Innovation Arms Race July 16, 2018 - Center for Advancing ... · Innovation Arms Race July 16, 2018...
Transcript of Innovation Arms Race July 16, 2018 - Center for Advancing ... · Innovation Arms Race July 16, 2018...
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Innovation Arms RaceJuly 16, 2018
Report By:Rosemarie Truman, Founder and CEO
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Table of Contents
Introduction to the Center For Advancing Innovation and PatSnap
Global Innovation Performance Analysis
Implications and Recommendations
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INTRODUCTION TO THE CENTER FOR ADVANCING INNOVATION
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Key Focus Areas
The Center for Advancing Innovation
Operational Capabilities Transformation
Due Diligence
Growth Strategy
Team Capability: • Leader: Led IBM’s Innovation Strategy Practice Globally • Capability: End-to-end from invention to maximizing
commercial potential of inventions
Qualifications and Experience: • Track record of working with private equity, investment
firms, serial entrepreneurs and Fortune 500 firms to identify the right investments to realize value quickly
• Key Clients: MedImmune/AstraZeneca, Danaher, Welch Allyn, Medtronic, Pfizer, GSK, Novartis, IBM, Nokia, Microsoft, Alcatel Lucent etc.
Trade Secret Methodologies: • Trade secret models for growth strategy & due diligence,
operational optimization and maximizing commercialization
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CAI - Partial Innovation AssessmentsTech transfer, innovation and commercialization
Deep Dives
University, Govt, & Hospital
State
Industry
Global
• Identify, analyze and forecast ROI for all key innovation levers
• Evaluate federal lab, university and hospital innovation performance
• Benchmark US state-by-state innovation performance
• Assess industries global innovation performance
• Benchmark countries innovation performance globally
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GLOBAL INNOVATION PERFORMANCE ANALYSIS
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1995
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Patent Applications by Applicant Origin (1995-2015)
U.S.UNITED KINGDOMKOREA, SOUTHTAIWANCANADASWITZERLANDISRAELINDIASINGAPORENORWAYRUSSIAN FEDERATIONBRAZILTotal, ChinaTotal, EU
Global Patent Applications – West has Lost LeadershipWhile the US and EU volume remains high in patent applications, they have lost their leadership to China* since 2011
Source: CAI Analysis Model, World Bank, WIPO Patent Database
RegionPatents/Million
Capita (2015)%CAGR Patent Apps (’95-’15)
%AAGR Patent Apps
(‘95-’15)Total, China 734 25.8% 26.4%
SINGAPORE 1117 20.3% 22.5%
INDIA 18 14.1% 14.4%ISRAEL 1729 8.0% 8.6%SWITZERLAND 5550 6.9% 7.1%KOREA, SOUTH 4669 6.6% 7.1%NORWAY 1101 5.8% 6.2%US 1654 5.4% 5.6%Total, EU 969 5.3% 5.5%
CANADA 691 5.2% 5.6%BRAZIL 32 3.8% 4.0%RUSSIAN FEDERATION 235 3.2% 3.7%UNITED KINGDOM 820 2.9% 3.1%
US
China
EU
UK
Korea
*All China numbers includes Hong Kong and Macau
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Patent Grants by Applicant Origin (1995-2015)
U.S.UNITED KINGDOMKOREA, SOUTHCANADASWITZERLANDISRAELINDIASINGAPORENORWAYRUSSIAN FEDERATIONBRAZILTotal, ChinaTotal, EU
