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S&T Policy

Challenges made-to-order

Eighteen São Paulo private institutes conduct research to respond to demands in health, technology, agriculture, and social sciences

Laboratory at the Eldorado Research Institute: investment in validation of wireless transmission systems

Eldorado Institute Laboratory at the Eldorado Research Institute: investment in validation of wireless transmission systemsEldorado Institute

The most notable face of science and technology in Brazil is associated with the work produced by public universities and institutions and innovations generated by companies. But there is a much less well-known kind of organization that has emerged recently and been producing contributions: private institutes, usually nonprofits, filling orders for research for companies and government agencies. There are 18 of this type of institute in the state of São Paulo, according to a survey published in the FAPESP 2015 Annual Activity Report. Some of these are affiliated with private hospitals and seeking to transfer the results of clinical research to the treatment of patients. Others are centers of research and development (R&D) that focus on challenges in areas like information technology, telecommunications, and agronomy.

One of the oldest private institutes, and the one with the broadest portfolio of products and services is the Center for Research and Development in Telecommunications (CPqD). Formerly a research center for the state-owned Telebras, it became a private nonprofit foundation 18 years ago, after the telecommunications industry was privatized. Its 1,100 employees work on projects in fields such as communications, computer science, national defense, data networks and security that have been commissioned by companies taking advantage of the resources of the Information Technology Act, the Fund for Technological Development of Telecommunications (Funttel), the National Science and Technology Development Fund (FNDCT), and the Brazilian Development Bank’s Technological Fund (Funtec). The CPqD also conducts projects in partnership with the Brazilian Industrial Research and Innovation Corporation (Embrapii) and provides consulting services to companies.

The CPqD engages in cutting-edge research. Recently a group coordinated by electrical engineer Jacklyn Dias Reis, from the CPqD, set a new fiber-optic distance and data transmission rate record. Using 10 channels on the same fiber, each with a 400 gigabits per second (Gbps) traffic capacity, the team was able to send an enormous amount of data along 370 kilometers (km) of optical fiber to reach its destination without errors. (see Pesquisa FAPESP Issue nº 246). A unique feature of the CPqD is that some projects eventually become startup companies. A recent case is BrPhotonics, a firm established in 2014, focusing on development of high-speed optical communications (see Pesquisa FAPESP Issue nº 238). Before that, other companies had sprung from the ribs of the CPqD. Padtec, established as a component of the center in 1999, became a private company in 2001 (see Pesquisa FAPESP Issue nº 219). “Not only are we transferring knowledge to the general public, but we usually lose some of our team to the startups,” says Alberto Paradisi, vice president of innovation at the CPqD, who emphasizes that the infant companies have also become partners of the foundation—both BrPhotonics and Padtec work with the institute on optical communications projects commissioned by companies and government.

Institutions research_248The Eldorado Research Institute, situated adjacent to the campus of the University of Campinas (Unicamp), was founded by Motorola in 1999 as a nonprofit. In its early years, it worked almost exclusively for that U.S. company, using funds available under the Information Technology Act. In 2009, it experienced an abrupt change when Motorola eliminated two-thirds of the projects that it had been sponsoring at Eldorado. The company was sold the next year. “It was a tough time; we had practically no income and were going into debt to build our headquarters,” recalls Jaylton Ferreira, superintendent of the Eldorado Institute. “The solution was to take an aggressive approach to offering services to other companies.”

Today, the Eldorado model is quite different. In 2015, the Institute conducted about 140 research projects involving more than 60 different companies, including Dell, Samsung, IBM—as well as Motorola. Current projects use funds from sources like the Technology Fund of the Brazilian Development Bank (BNDES), as well as partnerships with Embrapii. The team of about 800 employees and researchers works at facilities in Campinas, Brasília, and Porto Alegre where it is developing new technologies and adapting existing ones to cellphones, tablets, and other devices, as well as conducting tests with that equipment to determine whether the items comply with Brazilian standards. Some of the money is dedicated to research in fields that offer potential for innovation, such as the Internet of Things (which connects home appliances and cars to the web), virtual reality, and assistive technology.

