Economic Impact of University Medical Centres in the Netherlands

Transcription

1 BiGGAR Economics Economic Impact of University Medical Centres in the Netherlands A condifential report to 9 th June 2014 BiGGAR Economics Midlothian Innovation Centre Pentlandfield Roslin, Midlothian EH25 9RE, Scotland info@biggareconomics.co.uk

2 CONTENTS Page 1 EXECUTIVE SUMMARY INTRODUCTION CORE IMPACT STUDENT IMPACT VALORISATION IMPACT CATALYTIC IMPACT THE UMC NETWORK TOURISM IMPACT IMPACTS OF TEACHING AND LEARNING SUMMARY IMPACT AND UMC COMPARISONS APPENDIX A ABBREVIATIONS AND TERMS APPENDIX B ECONOMIC METHOD STATEMENT... 50

3 1 EXECUTIVE SUMMARY BiGGAR Economics was asked by NFU to assess the economic impact of eight University Medical Centers (UMCs) in the Netherlands: Utrecht, Leiden, Groningen, Erasmus (Rotterdam), Radboud (Nijmegen), Maastricht, VU Amsterdam and AMC Amsterdam. This is an overview report, which describes the total impacts of all eight UMCs. Economic impact was measured in Gross Value Added (GVA) 1 in the economy and through the number of jobs supported by the organisation. In 2012 the eight UMCs in the NFU network generated a combined core economic impact of 12,8 billion (miljard 2 ) GVA. They also supported jobs across the Netherlands. This impact was generated through people employed directly at the UMCs, through the UMCs expenditure on supplies, through the money spent by staff in the local economy and through spending on capital projects on the site. The figure takes into account the indirect and multiplier effects of all the direct expenditure and employment. Student expenditure and student employment (outside the UMC) is worth a further 0,8 billion GVA to the Netherlands. This supports a further jobs. We have considered six aspects of valorisation and commercialisation activity supported by the UMCs that can reasonably be quantified in economic terms from the data provided. We recognise there are further, highly significant, nonquantifiable aspects to this impact which can only be considered in terms of health benefits and developments in medical knowledge. The aspects of valorisation that we can quantify are technology licensing, spin-outs and start-ups, and collaborative research, workforce training, social returns to medical research and the social impacts of staff time. These have a combined impact which is worth 4,7 billion in GVA and jobs across the Netherlands. There is an overall catalytic impact of all UMCs in the NFU group from attracting inward investment and stimulating science park activity across the Netherlands. This amounts to 1,3 billion in GVA and fte jobs. The tourism impact created by visits to staff and students, visits to patients and attendance at conferences at the UMCs creates an impact of 14,3 million GVA and 229 jobs across the Netherlands. The impact of teaching and learning recognises the increased earnings over a lifetime that stem from having a degree in a medical or related subject. This impact is estimated to be worth 726,9 million GVA across the Netherlands and the induced impacts of this increased earning amounts to 3,893 jobs. All impacts together suggest that together the UMC network generates a total impact of 20,4 billion (miljard) GVA and jobs across the Netherlands. The ratio of total impact to the direct impact of an institution gives an indication of the institutions multiplier effect. The GVA multiplier of the UMCs is 4.30 and the employment multiplier is GVA is a measure of the economic value of goods and services produced in a given area. It is the total value of output less the value of intermediate inputs. 2 Note: Throughout this report m refers to million (miljoen) and b refers to billion (miljard). 1

4 2 INTRODUCTION This report summarises the findings of a study undertaken by BiGGAR Economics Limited into the economic impact of each of the eight University Medical Centres (UMCs) in the Netherlands. This is an overview report, which describes the total impacts of all eight UMCs. It is accompanied by eight individual reports, one for each UMC, which provide detail about the quantitative and qualitative economic impacts of each organisation. 2.1 Objectives The objectives of the study were to quantify the economic impact of the UMCs in terms of: their core impact on income and employment; their student-related impact from student spending and working; their commercialisation and valorisation activity; the tourism impact created by activity at each UMC; and life-time productivity gains from education delivered by each UMC. For each UMC, these impacts have been assessed on a regional level and on a national level across the Netherlands as a whole. This document reports on the national level impacts. The base year for all data is Background The Netherlands Federation of University Medical Centres (Nederlandse Federatie van Universitair Medische Centra, NFU) represents the eight cooperating UMCs in the Netherlands. The NFU was founded in 2004 as a spinoff from the University Hospitals Association (Vereniging Academische Ziekenhuizen, VAZ), which was established in The eight UMCs that make up the NFU are internationally significant: all of them are included in the THE World University Rankings top 100 universities for clinical, pre-clinical and health 3. They are: Free University Medical Centre (VUmc), Amsterdam; opened in 1964 as the teaching hospital of VU University Amsterdam. VUmc was created in 2001 by the merger of the university s medical faculty and the teaching hospital. Academic Medical Centre (AMC), Amsterdam; established in 1983 with the co-location of two of the city s hospitals. In 1994 the teaching hospital and the university s medical faculty merged to form the first university medical centre in the Netherlands. 3 The Times Higher Education World University Rankings' Clinical, Pre-Clinical and Health table judges world class universities across all of their core missions - teaching, research, knowledge transfer and international outlook. 2

5 University Medical Centre Groningen (UMCG); established in 2005 when Groningen University Hospital merged with the University of Groningen s Faculty of Medical Sciences. University Medical Centre Utrecht (UMC Utrecht); created in 1999 when Utrecht University hospital, Wilhelmina Children s Hospital and the medical faculty of Utrecht University merged. Leiden University Medical Centre (LUMC); created in 1996, when the teaching hospital and Leiden University s Faculty of Medicine merged. University Medical Centre St Radboud (Radboudumc), Nijmegen; began as a teaching hospital in It was given its current name in 1999, following a change in the organisation of the hospital and the medical faculty of Radboud University Nijmegen. Maastricht UMC+; Academic Hospital Maastricht (AZM) has been operating since 1950 but has been known by its current name since AZM and Maastricht University s Faculty of Health, Medicine and Life Sciences have been collaborating since 2008 under the name Maastricht UMC+. Erasmus MC, Rotterdam; was created in 2002, a partnership between the medical faculty of Erasmus University Rotterdam and Rotterdam University Hospital (AZR). Together, the eight UMCs have an income of over 7 billion, employ almost full time equivalent staff, and have over students. Table 2.1: Background UMCs, 2012 Income Staff (no. fte) Students (no.) UMC Utrecht 973,0m LUMC 688,4m UMCG 1.023,9m Erasmus MC 1.236,7m Radboudumc 950,6m Maastricht UMC+ 702,7m VUmc Amsterdam 666,0m AMC 841,0m Total 7.082,3m Source: UMCs data provided to BiGGAR Economics, March Report Structure This report is structured as follows: section three presents the economic impacts arising from the UMCs core activity including those associated with direct income and employment, the purchase of bought in goods and services, expenditure of employees and capital spending; 3

6 section four describes the impacts associated with students whilst studying and spending in the local economy and working part-time in local businesses; section five describes the valorisation impact associated with the UMCs and their employees using their knowledge to benefit other organisations, including the impacts from technology licensing, spin-outs and start-up companies and collaborative research; section six describes the catalytic impact that the UMCs have on the Dutch economy by stimulating investment and the growth of geographic clusters of life science activity; section seven assesses the UMCs impact on tourism from visits to students and staff, visits to hospital patients and expenditure at conferences hosted on the sites; section eight explores the economic impact arising from the role of higher education in increasing productivity during the working life of graduates; and section nine summarises the UMCs total economic impact. Appendix A provides a guide to abbreviations and terms commonly used throughout the report and Appendix B contains a statement on the methodology used to calculate the economic impact. 2.4 Methodology The methodology used to estimate the economic impact of the UMCs is one that has been in wide usage for at least 20 years. A large number of individual universities, particularly in the UK and the US, have undertaken economic impact studies over the last 20 years, and particularly over the last 5 years. Most relevant to this study is the work that BiGGAR Economics undertook on behalf of Leiden University and the LUMC. This work began in 2011 with a study that considered the economic impact of the research activity undertaken by the two institutions. This study was updated in 2012 and expanded to incorporate the teaching and other activities undertaken by the two institutions. BiGGAR Economics has also used a similar approach to estimate the economic impact of several higher education institutions in the UK and Ireland. Of particular relevance to this study is work undertaken for the University of Surrey and the Royal Surrey County Hospital in 2013, which considered the individual and combined impact of the two institutions. Some other examples of similar studies undertaken by BiGGAR Economics and others include: the University of Edinburgh (BiGGAR Economics, 2008, updated in 2012) the University of St Andrews (BiGGAR Economics, 2010, updated 2012) the University of Birmingham (Oxford Economics, April 2013); the University of Britich Columbia (2009, Planning and Institutional Research) the University of Iowa (September 2010, Tripp Umbach); and the University of Notre Dame, Indiana (September 2013, Appleseed). 4