Global Patent Grants – West Lags Growth In 2015, US and EU lost their competitive stance in patent grants to China, and are behind in growth compared to East Asia
RegionGrants/Million Capita (2015)
%CAGR Patent Grants (’95-
’15)
%AAGR Patent Grants
(‘95-’15)Total, China 203 29.1% 32.3%
SINGAPORE 495 27.9% 41.9%
KOREA, SOUTH 2139 13.4% 18.4%INDIA 4 13.1% 15.2%ISRAEL 763 9.5% 9.7%SWITZERLAND 2679 6.7% 7.3%CANADA 382 6.4% 6.6%NORWAY 593 6.1% 6.8%US 801 4.8% 5.0%
Total, EU 503 4.8% 5.1%UNITED KINGDOM 330 3.5% 3.8%BRAZIL 7 3.5% 5.0%RUSSIAN FEDERATION 173 0.8% 2.4%
US
China
Source: CAI Analysis Model, World Bank, WIPO Patent Database
EU
Korea
UK
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Global Patent Effectiveness – West Quality DeclineThe US, EU and UK’s ability to convert patent applications to patent grants, or Patent Effectiveness, is flat or declining. South Korea, China and Singapore lead in growth of quality patents
Source: CAI Analysis Model, World Bank, WIPO Patent Database
Region
%CAGR Patent Effectiveness
(’95-’15)
%AAGR Patent Effectiveness
(‘95-’15)KOREA, SOUTH 6.4% 13.5%SINGAPORE 6.3% 13.4%Total, China 2.6% 4.8%ISRAEL 1.3% 2.3%CANADA 1.1% 1.5%UNITED KINGDOM 0.5% 0.8%NORWAY 0.3% 1.4%SWITZERLAND -0.2% 0.2%BRAZIL -0.4% 1.1%Total, EU -0.5% -0.2%US -0.5% -0.1%INDIA -0.9% 0.7%RUSSIAN FEDERATION -2.3% 0.8%
0%
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20%
30%
40%
50%
60%
70%
1997 2000 2003 2006 2009 2012 2015
Pate
nt E
ffec
tive
ness
(Gra
nts/
App
licat
ions
)
Patent Effectiveness (3-Year Aggregates from 1995-2015)
U.S.UNITED KINGDOMKOREA, SOUTHCANADASWITZERLANDISRAELINDIASINGAPORENORWAYBRAZILTotal, ChinaTotal, EU
US
China
EUKorea
UK
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Global Patent Effectiveness Index – 2015 SnapshotIndexing global Patent Effectiveness on a per capita and GDP basis shows the US, UK and EU are trailing; they are not focused on innovation that turns into GDP…
Key Insights• Per capita the EU and UK rank #10 and #7, respectively; the US ranks #9, more than 6-times lower than South Korea at #6• China and India are in the bottom 2 on a per capita basis due to their large population size• The US is last in effectiveness per GDP, approximately even with China (#12), but over 12-times behind South Korea (#6)
Source: CAI Analysis Model, World Bank, WIPO Patent Database
0.001 0.0020.006
0.080
0.104
0
0.02
0.04
0.06
0.08
0.1
0.12
INDIA
Total, C
hina
BRAZIL
Total, E
UU.S.
RUSSIAN F
EDERATION
UNITED K
INGDO
M
KOREA, S
OUTH
CANADA
ISRAEL
SWIT
ZERLAND
SINGAPO
RE
NORW
AY
Effe
ctiv
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s / 1
M C
apita
Patent Effectiveness / 1M Capita (2015)
0.029 0.0340.149
1.5311.597
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hina
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U
BRAZIL
INDIA
UNITED K
INGDO
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CANADA
KOREA, S
OUTH
RUSSIAN F
EDERATION
SWIT
ZERLAND
NORW
AY
SINGAPO
RE
ISRAEL
Effe
ctiv
enes
s per
$1T
GDP
Patent Effectiveness per $1T GDP* (2015)
*Numbers adjusted by Purchasing Power Parity (PPP) to 2010
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0.001 0.0020.006
0.071
0.117
0
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0.06
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0.1
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0.14
Total, C
hina
INDIA
Total, E
U
BRAZILU.S.
