The Emergence of the Bioscience Cluster

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Elisabeth Pena

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36 J un e 2 003 PharmaVOICE ll drug development is local, to borrow from a popular phrase. Although pharma and biotech companies have to be focused on global issues, they still are firmly rooted in the commu nities in which they reside. State and local governments recognize the benefits to the local economic environment of attracting lifesciences research companies. By 2010, researchers expect that more than 18% of the U.S. gross domestic product will be driven by healthcare, biotechnology, and the life sci ences, according to New Economy Strategies. Local leaders are working to attract estab lished and emerging biotech and pharma com panies by increasing funding of research centers, providing tax incentives, and developing initia tives to educate and attract skilled workers. To meet the needs of this developing market, at least 41 states — up from just a handful a few BUFFALO,N.Y. Leaders from NewYork state’s economic devel opment organizations have created Empire Zones to provide for salestax exemption — property and business tax credits — for busi nesses locating and expanding in such zones. The purpose of the Empire Zones program is to give companies that are creating or retain ing jobs or making capital investments the opportunity to operate on an almost taxfree basis for up to 15 years. Businesses new to New York state are entitled to a 50% cash refund of certain unused credits. A Zone Capi tal Credit is a 25% tax credit against personal or corporate income taxes that is available for a direct equity investment in a certified zone business. The business may offer a potential investor an immediate 25%NewYork state tax credit for the amount of his/her investment into the business. The New York Small Business Technology Investment Fundprovides financial assistance in the form of venture capital for emerging busi nesses located in NewYork state. Investments are normally in the $50,000 to $300,000 range with matching funds from other sources. Buffalo also has the Niagara Region Ventures Fund,a quasi venture tool that provides between $100,000 and $500,000 to lifesciences companies that have their principal business location near Buffalo. Incubator programs, such as the University of Buffalo Technology Incubator, assist startup technology companies in becoming independent, thriving businesses. Groups such as The Buffalo Niagara Enter prise and BuffLink provide access to research institutions,workforce training,and available sites. “In Buffalo and in New York State, our public and private leadership is very strong, and this has resulted in significant new research and lifesci ences projects being created in the region, includ ing a new $300 million Center of Excellence in Bioinformatics,” says Angelo M. Fatta, Ph.D., presi dent of BuffLink. GEORGIA Three key programs reflect the state of Geor gia’s commitment to growing its biotech industry. Georgia’s QuickStart Program offers high quality training services at no cost to new or expanding businesses. The program is financed by the state and offers a supporting network of technical institutes throughout the state. The Georgia Research Growing the Cluster Georgia leadership understands the industry and that each company’s needs are unique. We custom design packages based on individual company needs, rather than providing canned solutions. Carol Henderson While biotechnology is mostly centered in major metropolitan areas, 41 U.S. states have undertaken initiatives to support and grow this sector of the industry. The following are some of the strategies that regions are focusing on to grow a biotech cluster. The Emergenceof the BIOSCIENCE CLUSTER Newbiotechnology centers of excellence are forming, and these clusters are growing to include members from all facets of the lifesciences industry. BY ELISABETH PENA A 37 PharmaVOICE J un e 200 3 years ago — have initiated biotech strategies during the last few years, according to a report by Battelle Memorial Institute for the Biotech nology Industry Organization (BIO). Still, biotechnology development in the United States typically is concentrated largely within nine metropolitan areas: Boston, Los Angeles, New York, Philadelphia, Raleigh Durham, N.C., San Diego, San Francisco, Seat tle, and the Washington D.C./Baltimore area. According to a report published by The Brook ings Institution, these nine areas account for more than threefifths of all National Institutes of Health (NIH) spending on research and for slightly less than twothirds of all biotechnolo gyrelated patents. Biotechnology commercial ization is even more concentrated within these areas: more than threefourths of all biotech firms with 100 or more employees and those firms founded in the past decade are in one of these nine areas; these areas account for eight of every nine dollars in venture capital for bio pharmaceuticals and for 95% of the dollars in research alliances. Part of the strength behind the growth of biotech clusters throughout the country is the expansion beyond that of companies that develop biotechnology drugs. Biotech clusters are extending to include