7 Perhaps of more direct relevance to the study of UMC economic impacts for NFU is that the approach has also been used by representative organisations similar to NFU, and this has been successful in influencing policy. Examples include the work published by the Russell Group 4 on the impact of research in 2010, which was influential in the UK Government s decision to protect research budgets from the 10% cuts that were announced in the 2010 UK Budget. The Russell Group has recently undertaken further work on the economic impact of capital projects. This has been based on work undertaken by BiGGAR Economics, using the same methodology as the UMC study. This report was launched on 20 May to help demonstrate how the university sector in the UK is contributing to economic recovery and growth. Universities Scotland 6 has also published economic impact work of the Scottish universities sector, using the same methodology. This has influenced Scottish Government decisions on its approach to tuition fees (which are funded from taxation revenues for Scottish and EU students, a departure from UK policy) and on identifying the universities sector as one of seven priority sectors in the Government Economic Strategy. Universities UK has also used a similar approach to demonstrate the impact of the higher education sector s contribution to the UK economy 7. The approach used for the economic impact of universities and research institutes is also consistent with Guidance issued by several governments and public sector organisations. For example, the methodology for the UMCs economic impact is consistent with the principles set out in European Commission Guidance 8 on major projects, which highlights the importance of assessing the fullest range of potential economic effects possible. 2.5 Baseline Year and Measures The economic impacts described in this report are for 2012, which is the latest year for which published data on income, staff and students was available at the time of writing, in early Economic impact has been reported using two measures: Gross Value Added (GVA) - which is the measure of the value that an organisation, company or industry adds to the economy through their operations. The analysis has used the production approach to measuring this impact, where the GVA is equal to the value of production less the value of the inputs used. Typically this is calculated by subtracting the non-labour costs of the organisation from the organisation s total revenue. 4 Russell Group (2010), The economic impact of research conducted in Russell Group universities (available at 5 Financial Times (20 May 2014), Russell Group universities invest 9bn to attract best students (the report is being published at 6 Universities Scotland (2013), Grow Export Attract Support: Universities contribution to Scotland s economic growth (available at 7 Viewforth Consulting Ltd (April 2014), the Impact of Universities on the UK Economy (available at 8 European Commission (July 2008), Guide to Cost Benefit Analysis of Investment Projects [in particular section 2.5 on Economic Analysis] (available at 5

8 employment (jobs) is measured in full time equivalent (fte) jobs supported. 2.6 Key Economic Assumptions Each area of impact requires the use of three types of economic assumptions: turnover to GVA ratio this is used to estimate the GVA impact of the spend in an area. It is obtained from data published by Statistics Netherlands for GDP, production and expenditure, output and income for 2012; turnover per employee this is used to estimate the employment impact of spend in an area and is taken from the same source; and GVA and employment multipliers these are used to estimate supplier and income impact created by businesses that directly benefit from additional spend in an area. The starting point for calculating the direct impact of the UMCs is the additional turnover generated or people employed by Netherlands-based companies as a result of each UMC s activities. This turnover is converted into GVA by applying GVA to turnover ratios for relevant sectors. The employment supported by this turnover is estimated by multiplying the number of employees by an estimate of GVA per employee in relevant sectors. The indirect impacts considered in this report include the effect of purchases made elsewhere in the supply chain by businesses and their employees. These impacts are calculated by applying an appropriate GVA and employment multiplier to the direct impact. This approach captures the impact of subsequent spending rounds as income is re-spent elsewhere in the economy. A more detailed economic method statement is contained in Appendix B. 6

9 3 CORE IMPACT The core impacts of the UMCs include: the direct effect (income and employment); supplier effects (impact of expenditure on supplies and services and jobs supported by this spend); income effects (impact of the spending of employees); and capital spending effects. 3.1 Direct Effect The direct impact of the UMCs is a measure of their direct value to the economy and number of jobs they provide. The value they add to the economy is expressed using gross value added (GVA), which can be estimated by adding together their operating profit and staff costs (this is the same as their total income less expenditure on supplies). The GVA and employment directly supported by the UMCs is shown in Tables 3.1 to 3.2. Together, the eight UMCs support full-time equivalent (fte) jobs in the Netherlands economy and have an output of almost 5 billion GVA ( 4.733,5 million). Table 3.1: Direct Effect GVA Total ( million) Total Income 7.082,3 Less Expenditure on Supplies 2.348,8 Direct GVA 4.733,5 Source: all UMCs Table 3.2: Direct Effect Employees Total UMCs employees (headcount) UMCs employees (FTEs) Source: all UMCs 3.2 Supplier Effect Each UMC buys in a wide variety of goods and services to supply its operation. The supplier effect is the GVA generated and employment supported in businesses throughout the UMC supply chain. A further round of GVA and employment is supported indirectly by the businesses that supply goods and services to the UMCs and this is calculated using multipliers for all industries as a whole. 7

10 Table 3.3: Supplier Effect Assumptions Amount spent on goods and services Item Total Spending, all UMCs Source: all UMCs and BiGGAR Economics Assumptions 2.348,8m The total supplier effect for the UMCs is shown in Table 3.4. Goods and services bought in by the UMCs create over 3 billion GVA ( 3.257,1m) and create almost fte jobs (35.903) in the Netherlands economy. Table 3.4: Supplier Effect GVA ( m) Employees (fte) Supplier Impact 3.257, Source: BiGGAR Economics Analysis 3.3 Staff Spending The people employed directly by the UMCs spend their wages and salaries in the wider economy and this increases turnover and supports employment in local businesses and throughout the Netherlands as a whole. This effect can be estimated by assessing the amount of wages spent in each study area, based on the number of employees and where they live. Each of the eight UMCs has been provided with data about the location and value of spend in their region, as well as their organisation s individual contribution to the Netherlands economy. At the national level, the key assumptions used in calculating staff spending impact are shown in Table 3.5. Table 3.5 the UMCs Staff Spending Assumptions Staff Numbers Number of FTEs Staff Costs ( m) 4.187,5m Salaries as % of staff costs 81% Source: all UMCs and BiGGAR Economics Assumptions The expenditure figures have been converted into a GVA impact by applying an appropriate turnover/gva ratio, which ensures that we exclude from the impact the tax paid by employees. The income effect estimated here is therefore a conservative one since it excludes the contribution of employees to the provision of public services paid for from Government tax receipts. The employment impacts are calculated by dividing the GVA impact by an estimate of the average GVA per employee and finally multipliers are applied to capture the indirect effects of subsequent spending rounds. This results in a staff spending impact of over 4 billion GVA ( 4.192,2m) and almost fte jobs (49.959) in the Netherlands. 8

11 Table 3.6: Staff Spending Impact GVA ( m) Employees (fte) Staff Spending Impact 4.192, Source: BiGGAR Economics Analysis 3.4 Capital Impact In 2012, the UMCs spent 506,7 million on capital projects. Capital spending provides an important income stream for the Dutch construction sector and we can value the economic impact of this income by applying a turnover to GVA ratio for the sector. The employment impact is estimated by dividing the GVA by the average GVA per employee for the construction sector. The indirect impacts of this expenditure can then be calculated by applying GVA and employment multipliers for the construction sector. Table 3.7 the UMCs Capital Spending Assumptions Capital Spending Annual Capital Expenditure, 2012 ( m) 506,7 Source: all UMCs and BiGGAR Economics Assumptions In this way it can be estimated that the total impact of construction expenditure by the UMCs amounts to 661,8 million GVA and fte jobs in the Netherlands. Table 3.8: Capital Spending Impact GVA ( m) Employees (fte) Capital Spending Impact 661, Source: BiGGAR Economics Analysis 3.5 Summary of Core Impacts The impact associated with the core activity of the UMCs is from generating income, supporting employment, spending on goods and services and capital projects. In 2012 this resulted in a total estimated impact of almost 13billion GVA ( ,6 m) and over fte jobs ( ). Table 3.9: Summary Core Impact GVA ( m) Employees (fte jobs) Direct Impact 4.733, Supplier Impact 3.257, Staff Spending Impact 4.192, Capital Spend Impact 661, Total Core Impact , Source: BiGGAR Economics Analysis 9

12 4 STUDENT IMPACT Students create economic impacts while studying through: spending money in the economy; and impacts arising from their part-time work. 4.1 Student Spending Students create economic impact by spending their income in local businesses, which employ staff and make purchases from their supply chains. The starting point for assessing the impact of student spending is to consider the number of students at the UMCs in 2012 and apply an average expenditure profile to this total based on information about student living costs. Our analysis assumes that, on average, students spend per year to cover housing, living and social costs while studying. It should be noted that this represents the basic minimum income that all students will require in order to complete their course; however, some students will have a higher income than this as a result, for example, of additional support from family. For this reason, the impact of student spending calculated below is likely to be conservative. The key assumptions used in making these calculations are shown in Table 4.1. Table 4.1: Spending of students assumptions Value Total number of full time students Annual Student Expenditure Profile Rent Living Costs Transport 780 Health & Liability Insurance 960 Books/ Study materials 660 Social Activities Total Source: all UMCs We have calculated how much GVA this expenditure creates and how many jobs it supports across the relevant sectors of the economy using national input-output ratios for each sector. These ratios vary for each sector depending on the relative amount of capital and labour involved in generating output (see Appendix B for a more detailed Method Statement). A further round of GVA and employment is then supported indirectly through this level of spending (the indirect effect) and this is estimated by applying sectorspecific multipliers to the direct impact. Finally, these figures are added together to estimate the total impact of student spending (Table 4.2). Spending by UMC students creates an economic impact of 408,3 million and fte jobs in the Netherlands. 10

13 Table 4.2: Summary Student Spending Impact - the UMCs GVA ( m) Employees (fte jobs) Student Spending Impact 408, Source: BiGGAR Economics Analysis 4.2 Part-time Work Students working part-time can make an important contribution to the labour market, allowing business to fill jobs and enabling them to increase economic activity. It is assumed that 75% of students work to supplement their income and that, in most locations, a proportion (between 7% and 43%) of these jobs are with the UMCs. The economic activity supported by this 10% has been captured in the direct impact analysis in the previous chapter, so these jobs have been excluded from this section of the analysis to avoid double counting. Consultations about the labour market conditions in each area and the sectors in which students usually undertake part-time work suggest that the students are generally not displacing other potential employees; however, it is reasonable to assume that some jobs may otherwise have been filled by non-students. In order to reflect that it is assumed that 70% of student part-time employment is additional. International students have not been considered in this analysis due to the restricted hours that they are able to work. The assumptions used in calculating the impact of student part-time work are shown in Table 4.3. Table 4.3: Student part-time working assumptions Value Number of Students Percentage of students who undertake part-time work (excluding international students) 75% Additionality of part-time work 70% Average hours worked per week 14,2 Number of hours worked per week in FTE equivalent job 35 Source: all UMCs, Student Survey evidence and BiGGAR Economics The value of the additional economic activity (GVA) supported by student employment is estimated by applying national ratios of GVA/employee for the sectors in which students typically work. A further round of GVA and employment is then supported indirectly through this level of spending (the indirect effect) and this is estimated by applying sector-specific multipliers to the direct impact. This results in a total impact from student employment of 397,0 million and fte jobs in the Netherlands (Table 4.4). Table 4.4: Student part-time working impact GVA ( m) Employees (fte jobs) Part-time Working Impact 397, Source: BiGGAR Economics Analysis 11

