Abstract:In the last two decades, university-industry relationships have played an outstanding role in shaping innovation activities in biotechnology and pharmaceuticals. Nevertheless, there still is an intensive and open debate concerning their short and long term effects on the research system in life sciences. This work introduces a new way to analyse university-industry relationships (UIRs) which makes use of an agent-based simulation model. We analyse knowledge interactions among heterogeneous actors and we show that: 1) universities tend to shift from a basic to an applied research orientation as a consequence of relationships with industry; 2) universities' innovative capabilities benefit from industry financial resources but not so much from cognitive resources of the companies; 3) biotech companies' innovative capabilities largely benefit from knowledge interaction with universities; 4) adequate policies in terms of public basic research funding can counteract the negative effects of UIRs on university research orientation.Keywords: university-industry relationships; UIRs; knowledge dynamics; agent-based modelling; ABM; university patenting; technology transfer; biotech; biotechnology; pharmaceuticals; basic research funding policies.Reference to this paper should be made as follows: Triulzi, G., Pyka, A. and Scholz, R. (2014) This paper is a revised and expanded version of a paper entitled 'R&D and knowledge dynamics in university-industry relationships in biotech and pharmaceuticals: an agent-based model' presented at 6th