Tech Transfer - University of Michigan

Leading Innovation

Mary Sue Coleman Speaks About UM's Role in Economic Development

Remarks of President Mary Sue Coleman
To the IT Zone Forum
June 9, 2003, Hale Auditorium, University of Michigan


I am delighted that you invited me to talk with you during my first year as president - I am looking forward to establishing a strong partnership with our regional partners in business and industry.

I would like to start by reporting on the current initiatives of the University of Michigan in the areas of technology transfer and economic development, and then open the session for a conversation on the role of the university within our regional community of industry and business.

Ann Arbor and the state of Michigan were founded on an economy similar to many states in the 19th century - grounded in natural resources, especially timber, agriculture, and mining.

And once the university had moved from Detroit to Ann Arbor, an interdependent relationship of town and gown thrived in the second half of the 19th century.

However, both the university and the town had greater ambitions than just to be another public university and another college town

In the past year, I have learned that the Ann Arbor business community always was far more motivated than the business communities of other college towns in that period. By the 1880s, business leaders in Ann Arbor were deeply concerned that the town was too dependent on the university for its existence, and that new business and industry was necessary to ensure future prosperity.

The question of the future business climate of Ann Arbor was argued very frankly, and the question was posed in a newspaper of 1874: was Ann Arbor going to be another college boardinghouse town, or was it going to become a city?

Your predecessors formed the Business Association of Ann Arbor in 1886, specifically to diversify the economic foundations of the town.

At the same time, the University of Michigan was establishing a remarkable plan to become a great research university. As I have studied the history of the university, I have been struck by the extraordinary vision of its early presidents, and their determination to fill the classrooms and laboratories with great researchers as well as great teachers.

I think these joint ambitions of business and academia in the 1800s led us to our strengths today - to a city that has been successful in attracting industry, and to a university that has indeed become one of the great research universities of this nation.

I marvel at the proximity of the well-preserved history of Ann Arbor - it shows us our roots at the same time it highlights how far we have come. I recently saw this photograph of corner newspaper boys from the 1890s - and while you might smile at the photograph, you should remember that those boys were the primary vehicle through which news updates were offered, as they shouted headlines on the corners of the streets.

Now, of course, we demand far more in terms of news, and our updates are now virtually instantaneous.

Today, I want to salute the IT Zone and the other organizations for initiating the conversation that needs to occur so that we can to move to a new level of economic development.

I did not come to the University of Michigan to maintain the status quo - the university must continually find new ways to excel. One of our missions that must be supported is the expansion of information technology and technology transfer. And to do that, we must find ways to be partners with all of you.

It is no longer sufficient for town and gown to co-exist as peacefully as possible - we must find ways to advance our agendas in tandem.

We want to find new ways to engage, collaborate, and facilitate the interactions of the business community and the university. We also need to find ways to focus our resources and potential, which we have in abundance here.

The connection of research universities and economic development is well known.

Major research universities are a key factor in the economic development of several cities and regions, such as the "Silicon Valley," the Triangle Research Park in North Carolina, and the cities of Boston, Austin, and Seattle.

Of course, universities add considerable value to the surrounding area because of the intellectual capital found on a campus.

Beyond that, the basic cost of running a large university provides the local economy with revenue from the operations of the university and the services our students, faculty, and staff require. Just last year, the University of Michigan paid local vendors over 150 million dollars in Washtenaw County alone.

But in terms of sustained economic development, one of the most important elements a university can add to an economy is the substantial infusion of federal research funding. At the top levels, where you will find the University of Michigan, over 500 million dollars are awarded each year for research projects designed by our faculty.

In this slide, I am providing you with two years' worth of data, because I want you to see three aspects of our research funding - the considerable amount of our funding, the academic company in which we find ourselves, and the level of competition from year to year for these dollars.

If you compare research expenditures for 2000 and 2001, you will see the same universities in the top five of the rankings, but a dramatic shift occurs in the funding for the University of Wisconsin and UCLA. The funding for all of the top universities increased, but UCLA managed to make an impressive gain within one year, increasing its research funding by almost 30%.

This is an important point, because you need to be aware that not only universities, but also entire states, are committed to attracting federal research dollars to revitalize their economies. Over and over, governors around this country are pledging to help make their states the new center of technological research.

I recently testified to the Higher Education Sub-Committee of the State Senate, and I related to them some of the competition we are facing as other states try to position themselves to attract the research funding we are determined to bring to Michigan.

You can see the recent remarks of governors of other states, who are pointing out the urgent need to unite universities and industry with research funding to revive their regional economies. I could add similar quotations from a number of other governors over the past few months.

You may think that our university primarily competes for students, or for faculty, or at football games - but make no mistake: we are in a deadly earnest competition to attract external research funding in an increasing amount each year. And each year, there is more vigorous competition for those dollars.

This funding, largely awarded by the federal government, is an investment in discovery and invention. America's leadership in information technology arises from a complex partnership among industry, academia, and government. Federally sponsored, university-based research plays a key role in essentially every technology upon which we rely today. The government counts on universities to carry out both basic research and the cutting-edge research that results in new discoveries.

But the funding is only the start of the process. Along with funding, the federal government has

also established a regulatory system that allows us to transfer our discoveries to the public sector, allowing inventors and subsequent investors to benefit without conflict of interest.

I want to focus on the commitment of the University of Michigan to working with industry to advance the discoveries that have intellectual value as well as commercial value.

Fortunately for us, the state has chosen to make a significant investment in research by creating the Life Sciences Corridor. And the university itself has created the Life Sciences Initiative, which includes multiple fields of research and has a strong interdisciplinary component.

But economic development is not just about life sciences. It also includes software, communications, engineering, energy, materials and advanced manufacturing, and the benefit of local access to technology such as Internet 2.

