Interesting question
Posted on April 11th, 2008 by Vijay Krishna Narayanan
A question I encountered in an article I read this past week:
Can organizations motivated by the need to make profits and please shareholders successfully conduct basic scientific research as a core activity?
There is some personal significance to that question; hence categorizing it under “Personal” as well.
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Filed under: Business, Personal
‘Basic’ scientific research is NOT for corporates, that’s why we have the Governments and taxes (part of it
).
The only reason for them to do basic research, if at all, would be part of CSR
The article in question was written in the context of the pharmaceutical industry. The operative word should be ‘research’ and not ‘basic’.
The point is that companies spend billions of dollars on R&D, but the effort might not turn out to be profitable. But in industries like pharma, R&D is probably the only route to big bucks. A catch-22 situation.
I was thinking about this question ever since I read your post on RSS…and suddenly the answer popped up in one of our strategy cases. It turns out there is atleast one company that comes close-it is a not-for-profit organization with revenues over $3b. They basically do research for companies that want to outsource their scientific research work. However I would expect this to be a fairly restricted market since research (when its done) is usually a very core competence for a company and they wouldn’t want to outsource it.
As you mentioned pharmaceutical industry is based almost entirely on research-for-profit. This again raises some interesting issues. Example? Abbott labs which invented what is probably the best AIDS medication to date and they initially priced it low. But when they raised the prices (to cover their initial “overhead” in doing all the R&D for it there was a hue and cry over how it was affecting patients in Africa. It is like these guys have the one pill that can save a man’s life and they won’t give it to him since he can’t pay for it. It is a tricky business.
Oops left out the details of the company I was talking about. Its called Battelle and is situated right here in Columbus (infact just about 10 blocks from my house:) ). Here is the website:
http://www.battelle.org/
And the wiki page:
http://en.wikipedia.org/wiki/Battelle_Memorial_Institute