KOREA, S
OUTH
UNITED K
INGDO
M
RUSSIAN F
EDERATION
CANADA
SINGAPO
RE
ISRAEL
SWIT
ZERLAND
NORW
AY
Effe
ctiv
enes
s / 1
M C
apita
Patent Effectiveness / 1M Capita (1995)
0.052 0.0520.204
1.654
2.478
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3
Total, E
UU.S.
Total, C
hina
BRAZIL
UNITED K
INGDO
M
KOREA, S
OUTH
CANADA
INDIA
SWIT
ZERLAND
SINGAPO
RE
RUSSIAN F
EDERATION
NORW
AY
ISRAEL
Effe
ctiv
enes
s per
$1T
GDP
Patent Effectiveness per $1T GDP (1995)
Global Patent Effectiveness Index – 1995 Snapshot…and there has been little change in rankings since 1995; China and South Korea improved marginally and the US and UK declined
Key Insights• In 1995, on a per capita basis, the US, EU and UK rank #9, #11, and #7, respectively; China, India, and the EU were in the bottom 4• The US and EU are last in effectiveness per GDP
Source: CAI Analysis Model, World Bank, WIPO Patent Database
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BRAZIL INDIA SINGAPORE UNITEDKINGDOM
ISRAEL CANADA U.S. NORWAY Total, China Total, EU RUSSIANFEDERATION
KOREA, SOUTH SWITZERLAND
Pate
nt G
rant
s / $
1B G
ERD
Patent Efficiency (Patent Grants / $1B GERD) 2015
Key Insights• The US, EU and UK rank #7, #4 and #10 in Patent Efficiency; he US, EU and UK are 2.5 to 3 times behind the leader, Switzerland• The US and UK rank below all top performing patenting countries (China, EU and South Korea)
Source: CAI Analysis Model, WIPO Patent Database, UNESCO Institute for Statistics
Global Patent Efficiency Index – 2015 SnapshotAnalyzing Patent Efficiency, converting $1B in R&D to patent grants, illustrates that Switzerland and South Korea generate the highest number of issued patents per R&D dollar; it costs too much per patent for the US, EU and UK
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576 594 610 611 634
812 8721032
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EDERATION
KOREA, S
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SWIT
ZERLAND
Pate
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rant
s / $
1B G
ERD
Patent Efficiency (Patent Grants / $1B GERD) 2015
11 44 49 117
296 339 341435 464
549654
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OUTH
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EDERATION
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rant
s / $
1B G
ERD
Patent Efficiency (Patent Grants / $1B GERD) 1995
Key Insights• Russia and Switzerland led in efficiency, but Russia dropped in efficiency rankings since 1995• The US, EU and UK all dropped in efficiency rankings, losing its position to China and South Korea• China and Singapore have the greatest growth improvement in efficiency with a 10% and 18% CAGR, respectively
Source: CAI Analysis Model, WIPO Patent Database, UNESCO Institute for Statistics
Global Patent Efficiency Comparison – West DeclineThe US, EU and UK Patent Efficiency dropped in rankings, overtaken by China and South Korea, from 1995 to 2015
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Key Insights
• Although the volume of US and EU GERD rank highest, the US ranks #4 and EU ranks #10 in R&D spending per capita• The EU and UK have modest GERD expenditure per capita and are growing at a steady rate• China has explosive growth in GERD overall; the US and EU has also lost GERD volume to BRICSource: CAI Analysis Model, WIPO Patent Database, UNESCO Institute for Statistics
GERD Volume and Growth – Is this the Issue?The decline in quality patents in the West theoretically could be due to lower Gross Domestic Expenditure on R&D (GERD) volume and growth however, China and South Korea both outperform the West in patenting metrics
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GERD (Billions) and GERD / Capita
GERD per Capita GERD (Billion)
Region GERD CAGR (‘95-’15) GERD AAGR (‘95-’15)China 11.0% 17.3%US 3.4% 3.1%EU 3.0% 3.4%Korea 2.7% 7.8%UK 2.3% 2.4%
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D ($
