.

The faculty parking lots are filled with luxury cars and sports utility vehicles, and every new building is named for a titan of the information age, for a Gates, Allen, Packard or Lucas.

Dr. Cohen's own pet project, a biomedical engineering centre now under construction, is being built with a single donation -- $150-million (U.S.) from Netscape Communications Corp. founder James Clark, who once taught at Stanford. The operating costs will come from another pledge, $60-million from an anonymous donor.

If that were not enough, Dr. Cohen says almost in embarrassment, he is negotiating another donation of several hundred million dollars from two foundations to the Lucile Packard Children's Hospital at Stanford, where his pediatrics team is a world leader in leukemia treatment.

For American science, there has probably never been a better time, not when discoveries abound while funding flows, public adulation soars and foreign rivalry pales. The United States now accounts for more than 40 per cent of the world's science spending, produces one-third of the globe's high-tech products and almost half of all major new drugs.

"I would say 60 per cent of the world's good science occurs in the U.S.," says Richard Taylor, a Canadian-born Nobel physicist at Stanford.

A century ago, Britain and Germany vied for science supremacy. After the Second World War, the United States and Soviet Union tried to outdo each other.

But now, no country outshines the United States in any major science, or on the broader playing field of innovation. Dr. Taylor is one of 85 U.S.-based scientists to have won a Nobel Prize since 1981, including 15 at Stanford. Germany and Switzerland run a distant second, with 10 each. Canada has three.

"We're in a different age," says Charles Kruger, Stanford's vice-provost and dean of research. "Whether it's a golden age or not is our responsibility, but it certainly is a good time."

At Stanford, the most common reason offered to explain this dominance is money. Last year, the United States spent more on research and development -- $229-billion in total -- than Germany, Japan, France, Britain, Canada, Italy and Russia combined. California alone spent $42-billion on R & D, more than four times as much as Canada. The growth of patenting, one indication of innovation, has reached its highest level in two decades.

This relentless drive for discovery is something Dr. Taylor, now 70, noticed as soon as he arrived at Stanford from the University of Alberta in the 1950s.

"It's not the Nobel Prizes" that motivates scientists, he explains, walking above a three-kilometre-long particle accelerator where he studied the behaviour of quarks, which won him the Nobel in 1990.

"It's the feeling of being at the frontier. You're at Stanford or Harvard and you should be doing something that's pretty good. In fact, you better do something pretty good. There's an attitude, which may be missing in Canada."

He says much of this American attitude toward science is based on the pursuit of major goals, such as reaching the moon, beating cancer and mapping the human genome. In the United States, the public perception of science tends to follow what he calls the "Edison model" -- a practical side epitomized by the inventor Thomas Edison.

Today, the practical side is in health care, in labs like Dr. Cohen's, where smashing cancer cells rather than atoms is the new vogue. On campuses such as Stanford and the Massachusetts Institute of Technology, the fields of biomedical engineering, genetics and nanobiology are so hot that they are redefining the nature of American universities and, with them, American science.

Much of the money comes from Washington, buoyed by a $7-billion economy and a new age of budget surpluses. The Clinton administration has raised health-research spending to double the research budget of the U.S. space program.

Philanthropists, enriched by a decade of rising stock prices, are also pumping money in to scientific research, especially science that claims to help people.

At MIT, such philanthropy reached new heights of boldness last year when Kenan Sahin, a Boston-area software entrepreneur, stood up at an alumni dinner and, on the spur of the moment, pledged $100-million to his alma mater.

But the biggest change to U.S. science may be found in the private sector, where multinational corporations and small biotech start-ups are turning to academe for assistance.

Or, as often is the case, American academe is turning to the private sector for profit.

Capitalism and science have never been far apart in a nation moulded by innovators such as Benjamin Franklin and Thomas Jefferson.

Through the first 150 years of the United States, most scientific achievement was entirely utilitarian and highly marketable, in the realm of technology, like the cotton gin, sewing machine, vulcanized rubber and Kodak camera.

At the beginning of the 20th century, when Orville and Wilbur Wright were just getting airborne, one third of American patent applications dealt with bicycle technology.

Individuals, private companies, philanthropic foundations and societies continued to dominate U.S. research until the Second World War, when the missile and nuclear race and an exodus of scientists, most of them Jewish, from Nazi Germany revolutionized American science.