14 4.3 Summary of Student Impacts The impact associated with student spending and student employment is estimated at over 800 million GVA ( 805,3 m) and fte jobs in the Netherlands (Table 4.5). Table 4.5: Summary Student Impact GVA ( m) Employees (fte jobs) Student Spending Impact 408, Student Working Impact 397, Total Student Impact 805, Source: BiGGAR Economics Analysis 12

15 5 VALORISATION IMPACT The UMCs valorisation activity capitalises on the research, technology and skills within each organisation and transfers the benefits of these through the creation of new businesses and other opportunities. We have considered the impact of six aspects of valorisation that can reasonably be quantified: social returns to medical research; licensing; start-up and spin-out companies; collaborative research; workforce training; and social impacts of staff time. 5.1 Social Returns to Medical Research Research by the Wellcome Trust on the value of medical research in the UK considers two types of return: health gains (net of the health care costs of delivering them) and economic gains 9. The economic gains of medical research are considered elsewhere in this chapter. This section considers the value of health gains these are the wider health returns to patients who ultimately benefit from the research. The value of health gains was assessed in the Wellcome Trust report using the quality adjusted life years (QALY) method 10. This is a widely used method developed by health economists to assess how many extra months or years of life of a reasonable quality a person might gain as a result of treatment. Although the QALY method is not perfect, it is widely used and is the accepted method of evaluating potential NHS treatments in the UK. The economic value of the QALY improvement delivered by a particular medical intervention can be assessed by considering the opportunity cost of the investment i.e. by considering what level of improvement could have been achieved by investing the same resources directly in frontline services. The key finding of the report was that the sum of the total health and economic gains medical research in the UK gave a total rate of return of around 39%. This included an economic return of 30% and a health gain of just over 9%. This means that a 1.00 investment in public/charitable CVD research produced a stream of health benefits thereafter that is equivalent in value to earning 0.09 per year in perpetuity. Assuming a discount rate of 5% this implies that over a 20 year period each 1 invested in medical research would deliver a total return of The value of the health care gains from medical research was therefore estimated by applying this multiplier to the total value of research undertaken by UMCs in the Netherlands in Medical Research: What s it worth? Estimating the economic benefits from medical research in the UK, For the Medical Research Council, the Wellcome Trust and the Academy of Medical Sciences, November Ibid. 13

16 Table 5.1: Social returns to medical research GVA ( m) Employees (fte) Netherlands 1.834,7 - Source: BiGGAR Economics Analysis 5.2 Licensing One of the main ways in which UMC research activity is translated into economic activity is through licensing agreements with industry. Licence agreements give companies the legal right to use a particular technology or other type of intellectual property (IP) to generate additional sales, reduce costs or otherwise improve their profitability. In return, companies pay royalties to the UMCs. The amount of royalties paid depends on the details of the licensing agreement and this can vary considerably from company to company. In order to agree a licensing deal, negotiators must first form a view of how much the IP is worth to the prospective licensee. There are a wide number of variables that may inform this judgement including potential risks to the company, the technology s stage of development, capital investment that might be required and market conditions. The World Intellectual Property Organisation sets out the well known and widely quoted 25% rule 11 according to which the licensor should receive around one quarter to one third of the profits accruing to the licensee. IP negotiators have used this rule for at least 40 years. In 2012 the UMCs earned 22,9 million in royalty income from licence agreements for technologies. This turnover is converted into GVA by dividing it by a turnover to GVA ratio for the sectors in which licence agreements are made. The employment impact is then calculated by dividing the GVA impact by an estimate of the average GVA added by each employee in these sectors. The effect of subsequent spending rounds is captured by applying GVA and employment multipliers. Table 5.2: Licensing Impact - Assumptions Licensing Income Value 22,9m Royalties as % of additional turnover generated 5% Source: UMCs Using these assumptions we have estimated that the licensing activity of the UMCs contributes 309,4 million GVA to the economy of the Netherlands and supports fte jobs. Table 5.3: Licensing - Summary GVA ( m) Employees (fte) Licensing impact 309, Source: BiGGAR Economics Analysis 11 Exchanging Value, Negotiating Technology Licensing Agreements: a training manual, World Intellectual Property Organisation,

17 5.3 Start-ups and Spin-outs The UMCs contribute to the economy through the creation of start-up and spin-out companies. The GVA economic impact is found by converting the estimated turnover of each company into GVA by applying industry ratios. The employment impact is found by applying the relevant GVA to employment ratios. The indirect impact is calculated by applying sector-specific multipliers to these base figures. Table 5.4: Start-ups and spin-outs - Assumptions Value Number of Start-ups/ Spin-outs 98 Direct employment in spin outs 961 Total Turnover Source: UMCs 200.8m Using these assumptions, the contribution of start-ups and spin-outs is estimated at 369,3 million in GVA and fte jobs in the Netherlands, as shown in the table below. Table 5.5: Start-ups and spin-outs (excluding Science Park tenants) - Summary GVA ( m) Employees (fte) Start-up and Spin-out impact 369, Source: BiGGAR Economics Analysis 5.4 Collaborative and Contract Research The benefits of the research activity undertaken by the UMCs are not restricted to activity directly undertaken by academic researchers but also include the benefits of collaborative research ventures with partners both nationally and internationally. Although the extent of this effect is difficult to quantify, collaborative research is of such importance to the Dutch economy that it is essential that this impact be considered. An important feature of academic research is that it does not typically represent the final stage of the technology development process. In general it tends to be focused at an intermediate stage in the technology development cycle and is unlikely to lead to immediate full scale commercial production or application. In order for the full results of such research to be realised, it is normally necessary for industrial partners to undertake further development work. The amount of subsequent research investment required will depend on the readiness level of the technology concerned and is likely to vary significantly between projects and could amount to many times the original investment. Recognition of the importance of collaborative research amongst economists can be traced back to the seminal work of Nobel Prize winning economist Robert Solow 12 in In this work, Solow demonstrated that 87,5% of the increase in 12 Solow, R. (1957), Technical Change and the Aggregate Production Function, Review of Economics and Statistics, pp

18 US labour productivity between 1909 and 1949 could not be explained by increases in factor inputs of labour and capital. Solow attributed this residual to technological change. This led to various attempts by researchers to model the so-called Solow residual using measures such as R&D spending and patenting. Most of these studies found that R&D spending makes a significant contribution to productivity growth, with a 1% increase in the R&D capital stock typically leading to a rise in output of between 0,05% and 0,1% 13. In most European countries, business R&D typically represents between 1% and 2% of total GDP. The Netherlands is no exception to this and data from the Centraal Bureau voor de Statistiek (CBS) can be used to estimate that in 2009, business R&D in the Netherlands represented approximately 1,8% of GDP. It is possible to estimate how much collaborative and contract research is worth to the economy based on the amount of income the institutions secure from industry each year. This income represents direct investment by private companies in research undertaken by academic researchers. It is then possible to calculate the value of this activity to the Dutch economy by applying an assumed multiplier for the relevant group of industries. Previous studies by BiGGAR Economics have found that companies that were involved with research contracts with Universities generate an average of 360% direct GVA impact over time. The increased GVA in these companies is supported by increased employment in these companies. These assumptions were used to calculate the direct impact of private investment in research and development at the UMCs. The total economic impact was then calculated based on the appropriate multipliers and ratios for the industries involved. Different bodies commission collaborative research and contract research. Contract research will involve research that is funded by industry and collaborative research will be funded by a mixture of public bodies, other research organisations and private companies. This section quantifies the private returns of this research to the private sector partners. The process for estimating the economic impact of contract research undertaken for industry and the economic impact of collaborative research involving industry is the same. In 2012 the eight UMCs together received 365,8 million in research income for industry contracts and from collaborative research agreements. The assumptions used to estimate the impact of collaborative research are presented in Table 5.6. Table 5.6 Collaborative and Contract Research Involving the UMCs Assumption Contract and collaborative research income the UMCs 365,8 m Private benefits from research 360% Source: Information provided by all UMCs and BiGGAR Economics Assumptions It is possible that some of the resulting spill-over activity would have occurred anyway at other Dutch universities and therefore not all off the impact could be attributed to the UMCs. However, the international reputation and high international rankings of every UMC demonstrates that the research undertaken 13 Cameron G (1994), R&D Productivity and the Case for a UK R&D Tax Credit, Nuffield College, Oxford. 16

19 at these institutions is of a particularly high quality. For this reason, it is reasonable to assume that most of the impact arising from industrial R&D spill-overs can be attributed the UMCs. Applying these assumptions to the amount of collaborative research contract expenditure suggests that industrial spill-over effects attributable to the UMCs contribute 1.825,4 million GVA to the Dutch economy each year and support fte jobs. Table 5.7: Impact of Collaborative and Contract Research - Summary GVA ( m) Employees (fte) Collaborative & Contract Research Impact 1.825, Source: BiGGAR Economics Analysis 5.5 Workforce Training The UMCs provided refresher courses and congresses with over participants in These are for general practitioners, specialists in various areas of medicine, researchers, doctors in specialist training and PhD students. These events have an impact by improving the quality of healthcare provision and research by keeping medical practitioners and researchers up to date with the latest skills and knowledge. The impact of this will be on improved health outcomes, which ultimately impact on health, wellbeing and productivity and improved research outcomes through improved knowledge. Workforce training is also likely to generate economic benefits. These benefits could be generated in a number of different ways. For example, training may enable medical professionals to diagnose and treat patients faster and more effectively, enabling them to return to work sooner than they may otherwise be able to and boost the productivity of their employers. Training may also enable health-care professionals to deliver care more efficiently, which could result in efficiency savings for the hospitals and surgeries where they work. It is possible to estimate the economic value of these benefits based on the amount of income generated from delivering workforce training. The economic benefits of workforce training accrue directly to the organisation that the trainee works for. Previous studies by BiGGAR Economics have found that these impacts can vary significantly depending on the course, industry and motivations for undertaking the course. However, it was found that the average business interaction with academia generated 360% GVA for the company. The total impacts were then estimated by applying the appropriate multipliers for the industries involved. The cost of the courses varies depending on the type and the length of the course, however, this analysis assumes that an average course costs 300 per participant. It is further assumed that 40% of attendees on courses work at the UMCs and therefore their impact has been calculated elsewhere, 60% are from the Netherlands and 40% from outside the Netherlands. The assumptions used are set out in Table

