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private sector, because stockholders cannot see the immediate benefits of R&D 

 expenditures. 



While the time from discovery to maricet has not shortened nearly as much in 

 pharmaceuticals as in software or other sectors, drugs now are replaced more 

 quickly once they enter the market because new agents are discovered that have 

 stronger action or fewer side effects, and generic drugs are introduced quickly after 

 a patent expires. Pharmaceutical firms have concluded that survival depends on 

 increasing the pace of innovation, introducing more products in less time, and data 

 show that strong connections to basic research performed outside the firm, as well 

 as strong R&D capacity within it, predict success in discovering new drugs. '^ Phar- 

 maceutical executives report that their products depend more on federally funded 

 science than any other industrial sector, and patent statistics bear this out.'^ Thus 

 even in a sector where private firms' R&D investments are high, and encompass 

 some basic research, the federal role remains vital. 



In the 1970s and 1980s attention turned to the dramatic technological ad- 

 vances made in Japan. Success there depended on improving technologies discov- 

 ered elsewhere more than on Japanese science. The Japanese postwar strategy 

 followed the "technology first" strategy pursued with equal success by the United 

 States early in this century. In light of Japan's economic success and U.S. history, 

 some observers began to question why U.S. taxpayer dollars should support basic 

 research at all. 



The case histories tracing drug discovery and advances in computing and 

 communications show that it can still take decades before the practical uses of 

 knowledge arising from disparate fields become apparent. But once commercial 

 opportunities are apparent, it is a flat-out race from the laboratory to the market. A 

 "technology first" strategy falters as the time scale from discovery to application 

 shortens, as the stock of untapped but freely available existing knowledge is de- 

 pleted, and as many nations attain technological expertise. As one analysis of links 

 between patents and citations to scientific literature noted, "The areas which are 

 leading the industrial growth of the West are just those areas that are very science 

 intensive, and it is hard to imagine sustained industrial growth in any country with- 

 out a strong competence in the scientific fields which so closely underlie these 

 modern technologies." '^ Successful nations must not only build and sustain a firm 

 technological base, but must also in the future make new discoveries and translate 

 them into new technologies. Such achievements require a broad and deep base of 

 science and technology, comprising not only those performing it but also those who 

 monitor and use it. Those with foresight, even in Japan which now lacks a substan- 

 tial science base, have recognized that neglect of science is a potentially fatal weak- 

 ness in life on the technological frontier''' 



"Until now Japan has depended primarily on foreign nations for the 

 creative activities that generate the knowledge and technology for 

 innovative products. . . . [F]rom now on Japan will have to create, ahead 

 of other nations, knowledge and technology that will lead to new prod- 

 ucts and markets.""' 



