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From risk to market

Evaluation of the BNDES program that encourages cooperation between universities and companies finds that 67% of projects resulted in products

Eduardo Cesar and Léo Ramos ChavesThe Brazilian Development Bank (BNDES) has published an evaluation of its Technology Fund (Funtec), the bank’s only program in the field of innovation that offers non-repayable funds to support technology institutions that are working on cooperative projects with companies. Published in 2016 in the journal Revista do BNDES, the analysis shows that 67% of the cases studied had succeeded in putting new technologies on the market—and suggested that this rate could reach 93% in the medium term. Among the highlighted initiatives were the development of chips used to identify and track animals, and treatments of cancer. In all cases, the reason that the funds made available did not have to be repaid is that they were to be used for projects where the risk was considered too high for companies to assume on their own.

The evaluation involved a sample of 22 projects that represented a total of R$198 million disbursed between 2007 and 2014, mobilizing 23 technology institutions and 15 public or private companies. The effort to assess the program began in 2013 with the development of a new methodology for the BNDES, known as Systemic Effectiveness Analysis (ASE), which is able to evaluate not only financial aspects and those related to verifying the achievement of stated objectives, but also considers factors such as the project’s impact on training of institution personnel and on internal and client procedures. “The evaluation was performed on the basis of the original objectives of the Funtec program, which were qualitative, including such things as encouraging university-company cooperation, assisting skills-building by the institutions involved, and generating new technologies that can be introduced to the market,” explains Luciana Capanema, BNDES innovation manager.

“Working from those objectives, we established indicators that would capture the effects Funtec has had in achieving them. Based on the results obtained we concluded that the fund has been successful in terms of both purpose and systemic effects,” Capanema explains.

Funtec supports projects in fields that are considered of strategic importance for economic development, such as health, advanced manufacturing, biotechnology, semiconductors, and renewable energy. It is one of several non-repayable public funding instruments for applied research that are available in Brazil, although it is the only one offered by BNDES. Programs such as the Brazilian Innovation Agency (FINEP) and FAPESP’s Innovative Research in Small Businesses Program (PIPE) finance research carried out at companies and pass the funds directly to them, while in the case of Funtec the research institutions are the ones that receive the money.

According to sociologist Glauco Arbix, a professor at the University of São Paulo School of Philosophy, Literature and Human Sciences (FFLCH-USP) and president of FINEP from 2011 to 2015, regular assessments of research funding programs are still rarely performed, which makes it difficult to compare the efficiency of the various initiatives in progress in Brazil. “In that regard, the fact that the BNDES has routinely monitored the Funtec stands out,” Arbix says.

The absence of monitoring hinders the ability to comprehend the social and economic impact of the research projects financed with public funds, says Sérgio Salles-Filho, a professor at the Department of Science and Technology Policy of the University of Campinas (DPCT-Unicamp). “There is a cultural bias in Brazil and many other countries. A significant percentage of public administrators think it is enough to merely determine whether the projects deserve to be financed and then simply disburse the funds. There is not a lot of concern about finding out what effects the research had and checking to see whether the objectives were achieved,” says the researcher who in 1995 participated in the founding of the Study Group on Organization of Research and Innovation (Geopi), responsible for developing indicators and methodologies for evaluating scientific policies, programs and institutions. The group has already assessed various FAPESP programs (see Pesquisa FAPESP Issues nº 147 and 210). According to Salles-Filho, the BNDES initiative is very welcome and it would be desirable for it to move forward with systematic evaluations of the impacts and returns on investments for society.

Infrastructure bottlenecks
The evaluation conducted by BNDES shows that program funds were used in different ways: in developing new technologies, training personnel, refining project management, and overcoming bottlenecks in infrastructure by modernizing laboratories. The study also points out that 90% of research institutions had to be persuaded to take on work on the topics of the projects in which they participated. That, says the document, indicates that projects conducted in partnership with companies helped identify new lines of action for researchers from the institutions, as well as encouraged them to work together in holding seminars and workshops and producing scientific articles. Other data shows that 75% of project coordinators at the institutions believed that Funtec support helped jump-start them into forging new partnerships with companies.