Institutes like the CPqD and Eldorado are devoted to both research and development but most centers, especially those connected with the cellphone industry, concentrate solely on the development aspect, particularly applications. Laws and public policies that encourage companies to invest in R&D support the work of a good part of these institutes. The primary example is the Information Technology Act, which dates from the early 1990s. It granted tax incentives in the form of a reduction in the Federal Value-Added Tax (IPI) to companies that allocate some of their sales revenues to research. When the law first took effect, most companies used the funds to support partnerships with universities. Later, large corporations established centers—usually as nonprofit foundations—in order to have more flexibility in allocating their financial resources.

Research on the disease known as greening is performed at the Fundecitrus laboratory in Araraquara...

Adriano Carvalho/Fundecitrus Research on the disease known as greening is performed at the Fundecitrus laboratory in Araraquara…Adriano Carvalho/Fundecitrus

This was the case, for example, with Alcatel Lucent, which established FITec, an institute with facilities in Campinas, São José dos Campos, Recife, and Belo Horizonte, or Venturus Innovation and Technology, founded in 1995 by a consortium led by Ericsson. “People who say that the Information Technology Act has not created jobs or leveraged technology in Brazil don’t know they are talking about. An enormous volume of research was produced, thanks to the incentive in that law,” says Marcelo Abreu, manager of innovation and new business at Venturus. Headquartered in Campinas, the institute now has 300 employees and a good part of its income comes from projects commissioned by companies that are benefiting from the Information Technology Act. It works for various clients, some of whom compete with each other, and maintains separate offices and teams for each project in order to ensure confidentiality.

The main focus of Venturus is development of applications for mobile phones. “We were responsible for developing cell phone applications for the last two World Cups of Soccer that Sony Mobile offered its customers all over the world,” Abreu says. In a study published in 2010, Eva Stal, a professor at United Metropolitan Colleges in São Paulo, demonstrated that the institutes created by the stimulus provided by the Information Technology Act developed innovative capabilities that differed from the skills that usually result from collaborations between companies and universities. “By establishing these institutes, companies had an opportunity to decide what they were going to do, and they developed skills to meet the demands of manufacturers worldwide,” she wrote. The ability to come up with new solutions persists, observes Gedier Ribeiro, manager of new business at the FIT Technology Institute, founded in 2003 by Singapore electronics manufacturer Flextronics. “When a company can’t find the solution it needs in the market, we create a customized technology. It might be a robot for its production line, a set of software programs or an artificial intelligence device,” he explains. The institution, based in the city of Sorocaba, has 260 employees. “Seventy percent of the projects are based on tax concessions. A lot of companies submit orders and pay with their own funds.”

The Brazilian private R&D institute model reminds us of the research and technology organizations (RTOs) set up in developing countries. Such centers fulfill the role of generating and disseminating new technologies, financed through government, private clients, and the provision of consulting services. This is the case, for example, with the German firm IABG, established by Germany in 1961 to develop technologies for the aerospace industry. It was privatized in 1993 and now works for the automotive and telecommunications industries.

...and a variety of sugarcane is being developed by the CTC in Piracicaba

CTC …and a variety of sugarcane is being developed by the CTC in PiracicabaCTC

A case unique among private institutes is the Wernher von Braun Center for Advanced Research, in Campinas, a product of the initiative taken by a single researcher, physicist Dario Sassi Thober. The original idea was to conduct pure research in physics with potential applications in industry. Over time, the nonprofit institution concentrated on developing software and semiconductors and on management systems that work with very high volumes of data. The center designed an electronic toll collection system that is used on highways throughout Brazil. It employs a label containing a chip that is installed on all the cars and communicates with detection devices located at toll plazas and parking lots. “We set up a factory in Asia to make the semiconductors we developed, which reduced operating costs for the client,” Thober recalls. He feels keenly the loss of several talents who left the institute in 2015. “Some of them went to work for semiconductor companies in other countries, for salaries well above those paid in our market,” he laments.