companies that sup port the development of biotechnology drugs, such as contract research organizations, tech nology companies, genomic and proteomic companies, and medicaldevice companies. “The lines are blurring between disciplines that previously were separate and are now merging,” says Barry Teater, director of corpo rate communications at North Carolina Biotechnology Center. “For example, high performance computing and software now are merging with biology and genetics because of the genomics and bioinformatics revolution. There now is a lot of genomic data and there needs to be a way to store it, annotate it, and make sense of it. This trend is going to draw BIOSCIENCE clusters Alliance (GRA) is a strategic partnership of Geor gia’s research universities, the business communi ty, and state government. The GRA has invested $350 million in R&D and commercialization. “One of the GRA’s strategic investments in the future of the state’s biotechnology industry is the creation of the Eminent Scholar program,” says Carol Henderson,senior project manager,Georgia Department of Industry, Trade andTourism,Office of Science and Technology. “The program func tions to build the state’s knowl edge base by bringing eminent scholars to Georgia from through out the world. The scholars are being recruited to endowed chairs with the latest stateofthe art equipment and new laborato ry facilities.” A third program to support biotechnology growth in Georgia is the Intellectual Capital Part nership Program (ICAPP), a pub licprivate partnership between the University System of Georgia and private industry. ICAPP is Georgia’s economic development incentive aimed at helping compa nies meet human resource needs and securing new investments in knowledge jobs for the state. INDIANA In 1999, the state of Indiana started the 21st cen tury Research and Technology Fund, a state administered fund that grants $75 mil lion — biannually — to fund early stage research to move ideas closer to commercialization. Since its inception, more than half of the projects have been health and lifesciences related. The Central Indiana Life Sciences Initiative (CILSI) was launched in Febru ary 2002 andoneof its manyprojects is an Indianapolisspecific opportunity. The city of Indianapolis, in partnership with The CILSI has completed a land use study with the intent of creating a research community in downtown Indianapolis. “Our expectation is that if we are able to create an environment where emerging companies and research labs can be located in a similar area, we will realize the syn ergies that exist in research parks in other parts of the country” says Wade Lange, president of Indiana Health Industry Forum and cofounder of the CILSI. Toward this goal, in March the first phase of an incubator associated with Indi ana University,called the Emerging Technologies Center, was complet ed in Indianapolis. NEW JERSEY The Biotechnology Council of New Jersey (BCNJ) is a founding member of the New Jersey Biotechnology and Life Sciences Coalition. The coalition is working on advertising, public relations, a Website,and other marketing vehi cles, as well as working closely with state government, to develop pro grams to help the industry. Debbie Hart, president of the Companies realize that the deep talent they need is here, and at a much lower cost — especially at a time when money is tight for startup companies — dollars go a lot further here than they might on the coasts. Wade Lange Whether growth comes from within by spinning out new companies and growing those that already are here, or from outside, this is something that we think is important. Debbie Hart … continued Patrick Kelly Regions need to diversify. Right now the biotech community is a significant component of the technology community — technologies are feeding on one another, helping to streamline and improve research processes and bring the research time frame down. on highperformance computing and software and other related disciplines.” Patrick M. Kelly, VP of state government relations at BIO, says the definition of biotech relating to cluster formation and growth needs to be expanded. “What a lot of states are doing with biotech encompasses all of the life sciences, including medical devices, agriculture, indus trial, and other applications of technology,” he says. “The life sciences are a significant com ponent of what states are looking at, but there has not been a redefinition of what biotech is.” Economic pressures and industry forces are playing a role in the changing dynamics of the biotech cluster. “Given the recent downsizing in the biotech industry, state and regional leaders will need to shift their focus on supporting other related areas of life sciences, such as med ical devices and key suppliers to the lifesci ences industry,” says Angelo M. Fatta, Ph.D., president of BuffLink. “For smaller regions to compete with larger ones, other related indus tries need to be targeted. It is important, how ever, for regions to play to their strengths and not try to be all things to all companies.” But not all in the industry view the biotech cluster evolving in this way. Although clusters may need to evolve to compete, investors may not feel as confident investing