G. Kozmetsky


 Viability of R&D Biotechnology Small Firms-Since 1974, small busi-
nesses (under 50 employees) have provided over 64 percent of the employ-
ment in the United States. Will this continue in the biotechnology indus-
tries? Some experts believe that the number of smaller and medium-sized
biotech companies will shake out from the current 200 to about 50 or so
that can serve 2,000 or so global pharmaceutical, chemical, and agricul-
tural companies. These companies may become much like the specializa-
tion in contract research.
 The United States has a commanding lead in biotechnology science and
engineering. We have utilized our venture capital industry as well as lim-
ited R&D partnerships to develop a critical mass of innovative R&D firms.
We have yet to evolve into the manufacturing phase of biotechnology.
There are hundreds of therapeutic and diagnostic products in the regula-
tory approval process. There are no manufacturing centers for the newer
processes that will be required for world-wide competition. This is true of
most other high technology developments in the United States.
 Manufacturing is a national issue. We have seen our imports in five of
seven high-technology areas exceed our exports. In addition, U.S. firms are
currently placing more high-technology manufacturing directly or by joint
ventures overseas. Meanwhile, Japanese firms are establishing manufac-
turing as well as their own suppliers in the United States. There are over 34
Japanese firms currently involved in establishing manufacturing entities in
the United States. MITI is in disagreement with these firm policies while
the Japanese Economic Agency approves. They obviously have their own
internal disagreements. European and Canadian companies are, and have
been, actively involved in acquiring American companies. Between 1983
and 1985, over 450 companies were acquired by foreign companies. Only
29 companies were acquired by the Japanese. The United Kingdom ac-
quired over 140 companies, and our neighbor, Canada, acquired over 100
companies.
 We have not concentrated or focused our resources, scientific and tech-
nological abilities, and academic expertise on developing U.S. leadership
in manufacturing. We have relied for some time on the invisible hand to
develop innovative applications that resulted from our federal core re-
search advances. We have had very little of our federal agencies' support
applied to biotechnology and commercialization. State governments, par-
ticularly since 1980, have developed newer institutional developments
aimed at economic growth, diversification, and job creation. The success-
ful creation of jobs in the past decade points to their successes. However,
neither the federal nor state governments, along with small and medium-