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The Formation of Bioinformatic Knowledge Markets - An « Economies of Knowledge » Approach - article ; n°1 ; vol.101, pg 47-64

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Revue d'économie industrielle - Année 2002 - Volume 101 - Numéro 1 - Pages 47-64
Le papier examine comment l'émergence de la bioinformatique a fait éclater les formes existantes d'organisation économique et les frontières entre les activités marché et hors marché. De nouvelles combinaisons de compétences ont émergé à l'interface de la biologie, l'informatique et les mathématiques, conduisant au développement de types différenciés de connaissances bio-informatiques. La manière dont la bioinformatique recouvre les secteurs public et privé soulève des questions concernant ce qui est échangeable et ce qui ne l'est pas, et les flux de connaissances et de ressources entres les secteurs mettent en lumière la diversité des processus économiques. Nous développons une approche en termes d'économie de la connaissance pour analyser les tensions et défis économiques qu'impliquent ces interactions complexes dans la formation des marchés des connaissances bioinformatiques.
The paper explores how the emergence of bioinformatics has disrupted existing forms of economic organisation and the boundaries between market and non-market activities. New combinations of capabilities have emerged at the interface of biology, computer science and mathematics leading to the development of distinctive kinds of bioinformatic knowledge. The ways that bioinformatics spans public and private sectors, raise questions about what is tradable and not tradable, and the flows of knowledge and resources between sectors provide further evidence of the multiple character of economic processes. We develop an economies of knowledge framework to analyse the tensions and economic challenges presented by these complex interactions involved in the formation of bioinformatic knowledge markets.
18 pages
Source : Persée ; Ministère de la jeunesse, de l’éducation nationale et de la recherche, Direction de l’enseignement supérieur, Sous-direction des bibliothèques et de la documentation.

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Informations

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Published 01 January 2002
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Andrew Mcmeekin
Mark Harvey
The Formation of Bioinformatic Knowledge Markets - An «
Economies of Knowledge » Approach
In: Revue d'économie industrielle. Vol. 101. 4e trimestre 2002. pp. 47-64.
Résumé
Le papier examine comment l'émergence de la bioinformatique a fait éclater les formes existantes d'organisation économique et
les frontières entre les activités marché et hors marché. De nouvelles combinaisons de compétences ont émergé à l'interface de
la biologie, l'informatique et les mathématiques, conduisant au développement de types différenciés de connaissances bio-
informatiques. La manière dont la bioinformatique recouvre les secteurs public et privé soulève des questions concernant ce qui
est échangeable et ce qui ne l'est pas, et les flux de connaissances et de ressources entres les secteurs mettent en lumière la
diversité des processus économiques. Nous développons une approche en termes d'économie de la connaissance pour analyser
les tensions et défis économiques qu'impliquent ces interactions complexes dans la formation des marchés des connaissances
bioinformatiques.
Abstract
The paper explores how the emergence of bioinformatics has disrupted existing forms of economic organisation and the
boundaries between market and non-market activities. New combinations of capabilities have emerged at the interface of biology,
computer science and mathematics leading to the development of distinctive kinds of bioinformatic knowledge. The ways that
bioinformatics spans public and private sectors, raise questions about what is tradable and not tradable, and the flows of
knowledge and resources between sectors provide further evidence of the multiple character of economic processes. We develop
an "economies of knowledge" framework to analyse the tensions and economic challenges presented by these complex
interactions involved in the formation of bioinformatic knowledge markets.
Citer ce document / Cite this document :
Mcmeekin Andrew, Harvey Mark. The Formation of Bioinformatic Knowledge Markets - An « Economies of Knowledge »
Approach. In: Revue d'économie industrielle. Vol. 101. 4e trimestre 2002. pp. 47-64.