in the expand ed biotech cluster. “While the sequencing of the human genome has spawned the development of a number of genomics, proteomics, and other companies that provide research tools, there is still a strong focus on traditional therapeutic products companies, probably because this is a business model that investors have faith in,” says David F. Hale, chairman of BIOCOM and president and CEO of CancerVax Corp. “There will continue to be a convergence of scientific disciplines as well as a convergence between lifesciences and technology companies.” CLUSTER ESSENTIALS Experts from most biotech clusters, as well as experts in the industry, believe that the most essential component to a successful biotech region is a strong university infras tructure. “All of the trends that we have seen and all the clusters that have been established seem to indicate that the first significant component is a major research university or research institu tion,” Mr. Kelly says. “Universities provide technologytransfer potential as well as a tal ent pool of potential employees.” Mr. Teater says excellent universities and strong lifescience programs are the engines that drive the industry with new technologies and trained graduates. Another essential component of a biotech cluster, according to industry experts, is access to capital. “If there is an indigenous venture capital BIOSCIENCE clusters BCNJ, was recently named by New Jersey Gov ernor James E. McGreevey to serve on the Jobs, Growth and Economic Development Commis sion that, among other tasks, will consider strategies for growing the lifesciences sector. In addition,at the request of Governor McGreevey,the BCNJ, Prosperity New Jersey, and the HealthCare Institute of New Jersey have underwritten the New Jersey Life Science SuperCluster Initiative, which began in October 2002. The goals of the initiative include the assessment of the current competitive position of N.J.’s pharmaceutical, medical technology, and biotechnology cluster; the identification of key strengths and weaknesses,chal lenges, and opportunities for this cluster in comparison with similar clusters in other selected regions; the development of an action agenda for the cluster, higher education, and state govern ment in an effort to improve the cluster’s competi tive position; and building the capabilities needed to successfully implement the action agenda. NORTH CAROLINA The North Carolina Biotechnology Center is working on three core pro grams to attract regional biotech growth.The first is the development of the area’s universities through grants for research, equipment, intellectual exchange meetings, seminars, and symposia,aswellas for the recruitment of faculty.The state has invested more than $50 million in its universities dur ing the past 20 years to strengthen biotechnology capabilities. The second program is business development,which provides support to new, young companies. The pro gram provides earlystage financial assistance in the form of lowinterest loans.The state has invested $9 million in lowinterest loans to 62 small companies, whichhavegoneon to raise about$460million in followon funding. “By providing the right amountofmoney to the right people at the right time, good things will come from this invest ment, and this is what this program is all about,” says Barry Teater, director of corporate communica tions at the North Carolina Biotechnology Center. The state’s third pro gram is education and workforce training in the form of grants to colleges, universities, and other schools to improve the teaching and training of biotechnology. OHIO Ohio’s efforts to retain and attract biotech companies We help companies with referrals to lawyers, accountants, consultants, real estate, lab space, and so on.We know all these people and can make the connections.We also help with networking. BarryTeater One of the things we want to do is raise the visibility of biotech companies in Ohio with fund managers — The MidAmerica VentureForum is a good example of that effort. Dr.Anthony Dennis … continued Growing the Cluster … According to a study conducted by Battelle Memorial Institute in 2001 on behalf of the Biotechnology Industry Organization, 10 states reported having developed a biotechnology or lifesciences strategic plan. All but one of these weredeveloped in the past four years.Four states reported having developed a science and technology or economic development strategic plan that includes a focus on the biosciences. Bioscience Technology Strategic Strategic Plan, Including Year State Plan Bioscience Focus Adopted Arkansas X 2000 Connecticut X 1998 Florida X 1998 Hawaii X 1999 Louisiana X 2000 Maryland X 1991 Massachusetts X 1993 Michigan X 2000 Minnesota X 2001 Missouri X 2000 New Mexico X 1999 NewYork X NA Oregon X 1999 Vermont X 1996 Source:Battelle Memorial Institute, Columbus,Ohio.For more infor mation,visit battelle.com. State Biotechnology Strategies 38 J un e 2 003 PharmaVOICE 40 J un e 2 003 PharmaVOICE or investment community in the area, chances are this has played a large part in the devel opment of the particular cluster,” Mr. Kelly says. “There has to be money available to take the technology out of the university environ ment and begin to build