How Industrial Policy Could Accelerate Innovation In The Life Sciences.

The US is expanding public investment in the technology-based industries, including the life sciences, in a move driven by anger, fear, and hope. Anger at high drug prices is leading to downward pressures and eroding traditional private-sector funding for research and development, fear of China's technological and political ambitions is creating bipartisan support for intervention, and the successful development of COVID-19 vaccines has spurred hope for analogous publicly funded breakthroughs in other therapeutic domains. The instruments of industrial policy used by other nations include grants for scientific research, equity investments in start-ups, tax incentives for corporate research and development, credit guarantees for asset-intensive sectors, governmental procurement, and product pricing. In the face of ever-stronger competition, if the US is to retain its leading position in the life sciences, public policy must consider competition among nations as well as among firms. This article analyzes emerging innovation and industrial policy in the three principal sectors in the life sciences: research universities and laboratories; entrepreneurial startups and "scale-ups," and large pharmaceutical and medical device corporations.