20 Table 5.8: Workforce Training Assumptions Value Number of participants on the UMCs refresher courses and congresses Average cost of an the UMCs course 300 % of participants from the UMCs 40% % of participants from Netherlands 60% % of participants from outside the Netherlands 40% Estimated benefit to participant of course as ratio to monetary cost 1:3.6 Source: all UMCs Applying economic ratios and multipliers results in an impact of 55,6 million GVA in the Netherlands and supports 719 fte jobs (Table 5.9). Table 5.9: Workforce Training Impact - Summary GVA ( m) Employees (fte) Workforce training 55,6 719 Source: BiGGAR Economics Analysis This impact captures some of the GVA gains that might be generated by providing additional training for health-care professionals. What cannot be captured is the gains that this training could deliver for patients. For example it is reasonable to expect that training would enable health-care professionals to treat patients more effectively and that this would result in improved health outcomes such as faster or more complete recovery. Such outcomes could have a significant impact on patient quality of life but it is impossible to capture this in monetary terms. 5.6 Social Impacts of Staff Time Staff at the UMCs are often contribute to public and charitable bodies. The staff contribute their time outwith their contracted hours, however it is their expertise and association with the UMCs that enable them to contribute to these bodies. The time of staff is given for free to these bodies and enables these bodies to benefit from their expertise that is gained in the UMCs. The activities that the staff participate in include: contributing to policy development; contributing to professional organisations; and volunteering. It is assumed that the time staff work on social activities is equivalent to 7,5% of their working hours. Therefore the costs which would be associated with this, if the public and charitable bodies were to pay equivalently qualified people, is equivalent to 7,5% of the total staff costs of the UMCs. This takes into account that more senior staff are likely to spend a higher proportion of their time on such activities, while junior staff are unlikely to spend as much time. This estimates the total value of staff s contribution to these bodies to be 314,1 million. 18

21 Table 5.10: Social Impacts of Staff Time Value Proportion of staff time on social activities 7,5% Value of staff time on social activities ( m) 314,1 Source: BiGGAR Economics Assumption 5.7 Summary of Valorisation Impacts The combined impact due to valorisation activity generated by and sustained by the UMCs is over 4 billion GVA ( 4.040,5 million) and fte jobs in the Netherlands (Table 5.11). Table 5.11: Summary Valorisation Impact GVA ( m) Employees (fte jobs) Social Returns to Medical Research 1.834,7 - Technology Licensing Impact 309, Spin-outs and Start-Ups Impact 369, Collaborative Research 1.825, Workforce Training 55,6 719 Social Impacts of staff time 314,1 - Total Valorisation Impact 4.708, Source: BiGGAR Economics Analysis 19

22 6 CATALYTIC IMPACT THE UMC NETWORK The previous chapter focused on the economic impacts generated by the UMCs work with individual companies. It is however also important to acknowledge the wider catalytic impact that the UMCs have by acting as anchors for the wider life science sector. This chapter considers this wider catalytic impact. 6.1 The Dutch Life Science Sector The life science sector has been identified by the Dutch government as a top sector due to its current strong position and scope for growth. It is estimated that in 2010/11 the Dutch life sciences and health sector 14 : included 343 companies; supported jobs; generated 17,8 billion in revenue; and stimulated over 2 billion investment in research and development. The Netherlands ranks fourth in the mobilisation of European funds for life sciences research and ranks 8 th world wide for the number of life sciences and health patents. The UMCs are the cornerstone of this sector and play an important role in helping to stimulate and retain investment both by indigenous companies and those based overseas. The life sciences and health sector creates economic value directly in terms of jobs supported and indirectly because of the greater productivity and reduced health care costs associated with having a healthier population. The sector also creates social value because healthier individuals will have an increased level of personal wellbeing, which will in turn enhance the wellbeing of those around them Approach to Quantifying Catalytic Impact This chapter takes a bottom up approach to estimating the scale of the catalytic impact associated with the NFU UMC network by considering various important initiatives and areas of activity that each UMC has contributed to. This involves: estimating how many jobs are supported by each area of activity; identifying how many of these jobs may have already been considered elsewhere in this report; making an appropriate adjustment to the gross employment estimate to avoid double counting; converting the remaining direct employment impact into direct GVA by applying relevant turnover/gva ratios; estimating the indirect impact of this activity by applying appropriate sectorspecific multipliers to the direct GVA and employment impacts. 14 Dutch Life Sciences & Health Outlook 2013, The Decision Group 20

23 It is however important to acknowledge that in most areas of activity the UMCs work collaboratively rather than in isolation. This means that although some of the sources of impact described in this chapter may be closely associated with a particular UMC, it is likely that all the UMCs have contributed in some way to realising the impact. The overall effect of this is to increase the total value of catalytic impacts generated by the UMC network as a whole. This means that the impact generated by the UMCs as a group are greater than the sum of their parts. The key components of the catalytic impact considered in this chapter include: the value that the UMCs add to the hospital sector in the Netherlands; the contribution that the UMCs have made to the development physical clusters of medical research activity including science parks; the contribution that the UMCs have made to the development of the Dutch clinical trials sector; the role the UMCs have played in attracting and retaining life sciences and health-related investment in the Netherlands. 6.2 Adding Value to the Dutch Hospital Sector In 2012/13 the NFU UMCs employed a total of almost staff who treated around 1,5 million patients. The scale of this activity makes a huge contribution to the capacity of the Dutch Hospital sector but the way in which the UMC model operates means that the impact of this is greater than suggested by these raw numbers. One of the reasons for this is due to the collaborative relationship that exists between the UMCs that has enabled each of the NFU UMCs to focus on developing different medical specialisms. This means that rather than competing with each other the UMCs have been able to concentrate on developing expertise in specific areas in which they excel. The result of this is that the total pool of medical expertise available to the Dutch population is greater than it would be if each of the UMCs operated in isolation. The specialisms developed by the UMCs also helps to enhance the quality of service delivered by other hospitals. This is because individual hospitals can call on the UMCs to help treat patients with complex needs or who require specialist treatment. This means that other hospitals do not have to maintain the skills to treat relatively uncommon conditions or perform specialist procedures in house. Instead they are able to concentrate resources on more routine medical procedures. The UMCs also add value to the hospital system by enabling innovative solutions to be identified for complex problems. This is often made possible because the UMCs provide an environment in which specialists from different areas and even other academic areas can collaborate with each other. For example, VUMC has developed particular expertise in medical imaging, which has been made possible in part by drawing on the physics research strength of VU University. By combining expertise from different areas the UMCs are therefore often able to deal with more complex medical challenges than might otherwise be possible, adding value to the Dutch hospital system as a whole. 21

24 In some UMC s there are also strong groups focused on health technology assessment. These groups provide policy makers and insurance companies with valuable advice, which helps to optimise the Dutch healthcare system. The UMCs have created an ecosystem for research and innovation in the Netherlands by providing a mix of facilities and research infrastructure and an effective link between partners in business and the public sector. This rich and varied environment enables problems and challenges to be tackled in a variety of ways and increases both the likelihood of solving a problem and increasing the efficiency of the solution. The UMCs are an important part of the research base in the Netherlands, both in themselves and together with universities. Together the academic research base collaborates with the public sector and businesses on research projects, which improve healthcare and create social and economic impact. This is shown by the wide variety and number of public and private partnerships in the Netherlands. Some examples of important public-private partnerships in include: the Center for Translational Molecular Medicine (CTMM) - this Centre aims to significantly reduce the burden of chronic diseases and improve the quality of life for patients by providing new diagnostic technologies and involves all eight UMCs along with other universities and more than 90 companies working on 25 projects with a budget of 302,7 million; Top Institute Pharma (TI Pharma) this partnership brings together researchers from industry and academia to work on innovative, multidisciplinary research aimed at improving the development of socially valuable medicines. The partnership supports pre-commercial research that would be difficult or impossible for individual companies to perform and acts as an interface between academic and industrial research; and Biomedical Materials (BMM) BMM was established in 2007 as a precompetitive initiative designed to being together partners from the public and private sector to develop innovative solutions to help cure a variety of diseases. To date BMM has brought together more than 50 partners in a collaborative venture to develop new therapies and products to compat organ and tissue failure and now has a portfolio that includes 18 pre-clinical projects. 6.3 Clusters and Business Parks The Netherlands has a range of regional Life Sciences and Health clusters. This section describes how the UMCs have contributed to the development of some of the largest and most important sub sectors within the Dutch life sciences and health sector Medical Delta The Netherlands Medical Delta is a research driven life sciences and medical technology cluster situated in the west of the Netherlands 15. Its mission is to stimulate the economic growth and provide healthcare solutions by developing, transferring and implementing new knowledge in life science and medical technology. Its goals are: improved, less invasive and earlier diagnosis, which allows earlier and more