doi : 10.3406/rei.2002.1810
http://www.persee.fr/web/revues/home/prescript/article/rei_0154-3229_2002_num_101_1_1810Nathalie LAZARIC
LATAPSES CNRS
Pierre-André MANGOLTE
CEPN-IIDE CNRS
Marie-Laure MASSUE
REIMS MANAGEMENT SCHOOF
CAPITALISATION DES CONNAISSANCES
ET TRANSFORMATION DE LA ROUTINE
ORGANISATIONNELLE
LE CAS SACHEM
Mots-clés sances Système expert routine organisationneiïe haut fourneau gestion des connais
Key words Expert-System Organizatione Routine Blast Furnace Knowledge
INTRODUCTION
Au cours des années 1980-1990 la crise traversée par industrie sidérur
gique conduit réunir ensemble de la production acier dans le groupe
USINOR La forte pression concurrentielle parallèlement rendu obligatoire
la réduction des capacités de production et la recherche importants gains de
productivité en particulier dans la filière fonte Le coût de celle-ci représente
en effet 56 du coût moyen des aciers et les volumes produits sont impor
tants et récurrents
Les fermetures de sites les réductions effectifs 98 000 emplois disparais
sent entre 77 et 90 et les mouvements de mutations internes organisés dans
industrie bouleversent alors les métiers et les systèmes traditionnels de
conservation des connaissances Les licenciements secs sont en général
évités mais utilisation des pré-retraites partir de 50 ans CGPS et CPS fait
disparaître brutalement la connaissance cristallisée dans les plus anciens sans
que ceux-ci aient toujours eu le temps de former leurs successeurs Toute
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applied in biology Briefings in Bioinformatics vol no
64 REVUE CONOMIE INDUSTRIELLE no 101 4ëme trimestre 2002 CONCLUSION
We have argued that the formation of newly instituted bioinformatic know
ledge exchanges can be analysed through an understanding of ongoing specia
lisation and differentiation leading to the creation of new classes of economic
or innovating agent and that to follow this mode of explanation requires an
epistemological understanding of the changing field ofbioinformatics
An economies of knowledge approach demonstrates the need to exami
ne non-market as well as market-based exchanges In this approach the acces
sibility of knowledge dimension breaks down any straightforward identifica
tion of private with closed and public with open This obser
vation should be considered by those that examine the relative merits of public
versus private support for research and development
Finally we illustrated the dynamic nature of our framework by looking at
how the nature of power asymmetries and interdependencies between different
economic spaces influences the viability and rate and direction of bioinforma
tic innovation by different types of innovating agent model of competition
and interdependency between economic spaces makes dichotomous analysis
of public and private science as either complementary or substitutable David
et al. 2000 seem too narrow
Consequently multiple economy dynamic is required for understanding
future developments ofbioinformatics either as scientific activity or in terms
of markets and institutions New forms of organised exchange may develop in
knowledge markets and between market and non-market organisations At the
same time new asymmetries of power arise in conjunction with the emergen
ce of an altered landscape of economic agents and the changing distributedness
of innovation between them Both these kinds of change present for us chal
lenge for further development of an instituted economic process approach
REFERENCES
ATTWOOD and PARRY-SMITH D.J 1999) Introduction to Bioinformatics
Prentice Hall Harlow and MILLER C.J 2001 Which craft is best in bioinformatics
Computers and Chemistry
BORNBERG-BAUER E. HARVEY and McMEEKIN 2002) Bioinformatics edu
cation skills shortage or fundamental shift in skill creation and demand European
Biopharmaceutical Review May
BROWN NELI RAPPERT WEBSTER A. van OMMEN G.J.B 1999)
Bioinformatics technology assessment of recent developments in bioinformatics and
related areas of research and development including high throughput screening and combi
natorial chemistry Final Report for the Science and Technology Options Assessment
European Parliament May
REVUE CONOMIE INDUSTRIELLE no 101 4ème trimestre 2002 63 Figure Networks of access to commercial databases
As of December 311999 Incyte had database collaboration agreements with more than 20
companies including
Abbott Laboratories Johnson Johnson
Millennium Pharmaceuticals Inc AstraZeneca PLC
Aventis S.A Monsanto Company
Bristol-Myers Squibb Company Novartis AG
Eli Lilly and Company Pfizer Inc
Hoffmann-La Roche Ltd Pharmacia Upjohn Inc
Genentech Inc Schering AG
Glaxo Wellcome pic Schering-Plough Ltd
LifeSeq Gold partners have access to rapidly growing intellectual
property portfolio with negotiated agreements for using this patented know
ledge in innovation projects Incyte has filed patent applications on more than
3000 full-length genes and has hundreds of patents already issued on genes
representing novel therapeutic targets and proteins
particular type of market exchange was thus formed by Incyte and its cus
tomers defined by the specifically instituted nature of these partnership agree
ments These market relationships are vulnerable to any sharp increases in the
database oriented bioinformatics activity within the TNCs undertaken behind
their firewalls closed untraded knowledge within the private domain econo
mic space in our scheme For if this were to happen the distinct economic
function performed by Incyte could be squeezed out This could result in
the demise of this type of DBIF as new class of economic agent only few
years after its formation and the de-instituting of the corresponding market Its
current sustainability is dependent both on the existence of public science
databases in their current institutional arrangement and on the continued stra
tegy of TNCs to outsource proportion of their bioinformatics activities At
this stage neither Incyte nor other firms operating as equivalent economic