the infrastructure required to continue the research in a private setting.” One of the biggest obstacles facing many emerging biotech companies is the availabili ty, or lack, of financing. While initial funding may be available, biotechrelated companies can struggle to find investors later in their development. “Another major factor that can be a finan cial obstacle for regions seeking to develop a biotech cluster is the lack of successful entrepreneurs,” Mr. Hale says. “Building a successful biotech company is very complicat ed and very difficult.” The recent down swing in the economic cycle has put additional pressure on biotech clusters to get the venturecapital funding needed to operate successfully. “Virtually every state in the union is expe riencing some type of economic crisis,” says Anthony Dennis, Ph.D., president of Omeris. “The economy definitely is hav ing an impact; state officials are having to make hard decisions about how they will support their initiatives going for ward.” According to Richard Seline, principal and founder of New Economy Strategies, the overall venturecapital market went through a huge ramp up, which now appears artificial given the sudden rise and fall of the dot.coms. “The overall venturecapital market is back to levels before the ramp up,” Mr. Seline says. “While the money in today’s venture capital market isn’t as free flowing as it was during that run there is about $8 billion in cash that has been accumulated in new funds for investment. There is no money for a bad business model. Venture capitalists might be a little skittish about where to invest in biotechnolo gy and life sciences right now, but compared with the numbers before the artificial bump, the fact is the industry is not that badly off.” Even in the best of economic times, money is always an issue for the biotech industry because of the great expense to bring a biotechnology product to market. “One of the realities that this industry deals with is the sheer cost of bringing companies to fruition,” Mr. Kelly says. “To successfully bring a healthcare biologic product to the market, a company can incur costs anywhere from $500 million to $800 million. For a company that employs maybe a few hundred people, that is a lot of money.” ATTRACTING FINANCE Different regions are taking different ini tiatives to attract companies and venture capi tal into their lifescience clusters (see box start ing on page 36). One strategy that is being implemented is the use of publicrelations firms, which are expressively focused on biotech. Atkins and Associates, which has its roots in the San Diego region, home to one of the BIOSCIENCE clusters include the Third Frontier Project, a $1.6 billion initiative of which almost a third is devoted to life sciences. One of the strategies that Ohio leaders are using is the recruitment of companies from other countries. The companies generally have sig nificantly advanced technology but relatively small markets. According to Anthony Dennis, Ph.D., president of Omeris, three Israeli companies recently relocated to Cleveland, and another four or five are looking to relocate to the state. “We’ve also relocated a Russian company to Cleveland and are currently in negotiations with a numberofAsian companiesabout relocation into the Columbus area,”Dr.Dennis says.“This strategy transplants skills and technologies directly into the region, and doesn’t put us in the position of having to be competitive with San Francisco or Boston.” PENNSYLVANIA Pennsylvania is supporting the state’s lifesciences using funds from its $11.3 billion share of the tobacco settlement funds. Pennsylvania has invested more than $100 million to develop three lifesciences green houses that will be incubators for new companies, as well as creating a $60 million venture fund. “There has been a commitment from the state level that life sciences and biotechnology are going to be key economic drivers for Pennsylva nia’s future,” says Fritz Bittenbender, president, Pennsylvania Biotech Association. “There has been a very significant investment in time, energy, and dollars to show that. A much better tax policy also has been created during the last five years to help with the creation and formation of earlystage, capital intensive research and development companies.” Other initiatives include the Governor’s recently proposed expansion of the research and develop ment tax credit from $15 million to $60 million. He also proposed allowing small companies to trade tax credits with profitable companies for equity. SACRAMENTO,CALIF. The Sacramento Area Commerce and Trade Organization (SACTO) recruits companies from around the world. To accomplish this, SACTO facilitates site selection needs; represents the s i x c oun t y r e g on through marketing to other regions within Cal ifornia, throughout the nation,and to the Pacific Rim and Europe; and generates interest in the region through the pub lication and distribution of marketing materials and data. According to Barbara We have the resources in Pennsylvania to grow this important sector of our economy. It is critical for our economic future, for our job base, and for the health and welfare of people throughout the world. Fritz Bittenbender Interest in the