25 effective treatment. In some cases it can even prevent disease manifestation; personalized and less invasive therapy, which results in better/more effective treatments with fewer side effects; and better aftercare and monitoring, which allows patients to recover more quickly and remain healthy, contributing significantly both to patients quality of life and the flow through the healthcare chain. The Delft-Leiden-Rotterdam region plays host to a concentration of healthcare centres, technological and scientific expertise and the largest cluster of life sciences companies in the Netherlands. It includes: Leiden UMC; Erasmus UMC; Leiden University; Erasmus University Rotterdam; and Delft University of Technology. The Medical Delta institutes fuel many joint professorships and joint educational programs at BSc-PhD level in life sciences, biomechanical engineering, molecular sciences and entrepreneurship. In last 3 years the Medical Delta institutes started around 30million worth of extra projects with industry and has stimulated further activity in the Life Sciences and Health sector for example Delft University of Technology have chosen Health as one of its main focus areas for the coming decades. Within the cluster there are around 300 companies of which 80 are at the Leiden Bio Science Park. Incubators in Rotterdam, Leiden and Delft host over 40 medical technology related start-ups. The cluster employs people and has an annual turnover of over 10 billion per year. As there are five partners involved in the Medical Delta it was assumed that 40% of the employment supported by the cluster could be attributed to the presence of the two UMCs. As some of the companies located within the cluster will be spin-outs from LUMC and Erasmus MC the direct employment supported by spin-outs from these two institutions was excluded from the total employment within the cluster in order to avoid double counting. It is also likely that the UMCs will licence technology to or undertake contract research on behalf of companies that are part of the cluster. To avoid double counting the direct employment supported by licencing and collaborative research activity undertaken by LUMC and Erasmus MC was therefore also excluded from the gross employment supported within the cluster. In this way it was estimated that around of the jobs within the Medical Delta can be attributed to the UMCs and have not been considered elsewhere in this report Amsterdam BioMed Cluster The Amsterdam Metropolitan Area has the highest concentration of Life Science and Health research in the Netherlands. According to the Amsterdam BioMed 23

26 Cluster, the independent innovation network for the sector, almost 400 Life Sciences companies and organisations are based in the region and that the sector employs 4,640 dedicated life sciences employees. The fact that Amsterdam is home to not one but two university medical research centres has been key to the successful development of the sector so it is reasonable to attribute some of the employment supported by these companies to the UMCs. In order to estimate the scale of the UMCs contribution to the development of the sector it was necessary to consider how the knowledge developed within the two UMCs is transferred into industry. An important vehicle for achieving this is the Life Sciences Centre Amsterdam. The Life Sciences Centre Amsterdam was established by six academic research partners (AMC, VUmc, the Netherlands Cancer Institute, Sanquin Blood Supply the University of Amsterdam and UM University Amsterdam). The objective of the Centre is to provide a single point of entry that enables industry to access innovative biomedical technologies developed by the six partners. This approach removes any confusion within industry about who or which institution to approach. As this is one of the main barriers that industry often identifies to working with academia it is reasonable to conclude that the Life Sciences Centre Amsterdam has enabled the sector to grow more than it otherwise would have. Another important vehicle for achieving this is Amsterdam Science Park, with 120 companies and 550 employees in multi-tenant buildings. Amsterdam Science Park is a joint development by the University of Amsterdam, the City of Amsterdam and the Netherlands Organisation for Scientific Research. In order to quantify this impact it was assumed that the impact of the Amsterdam biomedical cluster was attributable equally to the six academic research partners referred to above. This implies that a third of the jobs in the sector could be attributed to the two Amsterdam based UMCs. Some of these jobs are likely to be in spin-out companies from the UMCs, in companies that the UMCs licence technologies to or undertake contract research for. As the impact of this activity was considered in the previous chapter it was therefore necessary to exclude the jobs directly supported by this activity here to avoid double counting. In this way it was estimated that around 61 of the jobs within the Amsterdam Biomedical Cluster can be attributed to the UMCs and have not been considered elsewhere in this report The Pan-Amsterdam Technology Transfer Office The Pan-Amsterdam Technology Transfer Office (TTO) that was founded in The TTO was established as a joint centre of expertise to serve AMC, VUmc, the University of Amsterdam (UvA), VU University Amsterdam (VU) and the Amsterdam University of Applied Science. In the future the Pan Amsterdam TTO will provide comprehensive and integral valorisation services for the entire scientific community of the five institutions. It is expected that the Pan-Amsterdam TTO will help to significantly increase the scale of the Amsterdam Bioscience Cluster in the future Rotterdam Science Tower The Rotterdam Science Tower is a 21 storey tower that is part of a land mark development on the edge of Rotterdam city centre, which opened in October 24

27 2012. The Tower is a collaborative initiative involving Erasmus MC, real estate company VALAD and the city of Rotterdam. It is intended to become the first step in creating an international health and life sciences business area in Rotterdam. The Science Tower provides 15,000 sq meters of laboratory and office space specifically designed to meet the needs of growing biomedical companies and start-ups. It is hoped that collaborative agreements between the partners will help to foster greater engagement between industry and academia and enable the area to become a hotspot for international life science innovation. The Science Tower is currently home to a small number of groups and organisations. The main commercial tenant is Viroclinics Biosciences, which was founded in 2001 to provide virological services and consultancy and now employs around 60 people. As this company is a spin-out from Erasmus MC the impact of this employment has already been considered elsewhere in this report and is therefore excluded here Maastricht Health Campus Maastricht is rapidly developing into one of the most important centers in Europe for healthcare related research. Much of this activity is focused around the Maastricht Health Campus, which is being developed by Maastricht UMC+. The Priority research areas on the Health Campus include: mental health and brain research; cardiovascular diseases; metabolic aspects of chronic diseases and cancer; and public health and primary care. The Health Campus also has unique facilities such as the Tesla scanners and the Clinical Trial Centre Maastricht. Research undertaken in found that around 900 people were employed on the Maastricht Health Campus. This research also found that 28 of the 53 companies located on the Campus were spin-outs. As the impact of spin-outs was considered in the previous section, employment in these companies was therefore excluded here to avoid double counting. It is also likely that some of the remaining companies on the Park also have relationships with Maastricht UMC+. For example, they may licence technologies or might have commissioned the UMCs to undertake collaborative research. In order to account for this it was assumed that a total of 55% of employment on the Campus has already been considered elsewhere in this report. In this way it was estimated that around 405 of the 900 jobs located on the Maastricht Health Campus can be attributed to the UMCs and have not been considered elsewhere in this report Chemelot Campus Chemelot Campus BV was incorporated in 2012 to develop the Chamelot Campus. The ambition of the Campus is to become the main European operating site for companies and educational and research organisations in the 16 Buck consultants International (November 2012), Actueel beeld campussen in Nederland 25

28 field of chemistry and materials. The focus of the Campus will be on three sectors: High-performance materials; Biomedical materials; and Biobased chemicals and materials. It is expected that this development should result in the creation of jobs between 2014 and At the same time it is expected that the number of students will increase by 750. Continued growth in the number of new businesses starting up, an increase in the number of patents approved and a positive effect on knowledge institutes are also expected. Maastricht UMC+ is one of the main stakeholders behind the Chamelot Campus initiative and has been heavily involved in its development to date. Maastricht UMC+ is for example involved in the Aachen-Maastricht Institute for Biobased Materials (AMIBM), the Chemelot Institute for Science and Technology (InSciTe) the Chemelot Innovation and Learning Labs (CHILL) and Enabling Technologies BV. Although not all of these projects have been fully developed yet they are expected to play an important role in realising the potential impact of the Chemelot Campus Groningen Healthy Ageing Campus UMC Groningen is the focus of a large life sciences and health cluster in the northern Netherlands, which is considered one of the top three life science locations in the Netherlands. At the heart of this cluster is the Healthy Ageing Campus where UMC Groningen is based. At around 1km in length and covering an area of around 30 hectares the campus occupies a prominent position in the field of healthy ageing. It is a place where high-quality research and education, knowledge-intensive business and government work together. According to the Buck report referred to above around 420 people were employed on the Healthy Ageing Campus in 2012 (this excludes employment in QPS, which is considered in section 6.4.3). Although all of this employment can be attributed to the UMCs virtually all of it is within spin-out companies, the impact of which was considered in the previous section. For this reason the impact of the employment supported on the Healthy Ageing Campus was not included as part of the catalytic impact considered in this chapter Mercator Technology and Science Park The Mercator Technology and Science Park was founded in the mid-1990s as a public-private initiative involving Radboud University in Nijmegen. The Park was designed to provide an interface between scientists and entrepreneurs and to enable businesses on the cutting edge of academic knowledge to collocate with relevant academics. The Park is located on the campus of the University of Nijmegen and within walking distance of the UMC, and the strong research expertise in language, speech and cognitive neuroscience. The 2012 Buck Consultants International report referred to above estimated that people worked on the Mercator Science Park. Although medical and life sciences is an important focus of activity on the Park, it is not the only sector 26

29 represented on the Park. For this reason it was assumed that 50% of jobs on the Park might be associated with the UMC. According to the Buck report 50 of the 75 companies located on the Park in 2012 were spin-outs (i.e. 40% of companies). As the impact of spin-outs was considered in the previous chapter, 40% of employment on the Park was therefore excluded to avoid double counting. It is also likely that some of the remaining companies on the Park also have relationships with the UMCs for example, they may licence technologies or might have commissioned the UMCs to undertake collaborative research. In order to account for this a further 10% of employment on the Park was therefore excluded to avoid double counting. In this way it was estimated that around 275 of the jobs located on the Mercator Technology and Science Park can be attributed to the UMCs and have not been considered elsewhere in this report Utrecht Science Park The Utrecht Science Park is an important cluster of life sciences activity in the Netherlands. According to the Buck report cited above, around 900 people work on the Utrecht Science Park, around half of whom work for Danone. As the impact of Danone s investment in Utrecht is discussed below, these employees are therefore excluded here to avoid double counting. UMC Utrecht was one of five founding partners involved in the creation of the Utrecht Science Park, which now covers an area of more than 300 hectares. The Park is home to more than 60 companies, half of which are life science companies. Both the UMC Utrecht and Utrecht University are based on the Park along with more than student apartments, making the area the focus of daily activity for more than people. Described as the motherboard of the regional economy it is estimated that people work at the Park. It is expected that around 1 billion will be invested in new capital investment on the Utrecht Science Park over the next two to three years. These investments will include: a new life sciences business incubator (the second on site), which will provide an additional square meters of space for life sciences spinouts; a replacement building for the National Institute for Public Health and the Environment, which employs around people; new student accommodation, which could bring the number of student apartments on site to around 5.000; and an expansion of UMC Utrecht to accommodate the new Antonie van Leeuwenhoek Hospital and the Princes Maxima Centre for Pediatric Oncology. UMC Utrecht is one of three academic partners involved in the Utrecht Science Park (along with Utrecht University and Utrecht University of Applied Science. For this reason it was assumed that one third of employment in the Park could be attributed to the UMCs. The Buck report cited above suggests that half of the companies located on the Park are spin-outs. As the impact of spin-outs was considered in the previous chapter, half of the employment in the Park was therefore excluded here to avoid double counting. 27

