The brain behind France's new initiatives

Philippe Pouletty: rocking French R&D policy

The French parliament has just voted a 27 per cent increase in the public research budget to reach €24 billions by 2010. After the fusion reactor ITER, the creation of a new National Research Agency and another one for the industrial innovations along with some spectacular departures at the head of the science research agency CNRS, and publicly funded researchers taking to the streets to demonstrate, French R&D policy is rocking.

There is no doubt the former French doctor is inspired, in the American way. After 13 years in California where he most notably created, listed on the Nasdaq and then finally sold the biotech company SangStat to Genzyme for $600 million, Pouletty is now managing from Paris a €200 million VC fund.

But Pouletty devotes most of his time to provocative lobbying. For example, he is proposing that investors in newly listed innovative companies will be exempted from wealth, inheritance and capital gain taxes for eight years.

He is also behind the project of a new science campus for PhDs only, the European Institute of Technology of Paris, nicknamed “the French MIT” by insiders. But in France where projects are still bargained against political leverage and Anglo Saxon business culture is a scapegoat, can Pouletty deliver?

True, he is well connected. Next to the Elysée palace, the “Union Interallé” club is a monument of the French establishment. That’s where Pouletty, who is also the president of the industry association France Biotech, held its last general meeting. There, its members heard a speech from the current French research minister, François Goulard.

Listen to Goulard, and you can see Pouletty’s influence. “Research policy and economic policy have to go hand in hand.” “Scientific careers have to be driven by excellence through the revolution of benchmarking”. “There is no quality higher education without research; therefore a project like the European Institute of Technology in Paris goes in the right direction.”

Pouletty smiles. These are all arguments that the Strategic Innovation Council, a think tank he has created, have been developing since 2002. “I am an optimist,” he says.

In the office of Truffle Ventures, his VC firm, Pouletty is pretty confident. The European Institute of Technology has already gathered the support of France’s most prominent “Grandes Ecoles”, four universities and the medical research agency INSERM to create a common PhD school on the plateau of Saclay or perhaps within Paris.

Excellence is Pouletty’s motto. If the government comes up with a grant of €150 million for the start-up phase, the EIT – a private foundation – will recruit between 150 and 200 world-class professors. Pouletty hopes for an opening by 2007. “We gave a memorandum of understanding to the prime minister before Christmas and we are hoping for a positive response within the next few months,” he explains.

He believes that a European Institute of Technology in Paris might help to solve what he sees as the critical mass problem of the Grandes Ecoles – their campuses typically have less than 1,000 students – and the weakness of the universities, where researchers devote too much time to teaching. He is also betting the new campus will promote cross fertilisation among disciplines and technology transfers.

But logic and politic are two different things. The supporting signatures of seven engineering school deans and four university presidents will certainly impress the French authorities. But immunologist and president of the “Sauvons la Recherche” (“Save Research”), the committee behind the French researchers’ strikes in 2004, Alain Trautmann is quick to point out that science university Orsay is not part of the project. “It may be seen as surprising considering the fact the new campus is going to be established in its immediate vicinity.”

Trautmann adds that the scientific council of the University of Paris V (a non-executive body to which he belongs) adopted a defiant motion by 13 votes to 2 opposing the university president’s signature of the memorandum to create the institute. “Once again, Pouletty is working in total opacity,” explains Trautmann.

Trautmann sees certainly himself as the main opponent to what he considers “a too application oriented vision of a too secretive Pouletty”. But he acknowledges that French research is losing ground.

The gap between Philippe Pouletty and his opponents may be less deep that it seems. Pouletty is also a fierce critic of the French research system, saying that the 2.2 per cent of GDP that France spends on R&D brings poor returns. And he describes his hands-on action as a citizen commitment to correct this situation.

Jean-Bernard Schmidt, president of the French VC firm Sofinnova and a member of the Strategic Council of Innovation, notes that Sauvons la Recherche was against the creation of the new research agency advocated by the council – “but the Cochin Institute [where Trautmann is a lead scientist] was among the first to file grant requests”.

Schmidt’s support of Pouletty is symptomatic of something else. Even if Pouletty’s dynamism (he just signed four deals for Truffle beside all his lobby activities), speaking talent and articulate vision make it seem as if this is a one-man show, he has been able to gather a pool of influential decision makers around him.

Members of the Strategic Council for Innovation,which meets once a month at theInstitut Pasteur, come from both sides of the aisles of the parliament as well as from the management of leading institutions like Inserm. And Philippe Pouletty moved back to France after then minister of Finance socialist Sarkozy asked him to bring back his entrepreneurial experience to his home country.

But Pouletty has no ambitions of becoming president Chirac’s science advisor. “Strauss-Kahn was quick to introduce our first proposal, the SAS status which facilitates creation and management of companies. President Chirac implemented the JEI [a 100 per cent tax and social charges break of eight years for new companies investing at least 15 per cent of their annual budget in R&D], while [Interior Minister] Sarkozy was very efficient at pushing life insurers to invest part of their funds into start-ups,” he says. This escape of partisanship is coherent with his formidable task to change an administrative system. It requires years.

But Pouletty and his Strategic Council for innovation friends have already accomplished a great deal. The JEI has been adopted by 1,500 start-up companies. The parent status for the listed start-up is still in the doldrums but the projects based National Research Agency is en route to reach a budget of a billion euros by next year. And the European Institute of Technology’s fate will be decided soon.

The simple arguments Pouletty is making about reforming French research system may already have started to win the most important battle, that of hearts and minds. Even Trautmann complains more about Pouletty’s methods rather than his diagnosis and proposed cure. As Pouletty puts it: “Our opportunity is that politicians are starving for new ideas”. With a 27 per cent budget increase for science funding, some of them may go forward.