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Total GERD (1995-2015)
U.S.KOREA, SOUTHTotal, EUBRICTotal, ChinaUNITED KINGDOM
US
South Korea
China
EU
UK
BRIC
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GDP from R&D – East Asia’s Investment Drives GPDEast Asian countries are consistently investing more on innovation/GERD relative to GDP, compared to the static investment trends in the West
Key Insights
• GERD/GDP for the US, EU and UK has remained relatively flat since 1995
• From 1995 to 2015, Asian countries saw rapid increases in GERD/GDP, notably South Korea with a GERD/GDP of 5.5% in 2015
• From 2004 to 2005 China surpassed the US in R&D investment per GDP and maintains a 1.3% gap in 2015
Source: CAI Analysis Model, UNESCO Institute for Statistics, World Bank GDP Estimates
0.0%
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/GDP
GERD per GDP (1995-2015)
U.S.UNITED KINGDOMKOREA, SOUTHTAIWANCANADASWITZERLANDISRAELINDIASINGAPORENORWAYRUSSIAN FEDERATIONBRAZILTotal, ChinaTotal, EUUS
South Korea
China
EU UK
Country CAGR (1995-2015)China 7.4%South Korea 3.2%EU 1.6%US 0.6%UK 0.3%
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IMPLICATIONS
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Pate
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ssue
d (M
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CAGR Forecast Patents Issued(based on 1995-2015)
U.S. South Korea United Kingdom China EU
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Pate
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CAGR Forecast Patent Applications(based on 1995-2015)
U.S. South Korea United Kingdom China EU
Key Insights• China has the highest growth rates for patent applications (22%) and grants (24%) – together with the large increases in
historical volume (‘95 to ‘15), this creates forecasted volumes massively larger than any other country• By 2035 China will have grown to 40x the US patent application volume and 25x the US patent grant volume• Volume of patenting by China has already outpaced US, EU and UK volume combined
US
US
China (surpassed the US in 2014)
China (surpassed the US in 2014)
WIPO Global Patent ForecastForecasts based on a global view predict Asia will continue to outperform the West; China will continue to widen the gap, with South Korea poised to overtake the US
Source: CAI Analysis Model, WIPO Patent Database
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0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Brazil
India
United Kingdom
EU
Switzerland
China
Russian Federation
U.S.
Singapore
Israel
Canada
South Korea
Norway
Patent Effectiveness (Grants/Applications)
Patent Effectiveness Forecast (2035)
Key Insights• The US will be overtaken by South Korea in Patent Effectiveness, while the EU and UK will drop below China• Given the growth rate of patents issued is lower than the growth rate of patent applications, the US, EU and UK will
lose ground to China in volume of quality applications that convert to issued patents
Patent Effectiveness Forecast – West Loses GroundGlobal patent data shows the US, EU and UK will lose ground to Asia in Patent Effectiveness if current trends continue
Source: CAI Analysis Model, WIPO Patent Database
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Brazil
India
United Kingdom
China
Switzerland
EU
South Korea
U.S.
Canada
Israel
Singapore
Russian Federation
Norway
Patent Effectiveness (Grants/Applications)
Patent Effectiveness (2015)
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Key Insights
• The gap in GERD investment between the EU and the US will widen and the US will be overtaken by China in 2029
• South Korea’s growth is accelerating
2015 RE Top 5:1. US2. China3. EU4. S. Korea5. India
2035 RE Top 5:1. China2. US3. EU4. S. Korea5. India
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D (
$B
illi
on
s)
CAGR Forecast of GERD(based on UNESCO 1995-2015)
U.S.