agents are irreversibly instituted in fact recent press releases seem to suggest
that the highest profile database DB IPs are integrating their activities downs
tream towards drug discovery 21) Therefore this provides good example
of how the tradability of bioinformatic knowledge is subject to change
21 Incyte press release Palo Alto CA November 12 2002 announced program to elimina
te $88 million of expenses and the launch of its first fully-staffed drug discovery program
The cost reductions are to be made through laying off approximately 37 percent of its 700-
person work
62 REVUE CONOMIE INDUSTRIELLE no 101 trimestre 2002 Figure Developing proprietary bioinformatic database
1.2 million Incyte
4.9 million Incyte edited sequences
generated fromNCI-CGAP
sequences with TIGR WashU-
more added every Merck
month NCI and more
GenBank
sequences
INCYTE
Expert
Bioinformatics
Directed Closure
Strategy
LIFESEQ
GOLD
from publicly available data The required added value is achieved through
two steps central to the process through which Lifeseq Gold is developed
First through the use of proprietary expert bioinformatics that adds value
to the raw sequence data and second through the opportunity to cross referen
ce and cross check data with public domain knowledge These two compo
nents suggest that Lifeseq Gold will continue to be of higher quality and
contain more extensive data than the public domain counterparts However
this would not necessarily be the case if the institutional context of public data
bases were to change for example if they were to move from an untraded to
traded knowledge arrangement as indicated in the case of SWISS-PROT)
Incyte has database collaboration agreements with more than 20 major life
science companies see figure and each collaborator has agreed to pay
annual fees to receive non-exclusive access to one or more of the databases
Some of their database agreements contain minimum annual update require
ments which if not met could result in breach of the respective agreement
REVUE CONOMIE INDUSTRIELLE no 101 trimestre 2002 61 To summarise the interrelationship between the eight economic spaces
inevitably involves asymmetrical advantage and relationships of mutual
dependency illustrated in the diagram by the typical knowledge and human
skill flows 20 Our interest has been in analysing the consequences of co
existing economies of knowledge in terms of potential conflicts and inter-
dependencies and to consider the range of different economic agents that are
active within them The development of bioinformatics and its institutional
basis has and will be strongly conditioned by the particular nature of tensions
between the different economic spaces
THE FORMATION OF NEW CLASS OF ECONOMIC AGENT
We now provide an example of one firm and its main product to illustrate the
nature of interdependencies between different economic spaces and to show
how particular form of market exchange can be instituted and then de-insti
tuted over the course of only few years
Incyte was formed as dedicated bioinformatic firm with core business at
this stage built around the development of biological databases through the use
of proprietary bioinformatic techniques In this sense Incyte is an example of
new class of economic agent established to exploit the opportunities pre
sented by the emerging bioinformatics The development of proprie
tary database Lifeseq Gold demonstrates the boundary blurring between
public and private bioinformatic-based knowledge As figure indicates the
database is developed by combining data from the public domain and
own sequencing activities
The commercial sustainability of such model is directly related to the
extent that it provides additional value compared to databases available in the
public domain If there were no added value the Incyte business model would
surely be distinctly vulnerable Databases vary greatly in the extent to which
they are maintained updated cleaned and checked for redundancy Perhaps
more importantly for future developments databases also differ according to
the amount of annotation attached to the raw data and by the different types of
biological data that are made available Therefore the DBIF databases will
need to develop considerable added value if they are to survive competition
20 Knowledge flow asymmetries are further extended through flows of human skill Human
capabilities are key asset in the sense that knowledge of datasets and knowledge of state
or the art bioinformatic tools are often closely associated with particular individuals So
to augment the knowledge flows there is continuous human skill flow from public to
private sector given the competitive advantage held by the latter in the labour market See
Bormberg-Bauer Harvey and McMeekin 2002)
60 REVUE CONOMIE INDUSTRIELLE no 101 trimestre 2002 Figure 1- Flows of knowledge and exchanges within
and between economies of knowledge
of mirror might imply some symmetry between the public and private data
bases but this is not the case As illustrated by figure there is continual
flow of knowledge from public to private used to complement the data deve
loped in-house with significant extra value added through the use of in-house
bioinformatic expertise Private databases must always acquire distinctive
quality as an essential prerequisite for markets to be formed around them
These knowledge flows constitute critical asymmetry of advantage bet
ween public and private concerns since quite clearly knowledge developed by
TNCs is not for reciprocal use by public science institutions Bioinformatic
databases are expensive with major costs associated with their development
maintenance and curation In many cases governments meet these costs and it
is exceptional for private resources to be allocated to the maintenance of
public databases The case of SWISS-PROT where attempts have been made
to restore the balance of resource and knowledge flow through imposing sub
scription fee on firms for access to the database) provides good example of
