Innovation Paths of Estonian Biotechnology

The aim of this article is to evaluate the ratio of expenditures between fundamental research, applied research and technological development, to analyse this proportion in the innovation processes of Estonian biotech public sector and private SMEs, and to shape supportive measures to knowledge transfer and entrepreneurship in the biotechnology sector. The empirical study explores Estonian biotechnology by mapping the strategy, innovation processes and related expenditures of the public sector and private businesses. Findings from the annual reports of biotech SMEs and interviews with managers demonstrate the following: companies are mostly profitable, but their own capability to invest into development is quite limited; only a third of the biotech companies have adopted a growth-oriented strategy; entrepreneurship and marketing experience in the companies was nearly three times lower than in research; international knowledge transfer and networking are mostly related to research and practically never to commercialisation of the research results. The author deduced the gross funding structure proportion of basic and applied research, and product/service development in Estonian biotechnology sector according to the formula: 11:5:1. In the business sector the ratio is approximately 1:3:5 and together with public support: 1:6:5. The structure of research expenditures in the public sector mostly reflects the success of Estonian biosciences rather than the success of the biotech as an economy sector. Some options for improvement of sectoral system of innovation are given