30 In this way it was estimated that around 75 of the 900 jobs located on the Utrecht Science Park can be attributed to the UMCs and have not been considered elsewhere in this report Summary Assumptions This section has estimated that the various science parks and geographical clusters of life science activity that are closely associated with the NFU UMCs directly support more than jobs across the Netherlands. It has also estimated that approximately of these jobs can be attributed to the UMCs and have not been considered elsewhere in this report. A breakdown of this employment is provided in Table 6-1. Table 6-1 Employment supported in science parks and geographical clusters Science Park/Geographic Cluster Total employment supported Employment attributable to UMCs and not counted elsewhere Medical Delta (including Bio-Science Park Leiden) Amsterdam Biomedical Cluster (Including Amsterdam Science Park) Rotterdam Science Tower 60 - Maastricht Health Campus Healthy Ageing Campus, Groningen Mercator Science Park Utrecht Science Park (excluding Danone) Total Source: BiGGAR Economics Analysis 6.4 Life Science and Health Sector Investment Many of the key players in the Life Sciences and Health sector are multi-national corporations with operations all over the world. This means that investment location decisions are global and that locations around the world must compete fiercely to attract and retain investment. The global outlook of these types of companies means that investment location decisions are generally not made on the basis of colocation with one particular research organisation (although this is sometimes an important factor). Rather decisions are made on the basis of the overall quality of the research base within a particular geographic area and the ease with which the company may be able to access this from a particular location. The Netherlands is a relatively small country with excellent transport infrastructure so the facilities of all Dutch research institutions are relatively easy to access from anywhere in the country. This means that regardless of their physical location multi-national corporations that decide to locate in the Netherlands generally do so on the basis of research infrastructure available across the whole country rather than in any specific city. 28

31 For this reason the combined impact of the eight UMCs that work together under the umbrella of the NFU can be regarded as more than the sum of the parts of the individual institutions. This is illustrated by the fact that some of largest companies operating in the Dutch Life Sciences and Health sector collaborate with many of the individual UMCs across the country. This has contributed to the Dutch economy in two main ways, by: attracting investment for multi-national companies based elsewhere in the world; and helping to ensure that investment by Dutch based multi-nationals is retained within the Netherlands. These effects are illustrated below by considering the examples of how the UMCs have helped to attract, retain or stimulate investment across the Netherlands Philips Royal Philips of the Netherlands is a diversified technology company, focused on the areas of healthcare, consumer lifestyle and lighting. Philips global headquarters is based in Amsterdam but the company has operations all over the world, employing approximately people in more than 100 countries and generating sales that amounted to 23,3 billion in Healthcare is an important and growing area of activity for Philips, accounting for approximately of the company s global workforce. The company is a leader in cardiac care, acute care and home healthcare. In order to develop and maintain this position Philips has invested in partnerships with research institutions all over the world. Although Philips is a Dutch company it is also a multi-national corporation. This means that in theory research investment could have been undertaken anywhere in the world. The fact that Philips has instead chosen to maintain and grow its main research headquarters in Eindhoven in the Netherlands is therefore a testament to the quality of the Dutch research base. Given the importance of healthcare to the company, it is reasonable to conclude that the quality of medical research in the Netherlands particularly within the UMCs - must have been an important factor in this decision. Approximately Philips employees work at the Philips research head quarters in Eindhoven and it was assumed that 50% of these jobs were related to healthcare research. Due to the extent of collaborative activity that occurs between Philips and the UMCs it was assumed that the UMCs have been extremely important to retaining this activity in the Netherlands. As the impact of collaborative industrial research has already been considered in the previous chapter, only 50% of these jobs are considered in this section to avoid double counting. Using these assumptions it was estimated that around 375 jobs supported in the Philips research HQ in Eindhoven and a further 50 at UMC Utrecht are attributable to the UMCs and have not been considered elsewhere in this report. It is worth noting that this could underestimate the full impact of Philips research investment in the Netherlands. This is because Philips employs people all over the Netherlands, not just in Eindhoven. The reason for excluding employees 29

32 elsewhere in the Netherlands is to avoid double counting because some of these employees may be based in science parks that have been counted elsewhere in this report Maastricht UMC+ and Erasmus MC Researchers at Maastricht UMC+ collaborated with Philips to create a new method to analyse CT scans of the heart that can be used to better predict heart attacks. A CT scan can show whether arteriosclerosis is present in the coronary arteries; however, with new analysis software developed by Philips, it is possible to precisely determine how much atherosclerosis is present and to determine its composition. Together, Maastricht UMC+ and Erasmus MC investigated more than 1,600 patients who were referred for a CT scan of the heart and demonstrated a much better prediction of the risk of heart attack, allowing appropriate preventative treatment. The editor of the Journal of the American College of Cardiology in which the research is published, indicates that "this is a major step forward in better identify patients at high risk." VUmc Philips and VUmc have signed an agreement to jointly research new multimodality imaging solutions aimed at improving the early detection and treatment of diseases such as cancer and neurological and cardiovascular diseases. By combining data from different imaging modalities to increase the visibility of structures of interest and by mapping biological processes such as metabolism onto these images, new multi-modality imaging solutions could help clinicians to determine the presence and extent of many diseases at an earlier stage. This diagnostic information could then help them to plan and guide minimally-invasive interventions. It is expected that such solutions will contribute to more timely and more personalized treatments for patients and improve treatment success rates. Both parties will work on the development of next-generation medical imaging procedures, with initial projects focusing on nuclear imaging UMC Utrecht In 2012, UMC Utrecht, Utrecht University, Eindhoven University of Technology and Philips announced their intention to share their knowledge, expertise and capacity for innovation to research and develop new methods for disease diagnosis and treatment based on medical imaging. Through the establishment of the Institute for Diagnostic and Interventional Imaging (IDII), they focus on more effective treatments for cancer, brain disease and cardio-vascular disease. The consortium will focus on the development of new image-guided minimallyinvasive treatments based on MRI and X-ray imaging. It is increasingly possible to carry out treatments using a catheter or needle rather than having to perform open surgery. In some cases, treatment can be given without making any incision in the patient at all for example, using image-guided radiation therapy based on X-ray radiation or ultrasound waves. Because such treatments can be performed more targeted and less invasively, patients may be able to leave hospital sooner and recover more quickly. Both of these create economic benefits. The consortium partners also share facilities, such as the clinical laboratories of UMC Utrecht and the scanner technology research facilities at High Tech 30

33 Campus Eindhoven. The consortium s outputs will be translated into the industrial manufacturing of new systems that can be used in clinical practice. Philips' development and production site in Best will play an important role in bringing to market new solutions that arise from the partnership and in bringing them closer to the patient. In the future, the cooperation will be expanded to include other private partners as well. As a result of this collaborative activity, Philips has chosen to locate 50 engineers at UMC Utrecht Radboudumc Google Glass is a wearable computer with an optical head-mounted display that is believed to have a number of potential applications within the healthcare sector. For example, it could enable medical students to watch procedures from the surgeons perspective and even make recordings to use at a later date or to document the procedure. It is even possible that the technology could be used to enable clinicians located elsewhere in the world to contribute remotely to surgical procedures by observing and advising the on-site surgeon when required. Radboudumc has collaborated with Philips in order to test Google Glass in different clinical settings. Extensive tests have been carried out in diverse settings ranging from the surgical ward to in trauma situations outside the hospital. The technology has also been tested by disabled people using public transport. It is expected that these tests will benefit the patients involved in a variety of different ways while enabling Philips to explore the potential applications of a new technology Contract Research Organisations Two of the largest companies located on the Healthy Ageing Campus in Groningen are QPS and PRA, both large, international contract research organisations (CRO). QPS is a full-service CRO with extensive experience of conducting and staffing international Phase I to Phase IV clinical trials across a broad range of therapeutic areas for a wide variety of clients. The company has a dedicated 34-bed clinical pharmacology unit located at UMC Groningen, state-of-the-art large and small molecule bioanalytical laboratories, and all the clinical (operations) support staff and capabilities necessary for the successful planning, execution, and analysis of Phase I IV clinical trials, ranging from small studies to complex, multinational projects. PRA undertakes similar work to QPS, investigating the effects and possible side effects of drugs. This is done with the help of volunteers including both healthy people and patients. It is estimated that around 650 people are employed by QPS and PRA in Groningen and none of these jobs have been considered elsewhere in this report. QPS and PRA would not be based in Groningen if UMC Groningen did not exist so it is reasonable to attribute these jobs to the UMCs Danone Danone is a global food company, headquartered in France that employs approximately employees and has a turnover of around 21 billion. he 31