how new institutional embodiments of specific bioinformatic knowledge and
new instituted exchanges are formed out of tensions arising from prior arran
gements
REVUE CONOMIE INDUSTRIELLE no 101 trimestre 2002 59 with its tradability i.e access to the knowledge produced is only available in
an exchange involving economic resources) but this is not always the case
There is now multitude of commercial bioinformatic conferences 18 held
each year each with several hundred delegates from wide variety of com
mercial institutions and these provide examples of open untraded knowledge
from the private domain This type of event provides forum for scientists
employed by firms to meet present papers and exchange ideas with each other
and with scientists from the public science community The knowledge that is
made available in these forums is often intended to stimulate interest in the
proprietary knowledge that is not In this sense it acts as mechanism for for
ming potential market exchanges within the open traded knowledge in the pri
vate domain
Open untraded knowledge from the public-private hybrid domain is our final
economic space and is most prominently exemplified by the SNP Consortium
Ltd 19 It has been instituted to take advantage of the low lying fruit cha
racteristics of SNPs described earlier In this domain the resource require
ments are met by combination of public and private interests while the know
ledge produced is openly available and untraded These were the conditions set
out by the Wellcome Trust which clearly considers that SNP knowledge is of
sufficient public interest to warrant considerable expenditure to ensure that
the knowledge is open and untraded That the consortium includes number
of life science TNCs that might otherwise be in competition with each other
suggests that in some respects the knowledge produced is thought to be pre
competitive However it is also likely that the TNC partners will have
comparative advantage in applying this new knowledge by virtue of greater
absorptive capacity Cohen and Levinthal 1989 generated through participa
tion in the SNP project
It is already clear that whilst there are distinctive features to each of the eight
economic spaces each one can only be understood to exist in relation to the
others and one possible depiction of some of these relationships is illustrated
in figure below As discussed in the earlier part of this paper it is the nature
of interdependencies tensions and ambiguities between the different economic
spaces and particularly between private and public domains that underpins
our analysis of knowledge market formation
The development of mirror databases by TNCs provides good example of
such interdependency In fact these facilities are rather more than simply mir
rors of the public domain counterparts since their development is very stron
gly dependent upon importing knowledge from the public domain The notion
18 The annual Beyond Genome conference in San Diego is one prominent example
19 http://snp.cshl.org
58 REVUE CONOMIE INDUSTRIELLE 101 trimestre 2002 together with associated proprietary software packages and these might be
associated with formal IP regimes e.g LifeSeq Gold discussed
below For others formal IP protection is ignored either because legal pro
tection is too costly or because of the rapid rate of obsolescence of the know
ledge produced Nonlinear Dynamics UK based bioinformatic software pro
vider find legal costs of filing and defending patents to be prohibitive 16
Protecting intellectual property then becomes question of secrecy or
staying ahead of the game through continuous innovation Oxagen another
UK software provider have adopted this stance as both
response to the IP issue and in explicit recognition of the rapid obsolescen
ce associated with bioinformatic tools Thus the fourth economic space can be with both formal IP and with strategies associated with competitive
advantage The multiple regimes of appropriation present within this
domain are consistent with those identified in other science and technology
areas Teece 1986 Rappert et al. 1999 and range of differently instituted
market arrangements is implied by the different modes of appropriation
The large life science TNCs have developed in-house mirror genomic
databases and associated bioinformatics capability which can be described as
closed untraded knowledge in the private domain These mirror databases
are typically protected by technical rather than legal barriers known as fire
walls created through encryption or source code protection for example
Behind the firewall knowledge is private in the double sense of being priva
tely owned and not commercially available we could characterise this as clo
sed science Interoperability behind the firewall becomes critical issue to
make maximum use of internally generated and imported public domain
databases This has been described as akin to creating embryonic mirror
GRIDs 17 within the large pharmaceutical companies an internal private
infrastructure to match the external public infrastructure Such bioinformatics
activity is becoming major strategic basis for these firms innovation pro
cesses and is feature in all of the major pharmaceutical and agrofood firms
further development in the status of these mirror databases has been
the creation internal project-based spin-outs which in effect create almost
firewall-within-a-firewall system of knowledge ownership with the spin-out
firm trading as separate entity with the parent firm This has been the case at
Glaxo SmithKline and is an example of closed traded knowledge within the
private domain
Openness of knowledge in the private domain is normally associated
16 Interview with Mr Will Dracup Nonlinear Dynamics
17 The GRID is UK government funded project to develop and install high capacity net
work computing facilities for the UK scientific community Part of this is oriented towards
the bioinformatics community UKHEC 2000)
REVUE CONOMIE INDUSTRIELLE no 101 4ème trimestre 2002 57