Soon, the building of an atomic bomb was to epitomize a new belief that government should actively engage itself in science, an idea promoted by Vannevar Bush, an MIT professor and science adviser of the United States' first postwar president, Harry Truman.

In a seminal report, Science: The Endless Frontier, Dr. Bush called for a new public commitment to science and urged Washington to match the Soviet Union's research budget of $900-million, about what the United States now spends every 24 hours on R & D.

During the Cold War, Dr. Taylor's field of high-energy physics -- using accelerators to study the makeup of atoms -- was the stuff of science legend. It was showered with federal money to ensure that the United States would never again be humiliated by Moscow, which got to outer space first with Sputnik I in 1957.

"A year after Sputnik went up, you could go to Washington with a wheelbarrow and they'd fill it with money," Dr. Taylor says, recalling the days when the U.S. Navy would grant him funds for a research project and be satisfied with an annual progress report.

"It taught scientists how to spend money. Before the Cold War, scientists thought only in terms of $10,000 grants."

The push for bigger missiles, biological weapons and "smart" satellite-controlled bombs sparked fear in the public, and among some scientists, of a new "military-industrial complex" that would steer federal science money to destructive, yet profitable, ends.

Instead, by the 1970s, a different model of competitive science began to emerge. In it, multinational companies, suburban garage start-ups, university labs and government research centres all chased staggering new discoveries such as microchips and DNA.

A decade later, a boom in venture capital financed a new generation of scientist-entrepreneurs, people such as Netscape's Dr. Clark, who left an electrical engineering teaching position at Stanford in 1982.

At the same time, governments around the world started to back away from science, cutting their share of total research spending from roughly one-half, on average, to a third. In Russia, once the greatest rival of the United States, total R & D spending fell 74 per cent in the 1990s.

U.S. scientists, in contrast, found fresh support in the private sector, especially in fields such as biotechnology and medical research.

Industry's contribution to academe approached $2-billion a year, about 10 times its 1979 level, and campus discoveries began to move stock markets.

Few places exude this kind of gung-ho American enthusiasm for discovery more than Stanford, where science and enterprise are cheered as partners.

This is the campus where DNA was cloned and, more recently, where a device known as "optical tweezers" was developed. It allows scientists to assemble molecules -- creating structures, and possibly life, from the most basic unit known to science.

Set in the arid hills south of San Francisco, turned green by Californian irrigation, Stanford is also the place of personal fortunes.

Ever since two young graduates, Bill Hewlett and Dave Packard, set up their electronics company in a Palo Alto garage in 1939, the university has spawned much of Silicon Valley, with the creation of Sun Microsystems Inc. (which gets its name from Stanford University Network), Cisco Systems Inc., Netscape and Yahoo Inc.

So essential are market forces to Stanford that the university this year selected as its new president John Hennessy, a former computer-science professor who once spent a sabbatical launching his own company, which he later sold for $333-million.

Today, this very American approach to science may best be represented by Lucy Shapiro, a brilliant Stanford microbiologist who is as comfortable in the boardroom as in the lab.

Dr. Shapiro runs her own Shapiro Lab with the help of a private foundation, gives advice to the Clinton administration, sits on the board of pharmaceutical giant SmithKline Beecham PLC, and recently launched her own small company to develop a new antibiotic, which she believes could be a successor to penicillin.

When she needs rare materials for her lab, she can approach the huge biotech industry that has sprouted around Stanford and the nearby University of California-Berkeley. When those companies need research, they can hire her team. (Berkeley, a hotbed of anti-establishment protests in the 1960s, recently boasted that six of the 10 bestselling drugs in the United States stem from its own research.)

Then, when it comes time to move an idea from lab to market, she can turn to the hordes of venture-capital firms down Highway 101 in Silicon Valley.

Not surprisingly, "everyone in our lab is an entrepreneur," Dr. Shapiro says, citing the case of a graduate student who recently requested a year's leave to start his own company. "I've been an independent agent since I started."

She stresses that her lab has never pursued an idea to make money. It's just that the private sector knows how to put academic ideas to work, she explains. With a system of patents and property laws, it also protects her findings.