Research at hospitals
Another environment in which custom-ordered research has become more significant is the private health care sector. The Hospital Sírio-Libanês (HSL) in São Paulo announced in 2015 that it is carrying out genetic testing to guide the choice of the most effective treatments against cancer and to provide early detection of disease progression and the development of resistance to the drugs used in treatment (see PESQUISA FAPESP Issue nº 237). The work, coordinated by geneticist Anamaria Camargo, was done at the Syrian-Lebanese Institute of Education and Research (IEP) which has 1000 m2 meters of laboratory space. The IEP and other institutes affiliated with hospitals in the state of São Paulo follow a model that combines health care with education and research. The research is structured in two categories: clinical and experimental. The former investigates the effects of drugs and therapies tested on patients. These studies may be ordered and sponsored by pharmaceutical companies. In experimental research, the IEP is looking for ways to combat diseases or improve treatments, even if the results initially have no practical application.

Ana Maria Malik, a physician and professor at the São Paulo School of Business Administration (FGV-SP), explains that the strategy of investing in research helps hospitals become centers of excellence. “They gain prominence, thus attracting qualified researchers that helps them upgrade the overall skills of their employees,” she explains. In 2008, researchers associated with the HSL published 38 articles in indexed journals. In 2016, that number is likely to reach 170. “A percentage of those studies started out as clinical cases of hospitalized patients,” reports Luiz Fernando Lima Reis, director of the IEP-HSL. In 2016, the HSL will invest about R$20 million in research. Half of this comes from the hospital’s own budget and the rest from contracts with industry, sponsored clinical trials, or technology validation projects. The amount received from agencies like FAPESP and the National Council for Scientific and Technological Development (CNPq), represents R$1 million. Another R$1 million comes from donations.

Epidemiological research, mainly in cardiology and nephrology, as well as clinical studies financed by the pharmaceutical industry are conducted at the research center operated by the Beneficiência Portuguesa Hospital of São Paulo. Follow-ups on cardiology patients who have undergone revascularization surgery or angioplasty date from 2009. In the past three years, more than 107 scientific articles have been published. Many of these discuss patients being monitored by the hospital. “We are looking for new ways to encourage research,” says Luiz Eduardo Bettarello, executive superintendent of Technical Development at the Beneficiência Portuguesa Hospital of São Paulo. Meanwhile, at the Institute of Education and Health Sciences at the Oswaldo Cruz German Hospital, most of the funding for research is obtained through partnerships with companies, observes neurologist Jefferson Gomes Fernandes, its superintendent of Education and Sciences. “The institute has been conducting clinical research with participation by the physicians on its clinical staff,” he says.

Installation of a system for detecting cars at toll plazas that was developed by the Von Braun Center: every car bears a label with a chip

Von Braun Center Installation of a system for detecting cars at toll plazas that was developed by the Von Braun Center: every car bears a label with a chipVon Braun Center

Some hospitals have tax incentives available for use in research.  “In Brazil, world-class hospitals are encouraged by the government to conduct studies that could yield results to assist the public health network,” explains Ana Maria Malik of FGV-SP. Today, six hospitals fit that category: in São Paulo, the Sírio-Libanês, the Albert Einstein, the Hospital do Coração (HCor), the Samaritano, and the Oswaldo Cruz; and in Rio Grande do Sul, the Hospital Moinhos de Vento. All of these participate in the Program to Support the Institutional Development of the Unified Health System (SUS), the Proadi-SUS, and can obtain income tax deductions on sums allocated to research projects approved by the Ministry of Health. In the case of the Hospital Oswaldo Cruz, 16 projects completed between 2012 and 2014 were financed by a waiver of about R$105 million in taxes.

At the Albert Einstein Israeli Hospital, custom-ordered research represents 5% of the projects it conducts. “Most of our research is sparked by questions asked by physicians,” reports Luiz Rizzo, executive director of research at the Albert Einstein Israeli Institute of Education and Research. At present the hospital has 15,000 employees, 700 of whom are involved in scientific activities. In all there are 459 projects in progress. Today, the principal line of research is about aging. The hospital’s budget for research is R$23 million a year. In addition to that sum, the hospital obtained more than R$5 million in 2016 from participation in requests for proposal launched by agencies like FAPESP and CNPq and partnerships with foreign researchers on projects supported by international organizations like the National Institutes of Health (NIH) in the United States.

