Office of the Vice President for Global Communications

Wednesday, May 12, 2010

U-M companies highlighted in national report on economic benefits of federally funded basic research

Two highly successful U-M spinoff companies are highlighted in a national report that shows how federal investment in basic research leads to innovation and job creation.

More information

Full report and a database of companies created from federally funded university research.

“Sparking Economic Growth: How federally funded university research creates innovation, new companies and jobs” was released Tuesday by The Science Coalition, a non-profit, nonpartisan organization of 50 of the leading public and private research universities in the U.S.

The report names Arbor Networks and Health Media Inc. as two of the 100 examples of companies that trace their founding to breakthrough university research that was sponsored by a federal agency. Collectively, these 100 companies employ more than 100,000 people and have annual revenues approaching $100 billion.

Arbor Networks is an online security company launched in 2000 by Farnam Jahanian, professor and chair of Computer Science and Engineering, and G. Robert Malan, who was then a doctoral student. Health Media is a Web-based health-coaching system started in 1998 by Victor Strecher, a professor in the School of Public Health and the U-M Health System.

“At the University of Michigan, we are involved in every phase of economic development, from the basic research that sparks innovation to teaching the skills that enable entrepreneurs and innovators to succeed,” says Stephen Forrest, vice president for research and the William Gould Dow Collegiate Professor of Electrical Engineering. Forrest is also a professor of physics as well as materials science and engineering.

“We’re collaborating with industry on R&D efforts and helping people and organizations transform sound ideas into economic solutions. We believe that this deep involvement is part of our mission to make both the state of Michigan and the United States competitive and secure in this period of rapid globalization.”

Arbor Networks and Health Media are just two of numerous success stories of basic research in U-M labs leading to technology that spawns new companies or new projects in existing companies, and eventually jobs in the region and across the nation.

Since 2001, the U-M Office of Technology Transfer has facilitated 587 patents, more than 450 licensing agreements and 71 start-ups.

“All of these are based on U-M technology, the vast majority of which can be traced to some amount of federal funding for basic science and engineering research,” says Richard Chylla, engineering licensing associate director at the Office of Technology Transfer.

Arbor Networks maintains R&D facilities in Ann Arbor, and has added 80 jobs and an estimated $20 million to the local economy. Arbor is one of the world’s leading experts on service provider security issues, including denial-of-service, botnets and other network-borne attacks.

The company boasts 70 percent of the world’s network service providers as customers, as well as many of the largest enterprises networks in operation today. Customers include AT&T, Verizon, British Telecom, Deutsche Telecom and China Telecom. In all, Arbor has more than 300 customers around the world and they generate more than half their revenue from international markets.

The network security research conducted at U-M’s Software Systems Lab was supported by a $1.5 million grant from the Department of Defense, through the Defense Advanced Research Projects Agency. The NSF supported earlier networking research.

“Arbor Networks is a wonderful example of how the innovation economy can work when universities, government and entrepreneurs align behind great ideas and great technology,” Jahanian says. “The technology transfer program here was a highly effective link in facilitating the commercialization of technology for Arbor, demonstrating clearly how federally funded university research can result in a powerful engine for economic growth.”

Health Media was acquired by New Brunswick, N.J.-based Johnson & Johnson in 2008. It was founded based on a methodology and technology that effectively emulates a health coaching session but without the coach. Health Media delivers individually tailored behavioral change interventions for health and wellness, disease management, behavioral health and medical compliance.

A global leader in scalable behavior change interventions with outcomes, its clients include Kaiser Permanente, UPS, Cleveland Clinic, J&J, GSK, and eight Blue Cross Blue Shield organizations across the United States. The research that led to Health Media was funded in part by the National Cancer Institute.