Hidden from the grand boulevard of palms that leads visitors to Stanford's Spanish colonial quadrangle, Dr. Shapiro works in a state-of-the-art molecular-biology centre donated by industrialist Arnold Beckman, now 100, who made his fortune developing pH meters and other chemistry instruments. His private foundation sponsors cutting-edge research at five centres across the United States.

"I can't stress this philanthropy enough," Dr. Shapiro says.

To get her specialty of developmental biology established within the Beckman Center, Stanford raised $12-million from one foundation. For other disciplines, it has persuaded benefactors to build the William Gates Computer Science building, Paul G. Allen Center for Information Sciences and the Packard Children's Hospital.

But now much of Dr. Shapiro's focus is on another new creation, the Clark Center, which will merge the essential forces of government, philanthropy, industry and academe into a "new science."

The 220,000-square-foot James H. Clark Center for Biomedical Engineering and Sciences (Bio-X for short) is to open in 2003 with enough money and brain power to radically change science. Inside, 400 scientists and technicians will work on a range of research projects combining microbiology, computers, physics and chemical engineering in what the university calls scientific "dream teams."

The idea is to bring together the scientific knowledge gained in the past two decades, especially in microbiology and electronics, in the hope that extraordinary breakthroughs will result. One project already has united an ophthalmologist, neurobiologist, and electrical and chemical engineers to look at ways to hook up a camera to retinal cells in a blind eye to develop a working nerve connection.

For Dr. Shapiro, who has spent her career studying cell behaviour, the new facility will give her daily access to some of the world's best research in computing, genetic mapping, chemical engineering and medical imaging. This is essential because there is now too much knowledge for scientists to hold in their heads -- computers are key to making the links between discoveries in different fields.

She has spent her career trying to understand how one cell, a fertilized egg, divides and develops into a baby, and why some cells join to form a kidney while others mass together to make eyes. If she can crack the communications code at the cell level, she believes that she will have taken an enormous step toward solving cancer and other serious medical problems that arise when the cycle of dividing cells goes wrong.

Because her quest is so general and so critical to the understanding of life, and because the very nature of scientific research is so "haphazard," Dr. Shapiro says she must also rely on government research money.

No philanthropist or commercial company could finance a lifetime's quest or tolerate its diversions, she says, although private money can be important to giving her and her colleagues the tools they need.

The Bio-X teams will have equipment and budgets enjoyed by few of their peers internationally, but what distinguishes them most perhaps is their ability to put a discovery to work.

Recently, for example, Dr. Shapiro found one protein called CtrA, which controls the beginning of DNA replication in an aquatic bacterium. To find ways to block these critical proteins, she recruited other research teams at Stanford and then turned to the pharmaceutical industry around Silicon Valley to begin developing antibiotics.

Even though her work is federally funded, she can now license her discoveries, thanks to the 1980 Bayh-Dole Act, which has proved to be as critical to the current science boom as Sputnik was to the 1960s space race. Since the act was legislated, universities have set up patent and licensing offices and become as wealthy as many big corporations.

From one DNA cloning discovery, for instance, Stanford has earned more than $230-million. In 1998, the less celebrated Florida State University earned $45-million from a cancer drug, Taxol, which it licensed to Bristol-Myers Squibb Co.

"I think it's artificial to say that because you're a scientist, you can't get a product through to help people," Dr. Shapiro says. "That's stupid. It's like saying your right hand can't talk to your left hand."

Today, the spectre of corporate-sponsored research hangs over U.S. universities, and researchers are having to explain their motives more than ever. At Stanford, scientists who may also be millionaires insist that one of the most fundamental principles of science still stands, that discoveries must be published as soon as they are proved so that researchers everywhere can benefit.

Yet with the proliferation of patents, licences and ensuing profits, it remains unclear how much of science's public domain is really public, or whether the priorities of research are not just the priorities of business.

"Someone asked me, 'Isn't this a slippery slope?' " Dr. Cohen says of the new market forces in science. "I said, 'Yeah, but it's the only slope we're on.' "

Perhaps less controversial but no less important is the emerging evidence that an American-dominated world of science no longer serves the globe. At the beginning of the 21st century, there are powerful drugs to fight AIDS but not malaria, there is evidence that cancer will soon be in retreat but not tuberculosis, and there are automobiles that are smarter than a 1950s supercomputer but still rely on fossil fuels.