One of our primarily means of relating our research to the public is through the regulations of technology transfer. Our Regents set a university policy regarding this in 1996, stating that technology transfer was to be one of the missions of the University of Michigan. We have long had a tri-partite mission of teaching, research, and service, and this policy actually extends into all of those missions.

Through technology transfer, we are not just commercializing our inventions, but are providing information on them to our students, to our laboratories, and to the public. Intellectual property must be protected, but it also must be shared with our partners in government and industry.

And as you can see, the university has made rapid advances in the years since that policy was established, creating key positions and offices to improve our efforts in this area.

And this slide shows the significant increase in our activity in the past few years, as a result of our focus on technology transfer. Our number of disclosures, patents, and licenses all have increased substantially, and I want to thank Ken Nisbet and Marvin Parnes for building the team that has engineered this change.

As you all know, it is not a simple matter to go from a discovery to a commercial enterprise. The federal approval process, such as that of the Food and Drug Administration, is daunting, because it is intended to protect the public.

In addition to a regulatory approval process, commercial funding must be identified as well. Venture capital firms, corporate partners, and incubators all provide seed money for start-up companies in this region.

We have had some wonderful success stories as a result of technology transfer.

A number of startup companies have emerged from our laboratories in the past three years, and as you can see, many of them have established headquarters in our state.

Each of these has its own success story, but let me just briefly show you three of those stories.

Arbor Networks provides a protection system for our computer networks, providing "availability security," and was listed as a top new company on several lists in the technology press.

You'll hear more about Arbor Networks later in the panel discussion with Professor Jahanian, who developed the technology and is the CEO of Arbor Networks.

HandyLab was founded by two doctoral students who worked under two other senior research inventors at the University, and was spun off to become a new business in Ann Arbor. HandyLab has developed new technologies for rapid diagnosis of disease - for example, they invented a device that can detect Streptococcus in newborns and allow immediate treatment.

This company has attracted 7 million dollars in venture funding, and has filed for eight new patents in the past two years. They are saving lives and adding to the local economy at the same time.

And the new company IntraLase offers us new technology for laser eye surgery. This is a wonderful example of interdisciplinary collaboration, because two of our outstanding research centers collaborated on this invention. The Center for Ultrafast Optical Sciences provided new laser technology consisting of extremely short bursts of light, and our UM Kellogg Eye Center provided the expertise to apply the laser and create an advanced eye surgery system. The result was Intralase, with offering less expensive and safer laser eye surgery.

We have another new invention currently in the FDA approval process - FluMist. Our Professor Maassab, whose early mentor was Dr. Jonas Salk of polio vaccine fame, developed a flu vaccine that can be administered nasally, replacing the need for a shot injection. We hope that once FluMist is available, it will help reduce the number of cases of influenza that occur each year.

Some people avoid those flu shots just because of the needle, and FluMist will be a wonderful solution for them.

Fortunately, our efforts have not gone unnoticed - the media has taken note of our recent efforts to improve technology transfer.

Because of the enormous array of implications of technology transfer, we have appointed a National Advisory Board for technology transfer at the university, in order to provide guidance to us as we forge ahead in this field.

I attended the first meeting of the Board last October, and I was very impressed with the thoughtful discussion and the insight that Board will provide to the University.

The members are from across the country, and I think we even have a few members in the audience today - Rick Snyder, Tom Porter, Chuck Salley, Tom Kinnear, and Jan Garfinkle - would you please stand and be recognized? All of us at the university truly appreciate your contributions of time and energy, and we look forward to many productive years of collaboration.

We are so fortunate to have proximity to industry in this region. We only want to increase our interaction, and I am hoping to hear the same from you.

While I have you here, I want to remind you of our 22nd annual symposium on growth capital, organized by the Business School. I have heard that it is always a very successful event, and will be held next week.

Even before I arrived in Ann Arbor, I knew that the University of Michigan has had a long tradition of truly great research. In the time I have been here, I have seen the reasons for its reputation firsthand. We have an abundance of the world's finest researchers and teachers, state-of-the art facilities, and a history of world-class research. This slide shows the site of one of our earliest licensing agreements in the 1920s - for a cure for pernicious anemia, which we licensed to Parke-Davis.

Today, we have outstanding academic units that position us well for technology transfer: such as pharmacy, chemistry, engineering, business.

Plus, we have strengths in biology, microsystems, imaging, proteomics, networking, and so much more. The breadth and depth of these strengths, and our track record of multidisciplinary collaboration throughout our university system, is positioning us for success. That is our best competitive advantage, and it is a compelling one.

I have also been very impressed with the high quality of and the collaboration with industry in this region. Just on Friday, I received a letter from Jim Rosbe (RAHS-bee) of Soar Technology, informing me of the many ways his business is connected to the University of Michigan through its research and personnel. I encourage all of you to let me know about your links to us.

The question now is: how can we do more to position ourselves to assist in the economic development of the state. Here is one thought we have discussed:

The Governor is hosting a state-wide summit on the economy later this year.

Do we want to organize a symposium for Greater Ann Arbor that is the equivalent of the state-wide summit? Would such a gathering help us to organize our resources, to focus on some goals, and to coordinate our efforts? Would you find that useful?

Advancing our economic development will take more than funding -- it also will takes the will to collaborate. These are challenging economic times. But we can contribute something equally important -- our time, our brainpower and our energies.

So, we are engaged, we are collaborating, and we want to find new ways to inspire the regional economy. We are committed to making the most of our potential. But we cannot do this alone.

We need you, our local and regional businesses, our government partners, our entrepreneurs and our community leaders, to work with us.

And we must do this: not just for sake of the University of Michigan, not just for today's companies, but for the future that we are creating for our region and our state.

I thank you for inviting me here, and now I am looking forward to our conversation.

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