Sacramento region continues to be very strong. Companies often are more comfortable locating to an area where other similar companies have located and are successful.This will likely continue, regardless of the economic and political climate. Barbara Hayes Growing the Cluster … Total LifeScience Life Science $ Raised % of Total State ($ in millions) $ Raised California $2,128.38 22.5% Massachusetts 716.65 30.3 North Carolina 284.77 50.2 Maryland 217.40 34.9 New Jersey 188.78 33.2 Washington 175.24 29.3 Pennsylvania 154.00 36.7 Georgia 132.28 22.5 NewYork 129.80 16.2 Colorado 101.85 18.6 Texas 77.14 6.0 Florida 50.25 14.1 Virginia 7.27 1.8 Total U.S. $5,054.00 24.1% Source:Council for Entrepreneurial Development,ResearchTriangle Park,N.C.For more information,visit cednc.org. U.S.Dollars Raised by LifeSciences Sector CompaniesbyState 41 PharmaVOICE J un e 200 3 largest biotech clusters in the country, has established a Midwest office in Wisconsin to capitalize on its West Coast roots to grow clus ters in the region. “Clearly there is a need to increase venture capital funding in biotech companies in the area, and that has been a challenge for this region,” says Virginia Amann, account and regional supervisor, Atkins and Associates. “Companies such as ours that have relation ships with venture capitalists on the coast are coming to the Midwest and making connec tions for biotechnology firms here.” Another region that is employing public relations and marketing tactics to draw the attention of investors is New Jersey. “We have the tremendous support of spe cialists from around the industry,” says Debbie Hart, president of the Biotechnology Council of New Jersey. “There will be a much more focused recruitment effort and marketing effort to tell the terrific story we have in New Jersey. Growing the biotech industry is one of our chief goals.” Because most biotech companies are almost entirely dependent on investment, angel, and venture capital, state governments also can be helpful in raising additional cash and attract ing investors. “One of the trends that BIO has identified is the use of the tobacco settlement dollars for biotech initiatives,” Mr. Kelly says. “The states control about $25 billion of this fund, which they are allocating toward cancer pre vention and smoking cessation. In addition, a lot of that money also is being invested in building lifesciences companies. The justifi cation is that if a state develops a biotech clus ter, it is going to create a rich research envi ronment and begin to improve public health for its citizens.” According to a report prepared by the Technology Partnership Practice of the Bat telle Memorial Institute for BIO in 2001, about 16 states are partially funding biotech cluster efforts with money from their multi billiondollar tobacco industry settlement funds. Examples of states with such initiatives include Michigan, which has allocated $1 bil lion to lifesciences development, primarily for universities, and Pennsylvania, which is using $100 million of its tobaccosettlement dollars to develop lifesciences greenhouses and has set aside $60 million for a venture capital fund. Strong research institutions, access to funding, and a supportive public policy are all important factors in the development and growth of a biotechnology center of excel lence. “Public policy does play an important role in spurring economic development and can have a significant impact on building biotech clusters,” says Ruth M. Scott, president of the Washington Biotechnology and Biomedical Association. She says state governments can support clusters by creating a tax structure that encourages research and development as well BIOSCIENCE clusters Hayes,executive director of SACTO,the state of Cal ifornia offers a R&D tax credit as an incentive to attract biotech business to the state. SAN DIEGO The San Diego region promotes its large talent pool as a way to attract new companies. “The fact that San Diego is one of the largest biotech clusters in the nation is a large part of its appeal,”says David Hale, chairman of BIOCOM,and president andCEOofCancerVaxCorp.“A lot of com panies come here because of the talent pool and the top research being conducted at our institu tions.Large pharmaceutical companiesalsoare tak ing notice of these traits and many have recently established offices here, including Pfizer, Johnson & Johnson,Merck,and Novartis.” There are programs through BIOCOM,theSan Diego Regional Economic Development Corp., and the UCSD CONNECT Program in Technolo gy and Entrepreneurship that support the growth and development of companies. The venturecapital community supported the San Diego biotech cluster, with $1.5 billion in first half 2002 — more than in the entire previous year. TENNESSEE The Tennessee Biotechnology Association (TBA), Vanderbilt University, and BIO have part nered to offer a unique biotechmanagement certificate program. “A partnership between industry and educa tional and research institutions is an important factor in building a biotech center of excellence in a region,”says Caroline RagsdaleYoung,executive director of the TBA. The Growing and Managing the Biotech Enterprise Certificate Program, beginning in August, is a series of four twoday sessions