"It is much more difficult to raise dollars for international pediatric AIDS initiatives now that the problem in this country is much less," Dr. Cohen says.

"Breast-cancer and prostate-cancer research is accelerating because they represent important problems in this country. While everyone will benefit from some of this research, it is primarily being done because of the issue in this country."

As the United States pursues its own fountain of youth, there are some indications that its supremacy may not go unchallenged anyway.

Washington's shift to the health sciences over physics, to genetics over bombs, has allowed Germany and Japan to close the gap in a traditional science. Since 1992, the number of U.S. students starting physics graduate programs is down 27 per cent, largely because it does not have the cachet, or rewards, of biotech and computer software.

In a major study of American innovation, Harvard University management guru Michael Porter argued that the skills shortage, coupled with weak elementary schooling in sciences and math, could cost the United States dearly as emerging economies such as Taiwan, South Korea and China put a new generation of U.S.-trained researchers to work in their own labs.

On a sun-drenched afternoon at Stanford, however, there is barely a trace of fear, not when delegations from Russia and China are coming to ask what the Americans have done right. There are books that discuss the proximity between Stanford and Silicon Valley, the idea of innovation clusters, of financing and market access.

The best Dr. Kruger, Stanford's dean of research, can tell the Chinese is to give scientists the freedom to explore, and to profit from their work. Most will pump the money right back into their research, he says.

He believes other countries will follow, just as universities and research institutions in Europe are becoming more pragmatic. They are bringing science down from the ivory tower, and encouraging scientists to be more outward-looking, perhaps even market-driven.

"I have a view that things will get more similar," he says. "Ten years from now, it will be less different doing research in Moscow or Beijing than in California."

He sits back in his office, overlooking Stanford's main quad, to consider whether this will be a true convergence. He doubts it.

The rest of the world, all those countries that spend the other half of the world's science money, will be the ones making the biggest adjustments, he says.

"They will become more like the U.S."

By the numbers

Money is a large part of what makes the U.S. research and development world go round, and it shows through its dominance in so many aspects of science and technology. Though the world is catching up in some areas, Americans are the leaders when it comes to patents, scientific discoveries, the high-tech industry, and the use of personal computers and the Internet. (All figures are in U.S. dollars.)
...43%...The U.S. share of what the industrial world spent on R&D, 1997...
$189.4-billion*...-*Constant 1992 U.S. dollars
6.5 per cent:
Increase from 1997 to 1998 in R & D expenditures by the United States.
3.9 per cent: Growth of U.S. economy, 1997 and 1998.
65.9 per cent: Share of R & D funding from the private sector.
55.3 per cent: Share of total U.S. government R & D funding that goes to defence, 1997.
46.6 per cent: Share of civil R & D budget that goes to health and the environment.
24.5 per cent: Share of civil budget spent on space research.

65,000: Full-time researchers in the United States in 1997; 45 per cent of all researchers from the Group of Seven industrial nations.
First: Rank of the United States in the publication of scientific papers.
186: Number of R & D facilities U.S. companies had abroad, 1997.

67.9 per cent: Share of patents granted in Mexico to Americans, 1996.
52.2 per cent: Patents granted in Canada to Americans.
51.4 per cent: The percentage given in Japan.
42.4 per cent: The share granted in India.
1.58 billion: U.S. patent applications in other countries.
433,583: Patent applications abroad by second-ranked Germany.

129 million: Personal computers used in the United States, out of 365 million worldwide, 1998.
164 million: PCs in the United States by the end of this year, against 579 million worldwide.
40 per cent: U.S. share of Internet users expected for this year.
72 per cent: Percentage of secure Web servers used for electronic commerce that originated in the United States, as of August of 1998.

51 per cent: U.S. share of total world aerospace-industry production, 1997.
47 per cent: Share of computer equipment production.
31 per cent: Percentage of drugs and medicines made by the U.S.
23 per cent: U.S. share of communications equipment production.

Saturday, Oct. 14: Overview
Monday, Oct. 16: Diplomacy
Tuesday, Oct. 17: Culture
Wednesday, Oct. 18: Science
Thursday, Oct. 19: Business
Friday, Oct. 20: Military

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