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The inventive alternative
It may be more profitable to commercialise Australia'snew
nano-technology overseas than at home
claims Joshua Gans.
Last week we were greeted with the exciting news that Australian
scientists
had pioneered another breakthrough in biotechnology. Dr Bruce
Cornell and
his team at the CSIRO have produced a dream machine for
medical
diagnosis. Their nano-technology allows potentially for an
instantaneous
and highly reliable diagnosis of virtually all known viruses. If
all works outas predicted, today's practices of pathology will
become as outdated asleeches were in the face of modern medical
science.
While the commercial possibilities of such an invention are
reasonablyclear, the path to realising those possibilities is less
so. As with all
Australian inventions, this one was no different in one
respect.Accompanying the announcement were calls from various
quarters to keep
production of the new devices within Australia and by
Australians.
Everyone, from Dr Cornell to Peter McGauran, the Minister for
Science,
and a dozen other analysts, seemed to agree that Australia would
not receiveeconomic benefits from this technology without keeping
its production in
the family. Self-production was lauded as the only route to high
commercialreturns.
But looking at economic realities it is far from obvious that
such a directionwould be the best one available. It is true that
such inventions should be
exploited so as to yield the greatest return for their
Australian backers. One
doesn't have to be patriotic to understand that. But keeping
commercialisation within Australia may not be the only route to
high
returns. The alternative is to license the patent to overseas
manufacturers.This option potentially provides all the returns
associated with self-
production and more, while removing many of the uncertainties of
product
development.
To see this, consider what might happen if the self-production
route was
followed. It was admitted that the Australian scientists were
not alone in
their pursuit of a breakthrough in medical diagnosis -- hence,
the secrecy
surrounding the project. It may not be long until another team,
especially
given that they know such devices are possible, makes their
ownbreakthrough. And there are no guarantees the patent held by the
Australian
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Joshua Gans is associate professor in Economics, Melbourne
BusinessSchool, University of Melbourne and an Academic Associate,
London
Economics.
This article originally appeared in theAustralian Financial
Review,
Thursday 12th June, 1997, p.19. To read more about the
nanomachine see
the web page ofAMBRI. See a letter replying to the article by
BruceConnell, the director of the Cooperative Research Centre for
Molecular
Engineering and Technology, and Keith Daniel, CEO, AMBRI Pty
Ltdentitled "Stop this backwater mentality,"Australian Financial
Review,
Tuesday 17th June, 1997, p.18. My reply -- "It's all about
producing ideas,
not objects" -- to their letter was published in theAustralian
Financial
Review, Thursday 19th June, 1997, p.20.
http://www.afr.com.au/http://www.ambri.com.au/http://www.ambri.com.au/http://www.afr.com.au/http://www.mbs.unimelb.edu.au/home/jgans/papers/afrlett.htmlhttp://www.mbs.unimelb.edu.au/home/jgans/papers/afrlett.htmlhttp://www.afr.com.au/http://www.afr.com.au/http://www.afr.com.au/http://www.ambri.com.au/http://www.ambri.com.au/http://www.afr.com.au/http://www.mbs.unimelb.edu.au/home/jgans/papers/afrlett.htmlhttp://www.mbs.unimelb.edu.au/home/jgans/papers/afrlett.htmlhttp://www.afr.com.au/http://www.afr.com.au/
