Md. university research is big business but still lags peers

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Between the new chancellor of the University System of Maryland and a legislative proposal to closely link two of the state’s major universities, using university research is increasingly touted as a way to develop the state’s economy.

Research can give way to new companies, new jobs and new revenue, supporters say.

But are Maryland’s research campuses – including the University of Maryland institutions in College Park, Baltimore and Baltimore County, as well as Johns Hopkins University and Morgan State University — reliable economic drivers for the state?

“The simple answer is yes. It’s big business,” said economist Anirban Basu, CEO of Sage Policy Group, who has studied the economic impact of some of the state’s universities. But that business could be even bigger, he said.

The volume of new companies spun out of universities is one frequently cited measure of their economic impact, but it’s not the only important factor. Even before they get to the commercialization stage, researchers function as entrepreneurs, Basu said.

“We don’t necessarily think of Johns Hopkins researchers as business people. We think of them as institutional employees,” Basu said. But these people are hiring staff, running their labs, raising capital – doing many things that small business owners do, he said.

That contributes to employment, increases the tax base and increases demand for lab and office space, Basu said.

Research funding

And the money spent on research isn’t small potatoes.

For fiscal 2014, external research funding at Johns Hopkins University – including the medical school and the Applied Physics Laboratory in Laurel – totaled $2.8 billion, according to the university. Hopkins has led the nation in total research and development expenditures for the past several years, according to the National Science Foundation.

The University of Maryland, College Park drew about $485 million in research spending in 2014, according to the National Science Foundation, while the University System of Maryland reports that its 12 institutions, collectively, attract about $1 billion in grants and research funding each year.

A measure passed during this year’s General Assembly session and allowed to become law by the governor will strengthen a partnership between the University of Maryland, College Park and the University of Maryland, Baltimore, which was, in part, conceived to allow joint reporting of each campus’s research spending in the hope of raising the federal rankings and boosting research awards.

Basu is skeptical of that last point: Grants are won by researchers, not rankings, he said, adding that he didn’t see why joining the two institutions would make individual grant applicants more successful.

‘Make money’

In addition to jobs and research dollars, Maryland universities contribute human capital to the state’s economy, said Richard Clinch, executive director of the Jacob France Institute at the University of Baltimore, who has also published studies of the economic impact of state universities, including Hopkins and the University of Maryland, Baltimore.

“You educate students, then they go out and make money,” Clinch said.

But both he and Basu say the impact of research spending could be greater, that the pace of commercializing this research in Maryland has been slow compared to some other states.

The Ohio Third Frontier Program, launched in 2002, is a $2.1 billion initiative to help create new companies and support existing industries developing new products in that state; the Maryland Technology Development Corp., or TEDCO, established in 1998, isn’t quite operating on the same scale, Clinch said.

TEDCO invested a total of $190 million in emerging Maryland companies — some of which were spun out of university research projects — through fiscal 2015.

As home to federal agencies like the National Institutes of Health and the U.S. Food and Drug Administration, Maryland should be a national leader in innovative manufacturing. But employment numbers suggest the state is lagging behind, Basu said.

Maryland boasts about 107,000 manufacturing jobs, according to the state Department of Labor, Licensing and Regulation. Massachusetts, frequently cited as a Maryland rival in innovation, has about 250,000, according to data from that state.

Though Maryland ranks second in the nation for federal research grants and NIH contracts behind California, it ranks 27th in the number of patents awarded; the top two patent-earning states were California and Massachusetts in 2014, according to data from the U.S. Patent and Trademark Office.

While Maryland is still competitive when compared to most other states, it’s probably at a point where it needs to make significant investments in developing and commercializing technology, Clinch said.

The universities are already starting: Johns Hopkins launched its Fast Forward startup accelerator program in 2013, and 94 companies were created to bring Hopkins technology to the market from fiscal 2009 to fiscal 2014. Licensing revenue increased during that time from $13.4 million to $17 million, according to the university.

Growing entrepreneurs

From 2011 to 2015, the USM institutions have helped create 388 new startups, exceeding an earlier goal of reaching 325 companies by 2020. The system has established research parks — which provide space for both established and emerging technology companies that want to be close to university laboratories — in College Park and near the University of Maryland, Baltimore and the University of Maryland, Baltimore County.

Overall, the infrastructure of commercialization in Maryland, including incubators and accelerator programs for new companies, is better developed than it was 10 years ago, Basu said. The next 10 years will bring increased commercialization, more new products and more initial public offerings, he predicted.

At UMBC, faculty members are starting to look at their work with a more entrepreneurial eye.

Efforts like the Maryland Innovation Initiative, a program administered by TEDCO that supports commercialization by funding both new companies and research projects, have helped faculty members start to think differently about their work, said Greg Simmons, UMBC’s vice president for institutional advancement.

“It’s not just flipping a switch,” Simmons said. “This is about culture change.