34 company specialises in four areas: fresh dairy products, baby nutrition, waters and medical nutrition. Prior to 2013 Danone operated major research centres in the Netherlands (Wageningen, Zoetermeer and Cuijk), France (Palaiseau), Germany (Friedrichsdorf) and the UK (Liverpool). In 2013, the company combined its Dutch, German and UK operations in one state-of-the-art innovation centre on the Utrecht Science Park. The new Danone Research Centre for Specialised Nutrition is a life sciences innovation centre for the development of new product concepts for early life nutrition and medical nutrition. The Centre brings together almost 450 employees and represents a new strategic alliance with between Danone and Utrecht Life Sciences. The goal of this alliance is to intensify collaboration in the areas of research, education and entrepreneurship. Danone considered two options for this Centre, the Netherlands and France and the Netherlands was a more attractive option due to its extensive network in food and nutrition. Therefore, although the new facilities are located in Utrecht and UMC Utrecht played an important role in attracting the investment, it would be unreasonable to attribute the entire impact of the investment to the UMC Utrecht. This is because Danone s decision to locate in Utrecht is also believed to have been driven by the fact that from this central location the Netherlands the Company will also be able to easily interact with life science faculties and academic hospitals elsewhere in the Netherlands. For example, Danone is actively collaborating with MUMC+. For this reason some of the impact generated by the company can be attributed to UMCs other than UMC Utrecht. The impact of the 450 jobs supported by Danone in Utrecht has not been considered elsewhere in this report but is entirely attributable to the UMCs. This impact is therefore include as part of the catalytic impact considered in this chapter LifeLines Project A key initiative for UMC Groningen is the LifeLines project, a cohort study that will follow the lives of individuals over 30 years, making it one of the largest studies of its kind anywhere in the world. The LifeLines project is a 100 million enterprise that directly employs 150 people. This investment is entirely attributable to UMCG and has not been considered elsewhere in this report. The lifelines project generates vast amounts of data, which requires expertise in the management of big data. By developing this expertise RUG has been able to effectively bridge the gap between medical research and ICT, helping it to develop a distinctive strength in an increasingly important area. It is believed that this expertise was an important influence on IBM s decision to open a new research centre in Groningen in 2013, which now employs between 350 and 400 people. For the purposes of this analysis it was assumed that 25% of this employment can be attributed to UMCG. Using these assumptions it was estimated that the LifeLines project directly (and indirectly) supports 244 jobs in the Netherlands that are attributable to the UMCs and have not been considered elsewhere in this report. 32

35 6.4.5 Other Investments Macrogen is a genetic medicine company founded in 2004 in South Korea. In 2008 the company opened its first European branch in Amsterdam and began providing sequencing services for local customers. AMC was instrumental in attracting the company to the Netherlands by offering an attractive package of facilities and office space. The 10 jobs supported by the company are therefore entirely attributable to the UMCs and have not been considered elsewhere in this report. Another company that was attracted to Amsterdam by the space and facilities offered by AMC is Crystallics, a contract research organisation founded in Crystallics employs 20 people in Amsterdam. All of these jobs are attributable to the UMCs and none have been counted elsewhere in this report. Lead pharma is a small pharmaceutical company that focuses on the first phase of drug development. The company employs 15 people in the Netherlands. The company s close links with Radboud UMC mean that this employment can be attributed to the UMCs. As this employment has not been counted elsewhere in this report it has been included as part of the catalytic impact of the UMCs. 6.5 Taken together these three investments support 45 jobs in the Netherlands that are attributable to the UMCs and have not been considered elsewhere in this report.clinical Trials According to a study published in 2013 the Netherlands is the second most desirable location in Europe 17 in which to run a clinical trial. The Netherlands scores particularly highly on the accessibility and transparency of information required to run clinical trials. This is partly due to the close relationship and trust that exists between patients and doctors, which results in high quality information. In addition the Dutch system is characterized by a high fraction of doctors that are trained in research and achieve the PhD status. The close working relationship between the UMCs also means that companies can easily access a large population. The UMC model, which combines the three roles of teaching, research and patient care, also provides an attractive environment for companies engaged in clinical trials. For example, in this model doctors may visit patients with students and take research samples while they are there. This integrated approach leads to better delivery of all three activities. It also generates economic impact by helping to attract investment from contract research organisations that carry out clinical trials in the Netherlands. In 2012 it was estimated that the world market for pharmaceutical contract research was worth around $25 billion, equivalent to approximately 18 billion. Data published by ClinicalTrials.gov, an international registry and results database of publicly and privately supported clinical trials around the world, shows that at 17 Marta Gehring, Rod S Taylor, Marie Mellody, Brigitte Casteels, Angela Piazzi, Gianfranco Gensini, Giuseppe Ambrosio, (15 November 2013), BMJ Open, Factors influencing clinical trial site selection in Europe: the Survey of Attitudes towards Trial sites in Europe (the SAT- EU Study) 33

36 the time of writing just over 3% 18 of the open and active clinical studies listed in the database were being undertaken in the Netherlands. That suggests that the value of the clinical trials market in the Netherlands is likely to be between 560 and 600 million. A review of the ClinicalTrials.gov database suggests that at the time of writing the eight NFU UMCs were leading around a third of all open and active trials being undertaken in the Netherlands. This suggests the eight NFU UMCs account for around 200 million of the total turnover of the Dutch CRO industry. It is important to note that this figure relates only to the value of clinical trials that are being led by members of the NFU UMC network. In addition to these trials the UMCs are also involved as collaborators in many more trials. Taking these trials into account suggests that the UMCs are involved with almost half (47%) of all open or active clinical trials in the Netherlands activity that has a market value closer to 300 million. As it is not possible to assess how much of the impact of trials led by other institutions should be attributed to the UMCs, this section considers only the impact of trials that are actually led by the UMCs. For this reason it is likely that the full value of this impact has been somewhat underestimated. The direct employment supported by clinical trials led by the UMCs was estimated by dividing total turnover by an estimate of the average turnover/employee in the Dutch biomedical sector. This number was then adjusted to account for the fact that some of these jobs will be in the contract research organisations discussed in section After accounting for this it was estimated that clinical trials led by the UMCs directly supported 515 jobs in the Netherlands in 2012/ Summary Catalytic Impacts This chapter has highlighted specific examples of how UMCs support the health and life sciences sector. Taken together it is estimated that the various sources of catalytic impact considered in this chapter support jobs in the Netherlands, of which can be attributed to the UMCs and have not been counted elsewhere in this report. 18 Open trials refers to studies that were actively recruiting participants at the time of writing and active trials refers to studies that were underway but no longer recruiting. 34

37 Table 6-2 Catalytic employment supported by the UMCs Science Park/Geographic Cluster Total employment supported Employment attributable to UMCs and not counted elsewhere Philips QPS Danone LifeLines/IBM Other investments Clinical trials Total Source: BiGGAR Economics Analysis The catalytic economic impact of this employment was estimated by converting the direct employment supported into turnover by applying industry ratios from national economic data. The direct GVA impact was then estimated by applying relevant turnover/gva ratios. The indirect impact was estimated by applying sector-specific multipliers to the direct impact. Using this approach it was estimated that the catalytic effect of the UMC network was almost 1,3 billion GVA and jobs. This is summarised in Table 6.3. Table 6.3: Catalytic Impact Summary GVA ( m) Employees Catalytic Impacts 1.273, Source: BiGGAR Economics Analysis 35

38 7 TOURISM IMPACT UMCs stimulate tourism in their regional economies. This impact arises from: visits from friends and family to staff and students; visits from friends and family to hospital patients; visitors to conferences held at the UMCs; and attendance at open days for the medical school. 7.1 Visits to Staff and Students The presence of staff and students creates economic impact through visits from their friends and family. These visitors spend money in the economy and this spending increases turnover in local businesses, which in turn supports local employment. The impact of visits to staff and students has been calculated by assessing the number of visits from friends and family per head of the population in each region of the Netherlands, estimated by Dutch tourism statistics. We considered visits from domestic residents and overseas residents because the spending assumptions differ for each group. This was applied to the total number of staff and students employed at the UMCs with an estimate of trip expenditure per visit. The economic impact was found by converting trip spend (turnover) to GVA and employees and applying multipliers to estimate the indirect and induced effect of this level of spending. The assumptions used and the impact calculated are shown in Tables 7.1 and 7.2. Table 7.1: Visits to Staff and Students Assumptions Assumptions Value Total number staff & students (headcount) No. visits per staff/student - domestic 0,14 No. visits per staff/student - internationally 0,02 Trip spend per domestic visitor ( ) 155 Trip spend per overseas visitor ( ) 361 Source: Previous BiGGAR Economics research This results in an estimated impact from visits to staff and students of 3,8 million and 60 fte jobs in the Netherlands. Table 7.2: Visits to Staff and Students Impact - Summary GVA ( m) Employees (fte) Visits to Staff and Students 3,8 60 Source: BiGGAR Economics Analysis 36

39 7.2 Visits to Hospital Patients Economic impact is created by visits to hospital patients from their friends and family, particularly if the patient is from outside the area. The first step in estimating this impact was to multiply overnight clinical admissions by the proportion of patients from outside the region to estimate how many patients come from outside the region. We applied UMC data on the average length of patient admission. It was assumed patients have an average of one visitor who will come and stay in the area for the length of time the patient is in hospital. The total number of days spent in the area by friends and family was then multiplied by average expenditure per day. As in the previous section of this chapter, economic impact is estimated by converting spend into GVA and employment and applying multipliers. The assumptions used are shown in Table 7.3 and the impacts calculated are shown in Table 7.4. Table 7.3: Visits to Hospital Patients Assumptions Assumptions Value Clinical admissions/inpatients Percentage of overnight patients from outside region 42% Length of stay per patient (days) 6,65 Spend per day ( ) 40 Source: all UMCs and BiGGAR Economics Analysis This results in an estimated impact from visits to hospital patients of 2,5 million and 39 fte jobs in the Netherlands. Table 7.4: Impact from visits to hospital patients GVA ( m) Employees (fte) Visits to Patients 2,5 39 Source: BiGGAR Economics Analysis 7.3 Conference Impact Each UMC organises conferences that generate economic impact by attracting people to the area who would not otherwise have visited. The UMCs organised 787 conferences and events in 2012, which involved delegates. Just over half of these were from outside the Netherlands. For each UMC, we estimated the proportion of visitors from within the local area and their expenditure was excluded from the analysis because it was not additional to the study area. Applying expenditure data on business trips from the Dutch tourism statistics, we can estimate the additional total turnover generated by people attending conferences organised by the UMCs. This is converted to additional GVA and employment by using ratios and multipliers appropriate to the sector. This results in an impact from conferences of an estimated 7,7 million and 123 fte jobs in the Netherlands. The assumptions used are shown in Table 7.5 and the impacts are presented in Table