Among hospitals that are conducting research in São Paulo are some that stand out because of their traditional specialties. This is true of the A.C.Camargo Cancer Center, one of Brazil’s leading centers for research and specialized care in oncology. In 2015, the hospital performed 35 million treatments, 62% of which were covered by the SUS. About 90 professionals are engaged in scientific work, not counting members of the clinical and caregiver corps who also carry out projects in collaboration with the Research Center. The center occupies a building in the Liberdade district of the city of São Paulo that was inaugurated in 2010 during the administration of oncologist Ricardo Renzo Brentani. As CEO of FAPESP from 2004-2011, Brentani presided over the Antônio Prudente Foundation, which maintains the A.C.Camargo, and in 1997 was responsible for launching the first graduate course ever given at a private hospital in Brazil. “Professor Brentani showed the clinical corps that it is important to do research, not only because it makes a difference in one’s career but because it is essential in fighting cancer,” recalls Vilma Regina Martins, superintendent of Research and Education at the A.C.Camargo Cancer Center. In 2015, 159 projects were conducted and 168 articles published in international periodicals, addressing subjects like diagnosis and treatment of cancer, tumor biology, and palliative care.

Laboratory at the A.C.Camargo Cancer Center: 159 oncology research projects were completed in 2015

Eduardo Cesar Laboratory at the A.C.Camargo Cancer Center: 159 oncology research projects were completed in 2015Eduardo Cesar

The Boldrini Pediatric Center, in Campinas, is also dedicated to cancer research. Built as the result of donations, the philanthropical hospital was established in 1978 and began to specialize in the treatment of cancer and blood diseases of children and adolescents. It currently serves about 6,000 patients—most of them (80%) covered by the SUS. In the center’s clinical research work, the center has been known since 1980 for coordinating a number of Brazilian protocols for treatment of acute lymphoid leukemia in children that helped increase the chances of a cure from 5% to 80%. “With those cooperative studies, with several Brazilian hospitals working together, the Boldrini was able to implement sophisticated technologies in its examinations, molecular biology techniques and cytogenetics,” says physician Silvia Brandalise, executive director of the center, which in 2017 will inaugurate its Institute of Molecular and Cellular Engineering on a 4,000 m2 site in Campinas. The center is the result of a partnership with Unicamp and the National Synchrotron Light Laboratory (LNLS).

Applied research in agribusiness has revitalized two traditional private research institutes. One of them is the Sugarcane Technology Center (CTC) founded in 1969. The CTC became a corporation in 2011 with the companies Raízen and Copersucar as principal shareholders. It then went looking for new sources of financing to leverage research in sugarcane. An industry report made at the time showed that, although sugarcane productivity had increased in recent decades, there were bottlenecks that hindered significant gains in productivity. “Defining a focus and boosting investments in research is essential in order to expand productivity. The model we adopted seemed to be the most suitable for responding to that challenge, since it enables us to forge strategic alliances with other groups,” says Gustavo Teixeira Leite, CTC president. “Sugarcane is genetically very complex: this makes research more complicated, expensive, and time-consuming. It means that multinationals are less interested in investing that effort,” says Leite, a former president of the multinational Monsanto in Brazil.

Between now and 2025, CTC’s goal is to introduce technologies that permit doubling the productivity of sugarcane, now at about 10 tons of sugar per hectare. To do so, the approximately R$50 million invested annually has been raised to R$200 million a year. To get the plan started, the center sold 19% of its stock to the BNDES for R$300 million, as well as obtaining lines of credit from that bank and from the Brazilian Innovation Agency (FINEP). The CTC also changed its business model: it now sells technology to clients and collects royalties. Its team of 450 employees, of whom 300 work in research, is investing funds on several fronts. The number of genetic improvement programs has risen from one to six in order to create sugarcane varieties that meet the needs of the six Brazilian regions in which it is produced. “The time it takes to obtain a new variety, which was 15 years, has been shortened to 8 years.” Another important program will develop artificial seeds. “Cane is planted today the same way as it was planted when Brazil was colonized: we use cuttings. We lay them in furrows and wait for them to grow. Our idea is to produce seeds from an embryo of the plant and sow them like we sow grain, something not yet being done anywhere in the world,” he says.

