This article presents the results of an analysis of the relationship between public sector research and industry development in the field of biotechnology in a peripheral region of the European Union: the Region of Valencia (Spain). It contributes empirical data on the delocalized impact of research-industry relations in a globalized economy. It also uncovers a gap between a relatively well-developed public research sector in biotechnology and a weak biotechnology industry. The analysis raises questions as to the role of the concept of predominantly local knowledge communities in regional innovation systems, as well as the model of linear technological development, both of which exert an important influence on decision making in research and development (R&D) and innovation. A high level of R&D is shown to be a necessary condition for stimulating innovation, but does not suffice. Rather, R&D must be integrated with a number of different actions to correct deficiencies in the regional innovation system.