Apr 5, 2011
MIT’s reputation as the best technological institution in the world rests on the quality of engineering education and research at the institution. Technological research at the institution manifests publicly as spin off companies founded by the faculty and staff members at MIT. Here we examine the impact of MIT faculty entrepreneurship on the industry and economy of the life sciences sector.
The life sciences industry is highly dynamic and its myriad facets reflect the complexity of human medicine. Application of engineering and basic scientific techniques to the precise study of human physiological function and dysfunction has led to development of a large number of industrial efforts in medical devices, pharmaceuticals, biotechnology, biomedical imaging technology, and more. Fittingly, MIT faculty have consistently contributed to this effort, both at the level of academic research and also through entrepreneurial efforts. For example, Intuitive Surgical, Inc., a robotic-assisted surgical devices company started at MIT has created DaVinci, a robotic-assisted surgical system, with capabilities to perform complex surgeries with remote, computer-based control by the surgeon.
Developing new therapeutics and designing more sensitive and specific diagnostics at manageable costs for chronic diseases, infectious diseases, cancer, and immunological disorders, are some of the grand challenges facing medicine today. MIT faculty have been extremely successful in advancing the science and developing therapeutics for several of these conditions. Table 1 represents the different areas of the life science industry where MIT faculty have had an impact (data kindly provided by the MIT Technology Licensing Office (TLO)). We observe that MIT faculty-initiated entrepreneurial efforts touch most major disease areas and impact several of the most important sectors of the healthcare-life sciences industries.
Table 1. Industrial sectors served by MIT faculty entrepreneurship.
In the world of life science entrepreneurship, founders must balance two metrics of success: contribution to improving health care and creation of shareholder value. The former is rarely possible without the latter as companies languish or disappear without sufficient capitalization, so we will focus here on shareholder value. The commonly used metrics for success are market capitalization (for publicly held companies) and acquisition by another corporation of similar or larger size (for both public or private). Table 2 summarizes the findings for market capitalization outcomes (company name data provided by the MIT TLO, while the market capitalization values were obtained from Google Finance). Table 3 summarizes the findings for successful exits in terms of merger with another corporation or acquisition by a larger corporation (company name data provided by the MIT TLO, while the exits information sources are indicated in the table, exit price data indicated when available to public).
Table 2. Market capitalization for companies founded by MIT faculty.
Table 3. Successful exits (acquisitions) for companies founded by MIT faculty.
Trends in MIT Faculty Entrepreneurship
MIT faculty have been highly successful in entrepreneurial efforts based on technologies developed in their research groups. We see large number of successful companies in the biotechnology and pharmaceutical sector, while a few, highly successful efforts in the medical/surgical technology sector have also been observed. This performance has been relatively stable since 1997. At the same time, the diversity of MIT faculty research interests yield entrepreneurial efforts in most major areas of contemporary life science industry, sometimes anticipating or leading industry (e.g. Intuitive Surgical, Inc.) trends. The author expects that in the near future, MIT faculty entrepreneurship efforts will include healthcare information technology, image and signal processing for biomedical research, better imaging techniques for biomedical research, improved drug screening technologies, surgical learning technologies, and more. MIT biotechnology entrepreneurship is poised to set the pace for innovation in the coming years.