Physicist Vanderlei Bagnato, coordinator of the Optics and Photonics Research Center (CePOF), one of the FAPESP Research, Innovation and Dissemination Centers (RIDCs), based at the USP Physics Institute in São Carlos, explains that they strengthened their relationship with MM Optics, a company based in that city’s technology hub, because of a project selected in 2010 under a Funtec RFP directed towards health. “With the Fund’s support, we deepened the partnership, connecting the knowledge produced at the university with the development carried out at MM Optics,” says Bagnato.

The CePOF and MM Optics developed equipment that applies photodynamic therapy in the treatment of certain kinds of skin cancer, using a photosensitive drug that can identify the locations of tumors. Using Funtec resources, it was possible to finance the testing of that equipment at 100 centers scattered around Brazil. “More than 10,000 patients used the equipment, which exhibited efficiency by increasing the chances for a cure by 94%,” says Luiz Antonio de Oliveira, director of MM Optics. Each piece of equipment costs R$23,000. In all, R$3.5 million was invested in the projects, 10% of which came from MM Optics. Luciana Capanema of BNDES explains that Funtec always insists on some contribution of funds by the company taking part in the project. “That is to strengthen the company’s commitment to the project’s outcome.”

Promoting interaction between universities and companies was not the original mission of Funtec during its first incarnation in 1964. Its function then was to finance implementation of university graduate programs. The first phase lasted until 1967, when it was abolished. In 2006, the BNDES recreated Funtec, which then began to focus on support to innovation. In its first years, some of the funds helped modernize university laboratories that could be used by companies. In 2012, participation by companies in the projects became mandatory. “The involvement of companies expands the possibilities that the technology will reach the market,” Capanema points out.

The fact that the funds invested need not be repaid is important in making research viable within companies, specifically a certain kind of research that is not only expensive but also has a high risk of not succeeding. “If a project that involves a technological risk is successful, the return for society is very significant. That is the logic that drives investment in cutting-edge research in industrialized countries,” says Miguel Giudicissi Filho, medical-scientific director of União Química, who has already taken part in Funtec-financed projects. One of those was development of a drug to treat tuberculosis. It was produced in partnership with the Pontifical Catholic University of Rio Grande do Sul (PUC-RS). The company was responsible for manufacturing the capsules and testing the drug’s stability. It is now undergoing pre-clinical testing.

Another project involves the Butantan Institute and the São Paulo Institute for Technological Research (IPT), working to develop a biological anti-tumor medication. This is a recombinant protein that is able to cause the death of malignant cells without damaging healthy cells. “We are about to begin clinical testing on humans,” Giudicissi says. The research began with a study of the Cayenne tick (Amblyomma cajennense) made more than 10 years ago by Ana Marisa Chudzinski-Tavassi, a Butantan researcher. The objective at the time was to find new agents in the saliva of that arachnid that would inhibit blood clotting. But, during testing, it was discovered that one of the molecules in the salivary gland of the tick inhibits cell proliferation and thus has a potential to treat certain kinds of cancer. The project led to a patent and won support from FAPESP.

Cattle chip
Funtec has supported projects in other sectors, such as information technology. The National Center for Advanced Electronic Technology (CEITEC), converted into a company in 2008 in Porto Alegre, produced the so-called “cattle chip” used to identify and track cattle. It has been on the market since 2012. Funtec funds—approximately R$18 million—were invested in the product manufacturing facility and in R&D on the chip’s integrated circuit. “With individualized, automatic identification of every animal, the owner improves the efficiency of the different procedures involved in herd management, making the business more profitable,” explains Paulo Luna, president of CEITEC S.A. The project was carried out in partnership with research institutions that included the Federal University of Rio Grande do Sul (UFRGS). About one million chips have been produced so far.

Consideration has also been given to the concept of the program itself. Glauco Arbix recognizes the importance of Funtec in promoting business-based research, but says it would be better not to leave coordination of the project in the hands of the research institutions. “Universities are required to follow certain rituals adopted by the public sector, such as bureaucratic bidding procedures and difficulties in hiring researchers that slow down the process somewhat,” he says. Legislation that permitted the transfer of non-repayable public funds to projects undertaken at private companies is something new in Brazil. Although some funding agencies have now put economic subsidy programs into practice, the legal basis of this mode dates from 2006, with the Innovation Act. “If the funds go directly to a company, then it will start dictating the tone of the project according to a tighter timetable than the universities employ,” Arbix predicts.