United Kingdom
South Korea
Taiwan
Canada
Switzerland
Israel
India
Singapore
Norway
Russian Federation
Brazil
EU
China
2029
GERD Forecast – China Surpasses the US by 2029
Source: CAI Analysis Model, UNESCO Institute for Statistics
US
South Korea
China
EU
UK
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0.0%
2.0%
4.0%
6.0%
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12.0%
14.0%
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
GE
RD
/ G
DP
GERD Forecast / GDP Forecast (Based on 1995 - 2015)
U.S.UNITED KINGDOMKOREA, SOUTHTAIWANISRAELINDIASINGAPORETotal, ChinaTotal, EU
Key Insights
• China, South Korea, Taiwan, Singapore and Israel will have the largest investments in R&D by 2035, reflecting the faster forecasted growth in GERD compared to GDP• The US, EU and UK have low growth due to a mature and constant GERD. If additional
GERD is wisely spent, an increase in innovation may occur
Region 2015 GERD
US $420 billion
EU $255 billion
UK $37 billion
China $345 billion
South Korea $70 billion
US
China
CountryGERD CAGR
‘05-’15
GERD CAGR
‘04-’09
Total, China 14.55% 11.96%KOREA, SOUTH 8.60% 7.16%SINGAPORE 6.15% 7.08%TAIWAN 5.19% 4.35%BRAZIL 5.16% 2.81%INDIA 4.71% 1.16%ISRAEL 4.45% 5.09%NORWAY 4.01% 4.92%SWITZERLAND 3.29% 3.05%RUSSIA 2.95% 1.20%Total, EU 2.70% 2.01%US 2.51% 2.45%UK 1.99% 2.32%CANADA -0.27% -0.21%
GERD / GDP Forecast – Asia Outpaces the West
Source: CAI Analysis Model, UNESCO Institute for Statistics, World Bank GDP Estimates
South Korea
EU
UK
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$0
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20192020
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GD
P (
Bill
ion
s)
CAGR Real GDP Forecast Applied to Nominal GDP(based on 1995-2015 World Bank)
U.S.
United Kingdom
South Korea
Taiwan
Canada
Switzerland
Israel
India
Singapore
Norway
Russian Federation
Brazil
EU
China
2025
2015 GDP 2035 Projected GDP
China $9.2 T $52.2 T
US $16.6 T $26.8 T
EU $15.2 T $21.1 T
UK $2.7 T $4.1 T
South Korea $1.2 T $2.9 T
Key Insights
• The US, EU and UK are ranked among the bottom for GDP growth rate out of the 14 countries included in the study – China was #1• Continuing with the current growth rate, China
will overtake the US in GDP by 2025• Over the last 20 years, the US GDP growth rate
is 2.43% versus China, which is 9.06%GDP Growth Rate
US = 2.43% China = 9.06%
GDP Forecast – China Surpasses the US & EU by 2025
Source: CAI Analysis Model, UNESCO Institute for Statistics, World Bank GDP Estimates
US
South Korea
China
EU UK
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Innovation Arms Race Conclusions
Source: CAI Analysis Model, UNESCO Institute for Statistics, World Bank GDP Estimates
• Patent Effectiveness declining in the West: The US, EU and UK’s ability to convert patent applications to patent grants, or Patent Effectiveness, is flat or declining, on a per capita and GDP basis. South Korea, China and Singapore lead in growth ofquality patents
• Patent Efficiency needs to improve: Patent Efficiency is the ability to convert one dollar in R&D spend to a patent grant. It costs much more for the US and UK than China, South Korea and Russia to produce a high-quality patent that gets granted; both the US and UK
• Research expenditure provides little ROI: While the US spends twice as much as each of the UK and EU in research expenditure relative to GDP, R&D spend is not driving GDP growth in the US. In other words, one additional dollar of R&D spend in the US does not drive GDP growth
• Asia will continue to dominate: East Asian countries are out-performing the US, EU and UK in growth of patent grants. China and South Korea are consistently in the lead regarding a number of performance metrics. India, Israel and Singapore are expectedto see the highest growth in patents granted through 2035
• Conclusion: the US, EU and UK needs to harness investments in innovation to drive R&D ROI