041_CentrosEDUARDO CESARWhile the CTC decided to become a corporation, another institution devoted to agricultural research, the Citriculture Defense Fund (Fundecitrus) is operating as a nonprofit private association supported by citrus growers and the orange juice industry. Founded in 1977, Fundecitrus now invests R$23 million annually in research on controlling agricultural pests. A team of 15 researchers is working at four laboratories in the city of Araraquara and at 65 experimental fields in three states. In the 1990s, when Citrus Variegated Chlorosis (CVC), a pathogen known as amarelinho, or “yellowing” became more severe, Fundecitrus established its Scientific Department, which inherited the objectives of Procitrus, a private foundation similar to Fundecitrus. The effort at the time was devoted to surveillance and eradication of diseased plants. “We eventually had 4,000 inspectors traveling in a thousand vehicles to do inspections and enforce controls. Now we have become an intelligence center,” says Juliano Ayres, manager of Fundecitrus.

The effort by the fund, which works with universities, companies, and Embrapa (Brazilian Agricultural Research Corporation), has made it possible to reduce the incidence of amarelinho from a presence in 50% of plants in 1990 to 3% this year. Progress occurred because of a group of research projects that attempted to understand the mechanisms by which the pest works and to control it. The causative agent, the Xylella fastídiosa bacteria, was the subject of the world’s first genetic sequencing of a pathogen, done with financing from FAPESP and a contribution from Fundecitrus. “No other citriculture industry in the world has research programs like ours. Today, the main threat, a disease known as greening, is affecting 18% of our orange groves, while in Florida that incidence can be as high as 80%,” Ayres observes.

CEBRAP staff head up initiatives such as the Center for Metropolitan Studies

léo ramos CEBRAP staff head up initiatives such as the Center for Metropolitan Studiesléo ramos

National reference in public policy
CEBRAP is supported by funds from private sources and government agencies

The Brazilian Center for Analysis and Planning (CEBRAP), a research institute dedicated to the social sciences and humanities, was founded in the late 1960s under the leadership of a group of intellectuals and professors who had been forced by the dictatorship to retire. Among them were the sociologist and future President of Brazil Fernando Henrique Cardoso, and philosopher José Arthur Giannotti. Financed primarily by foundations that were based abroad, like the Ford and MacArthur foundations, CEBRAP, in its first 15 years, devoted its work to studies in which it became a leading authority in health, demographics, and urban development. After re-democratization, the flow of foreign funds diminished and put the model at risk of extinction. “Several institutes with the same background ended up closing, but we were able to adapt,” says sociologist Angela Alonso, a professor at the School of Philosophy, Literature and Human Sciences of the University of São Paulo (USP) and current president of the center.

However, changes had to be made in the organizational structure. CEBRAP encouraged its researchers, of whom it now has 38 who are permanent, along with more than 100 associates, to apply for positions competitions at public universities through competitive exams and stopped paying them salaries— thus, those who teach at the public universities then become volunteers at CEBRAP. The resources obtained from funding agencies and government organizations pay for major projects, like the Center for Metropolitan Studies, one of FAPESP’s Research, Innovation and Dissemination Centers (RIDCs), as well as participation on the Brazilian Platform on Drug Policy and evaluations of public policies on behalf of city governments.

CEBRAP is also called upon to conduct projects commissioned by private institutions. One of its current clients is Banco Itaú, which asked CEBRAP to study sites at which bicycle rental services could be set up in major Brazilian metropolitan areas. Public and private financing have kept research alive within CEBRAP, but it stills encounters roadblocks.

The inability to use research project funds to cover its administrative overhead means that the center would find it difficult, for example, to do a simple project on accessibility at its headquarters. A fundraising campaign directed toward seeking donations from businessmen and alumni is being launched to help finance fixed expenses that are unrelated to research.