40 Table 7.5: Conference Impact - Assumptions Assumption Value Number of conferences 787 No. of delegates to the UMCs organised conferences and events Estimated % of International attendees 51% Estimated % of Dutch attendees from outside study areas 46% Trip spend per domestic visitor on business ( ) 319 Trip spend per overseas visitor on business ( ) 509 Source: all UMCs Table 7.6: Conference - Summary GVA ( m) Employees (fte) Conferences 7,7 123 Source: BiGGAR Economics Analysis The conferences hosted by the UMCs have also made a wider contribution to business tourism in the Netherlands by stimulating demand for conference facilities and attracting international events. It is for example unlikely to be a coincidence that the Maastricht Exhibition and Congress Centre (MECC) is located on the Maastricht Health Campus just a five minute walk from Maastricht UMC+. Although it is impossible to quantify the impact of this, it is likely that the UMCs have contributed to making the Netherlands the 9 th most popular destination in the world for international association meetings Open Days Prospective students visit universities in advance of making decisions about where they wish to study. One UMC provided us with statistics about how many people visited it s open days in 2012 this was 165% of the total student numbers. We have assumed the same proportion of students visit each of the UMCs open days and 50% bring a parent/guardian or other person. 10% of open day visitors are assumed to be international. The impact of visitors to open days is only additional if they are from outwith the study area, in this case the Netherlands. Therefore, only the impact of international visitors is measured at the national level. The assumptions used to estimate the economic impact of the open days is shown in the table below. Table 7.7: Open Days - Assumptions Value International visitors to open days Visitor spend, international 50 Proportion who bring a parent/guardian/other 50% Source: BiGGAR Economics Analysis Applying these assumptions provides an estimate of the impact of UMC open days of 0,4million GVA and 7 fte jobs in the Netherlands. 19 International Congress and Convention Association (2012), Country and city rankings

41 Table 7.8: Open Days - Summary GVA ( m) Employees (fte) Impact of Open Days 0,4 7 Source: BiGGAR Economics Analysis 7.5 Summary of Tourism Impacts The contribution of the UMCs to the economy through attracting visitors results is an estimated 14,4 million additional GVA and 229 fte jobs per year in the Netherlands. Table 7.9: Tourism Impact - Summary Netherlands GVA ( m) Employees (fte) Visits to staff and students 3,8 60 Visits to patients 2,5 39 Conferences 7,7 123 Open Days 0,4 7 Total 14,4 229 Source: BiGGAR Economics Analysis (numbers may not sum due to rounding) 39

42 8 IMPACTS OF TEACHING AND LEARNING The learning that the students undertake during their time at their host UMC enhances their future earnings and hence their impact on the economy. The impact of teaching and learning is a measure of the additional lifetime earnings that are estimated to occur as a direct result of an individual possessing a university qualification. The impacts of teaching and learning are a different kind of impact than the others described in previous chapters because the impacts will occur over the working lifetime of graduates rather than in the year of their graduation. These impacts would not all have been realised in 2012/13, which is the year our analysis covers. However, in 2012 graduates from previous years will be creating these impacts and this has not been captured elsewhere in the study. Therefore the future impacts from the 2012 cohort of graduates have been quantified and added in to ensure that the full impact of teaching and learning is reflected in thieanalysis. This aspect has been studied most recently in the UK by London Economics on behalf of the government s Department for Business, Innovation and Skills and their findings are published in the report The Returns to Higher Education Qualifications, This work estimates the impact of teaching and learning for graduates in all subjects and suggests that for medicine and dentistry the lifetime earnings premium is ( ) and for graduates in subjects allied to medicine it is 145,633 ( ). For PhD graduates there is a further earnings premium of 70,000 ( ) and we have assumed this applies to Masters graduates also. Data contained in the OECD Education at a Glance publication 20 implies that, the earnings premium for a Netherlands degree holder is 94% of that of the UK, suggesting that the graduate premium effect is similar in the two countries. The UK research has been used but the earnings premium figures have been adjusted to take account of the small difference highlighted in the OECD publication. The adjusted impact of teaching and learning has been applied to graduates of the UMCs in 2012 who graduated with a masters degree and to graduates with a masters in biomedical science and as a medical doctor. For each UMC study, we have adjusted these for each study area to take account of data on where people live after they graduate. 20 Education at a Glance 2013, OECD Indicators, Table A

43 Table 8.1: Impact of Teaching and Learning - Assumptions Assumption Value Earnings premium for holder of medical or dentistry degree ( ) Earnings premium for holder of a degree in subjects allied to medicine ( ) Earnings premium of holder of PhD degree ( ) No. of UMC graduates in medicine & dentistry No. of UMC graduates in subjects allied to medicine 565 Total number of first degree graduates Total number of masters degree graduates Total number of PhD graduates 995 % graduates living in Netherlands 40% % medical graduates leaving the UMCs 50% Source: all UMCs and BiGGAR Economics Assumptions This results in an estimate of additional premium in human capital of 726,9 million in the Netherlands as a result of training people in medicine and allied subjects at the UMCs in The increased earning of the graduates of the UMCs would have an employment impact when these earning were spent, in a similar way to the Staff Spending described in 3.3. The increase in earnings of graduates would support almost 4,000 job years of employment from the 2012 cohort of graduates. This impact occurs over the working life of graduates and is not an annual impact that can be compared directly to the other impacts set out in this report. However, the UMCs produce a cohort of graduates each year, each of which can be expected to have a cumulative impact on the economy. Therefore, the additional GVA calculated has been added to the total impact of the UMCs and then converted into an employment impact to arrive at our final estimate of the value of teaching and learning on the economy. Table 8.2: Impact of Teaching and Learning GVA ( m) Employees (fte) Graduate premium 726,9 3,893 Source: BiGGAR Economics 41

44 9 SUMMARY IMPACT AND UMC COMPARISONS 9.1 Total Impact By bringing together the various sources of impact discussed in this report it can be estimated that the UMCs: contribute 20,4 billion GVA ( ,1 million); and support jobs in the Netherlands The employment impact includes a direct impact of fte jobs, which means that for each direct job supported in the UMCs supports a total of 3.78 jobs in the wider Netherlands economy. The GVA impacts include 4.7 billion direct GVA and therefore the GVA multiplier for the UMCs is A breakdown of this impact is provided in Table 9.1. A comparison of the relative impacts of the different UMCs follows. 42

45 Table 9.1 Summary Netherlands GVA ( m) Jobs (ftes) Core Impact , Direct Impact 4.733, Supplier Impact 3.257, Staff Spending Impact 4.192, Capital Spend Impact 661, Student Impact 805, Student Spending Impact Student Working Impact 397, Valorisation Impact 4,708, Technology Licensing Impact 309, Spin-outs and Start-Ups Impact 369, Collaborative Research 1.825, Workforce Training 55,6 719 Social Returns to Medical Research 1.834,7 - Social Impacts of Staff Time 314,1 - Tourism Impact 14,4 229 Visits to Staff and Students 3,8 60 Visits to Patients 2,5 39 Conferences 7,7 123 Open Days 0,4 7 Catalytic Impacts 1.273, Catalytic impacts 1.273, Sub-total , Impact of Teaching & Learning 726, Total ,1 215,413 Source: BiGGAR Economics Analysis, figures may not total due to rounding 43

46 The table below shows how the impact of the eight UMCs is distributed. Each UMC accounts for between 9,4% and 18,4% of the overall impact of the group. Table 9.2 Total Impact by UMC UMC Total GVA Impact m % UMC Utrecht 2.974,7 14,6 LUMC 2.356,0 11,6 UMC Groningen 2.973,0 14,6 Erasmus MC 3.750,0 18,4 Radboudumc 2.217,7 10,9 Maastricht UMC ,5 9,4 VUmc 2.404,3 10,8 AMC 1.977,8 9,7 Total ,1 100,0 Source: BiGGAR Economics analysis The figure below shows a comparison of the six categories of impacts identified in this study, by UMC. This shows that: around two thirds of the impacts in each UMC are core impacts; around 5% of the impacts for the UMCs are generated by student impacts; economic impact from valorisation accounts for around a fifth of the impact of the UMCs as a whole but varies significantly (11%-35%) between institutions; tourism impacts are small in the overall picture, accounting for less than 1% of the total impact of the UMCs; catalytic impacts account for almost 7% of the total impact of the UMC s but this varies considerably between institutions - from less than 1% for one institution to almost 30% in another; the impact of teaching and learning accounts for almost 4% of impacts in all UMCs. 44

47 Figure 9.1 Comparison Proportion of NFU impacts by UMC Source: BiGGAR Economics 9.2 Impact in Context The NFU UMCs are a unique group of organisations that undertake a complex and extensive range of activities. This makes it very difficult to benchmark their performance against other organisations either elsewhere in the Netherlands or elsewhere in the world. Differences in the methodology used for different economic impact studies can also make it difficult to directly compare the economic impact presented in this report with studies that have been undertaken for other institutions elsewhere in the world. Even when the methodology is the same, it is often not possible to make direct comparisons. For example the economic impacts of the UMCs cannot be directly compared to that of medical schools in other countries, which also provide education and training and undertake research, but do not directly provide healthcare. Data constraints can also make it difficult to find appropriate comparators. For example, data is not available on the economic impact of the non-umc hospitals in the Netherlands. It could, however, be noted that non UMC hospitals would not be expected to have the same economic impacts as the UMCs because the UMCs impacts are associated with activities not undertaken in other hospitals such as education and training, research and valorisation. It is however possible to make a number of comparisons that help to benchmark the economic impact of UMCs. While in isolation none of these comparators is ideal, when taken as a group, they provide evidence of the impressive scale of the economic impacts of the UMCs in the Netherlands. As a starting point for this it is worth noting that, according to Eurostat in 2012, the GDP of the Netherlands economy was 599,3 billion. The economic impact of the UMCs of 20,4 billion is therefore equivalent to 3,4% of the Dutch economy. 45