to be held on the Vanderbilt campus and conducted by theOwenGraduateSchoolofManagement faculty. A sixstory, 165,000squarefoot facility for biotechnology research activities for multiple ten ants, is being built as the first phase in the develop ment of the UT/Baptist Biotechnology Research Park, which is expected to be an economic devel opment engine for the Memphis community. The site, given to the Memphis Biotech Foundation in 2001,will be redeveloped into a 1.2 millionsquare foot campusstyle research and development park. WASHINGTON Washington state has several tax incentives geared to the bioscience sector, including a hightechnology sales and usetax deferral/exemption, a hightechnology busi ness and occupation tax credit,and a sales and usetax exemption on machinery and equip ment. The state also supports two organiza tions that promote the development of tech nologybased companies — the Washington Technology Center (WTC) and the Spokane Intercollegiate Research and Technology Institute (SIRTI). “In building a strong bioscience sector, it’s just as important to pay attention to the com panies that are already located here as it is to attract newones,”says RuthM.Scott,president of the Washington Biotechnology and Biomedical Association. “Partnering with eco nomicdevelopment offices, academic and research institutions, and core companies, we make the most of opportunities to promote the state through the media,BIO’s annual con vention,and a strong industry association.” Venture investments nationwide declined more than 48% from $44 billion in 2001 to $21 billion in 2002,according to figures from theMoneyTreeequity investment report com pleted by PricewaterhouseCoopers, Venture Economics, and the National Venture Capital Association. 2002 Nat’l Venture Investments %Chg. 2002 %Chg. Rank State ($ in millions) from 2001 Deals from 2001 1 California $9,467.26 (45.5)% 1,037 (36.1)% 2 Massachusetts 2,362.66 (49.0) 337 (39.3) 3 Texas 1,284.16 (72.8) 170 (56.0) 4 NewYork 803.24 (66.5) 151 (54.4) 5 Maryland 624.75 (38.3) 92 (10.7) 6 Washington 599.05 (45.2) 114 (24.0) 7 Georgia 587.66 (34.4) 85 (46.5) 8 New Jersey 567.79 (63.6) 88 (39.3) 9 North Carolina 567.44 (18.6) 97 (6.7) 10 Colorado 547.28 (66.0) 78 (43.9) 11 Pennsylvania 419.72 (58.9) 82 (46.1) 12 Virginia 408.72 (61.0) 91 (45.5) 13 Florida 356.75 (60.6) 53 (58.9) Total U.S. 21,179.0 (49.2) 3,011 (36.1) Source:Council for Entrepreneurial Development,ResearchTriangle Park,N.C.For more information,visit cednc.org. Venture Capital Investments byState 42 J un e 2 003 PharmaVOICE BIOSCIENCE clusters as technological innovation, which allows for ease in transferring technology from academia to the private sector for product commercial ization and rewards private investments in research. LOOKING AHEAD Industry experts believe that global eco nomic conditions, in addition to homeland security issues, will impact the amount of capital that is available to clusters in the future. “As a result, companies are more cautious than ever about expanding, moving to new markets, and launching new products,” says Carol Henderson, senior project manager, Georgia Department of Industry, Trade and Tourism, Office of Science and Technology. The biotech industry, however, may benefit from homeland security measures that call for the development of defenses against biological weapons. “Biotechnology has been enlisted in feder al efforts surrounding homeland defense and national security,” Ms. Scott says. “New fund ing sources are available for biotech compa nies and research institutions to develop defenses against biological warfare, providing a viable opportunity for further cluster growth and or alternative product develop ment within existing companies.” While the Boston, Seattle, San Diego, and San Francisco areas are most recognized for their cluster excellence, new regions are begin ning to emerge as significant areas of innova tion. According to Mr. Seline, North Carolina, Atlanta, and Colorado’s Denver/Boulder region are emerging as strong areas of cluster growth. In addition, regions that lean less toward biotechnology will begin to impact the cluster landscape. “There are regions where medical devices and nanotechnology are starting to emerge in a big way,” he says. “Worth watching is what HE SOUTHWEST MICHIGAN REGION, an area that already has established a growing lifescience center of excellence, is working to retain the largest player in its cluster. Kalamazoo, Mich., is home to Pharmacia’s largest research and development operations. Pfizer’s acquisition of Pharmacia has put the future of the location’s facilities in question and Southwest Michigan community leaders and officials are working to convince Pfizer to retain the Kalama zoo facility. Life sciences is an important industry to the Kalamazoo region; it accounts for 15% of the region’s workforce, 23% of the community’s wealth, and 50% of the state’s lifesciences economy. Southwest Michigan community leaders, Southwest Michigan First, city of Kalamazoo offi cials, and the Michigan Economic Development Corp.have teamed up to put a fullcourt press on Pfizer to retain and expand the soontobe acquired Kalamazoo County operations. According to Barry Broome, CEO and execu tive director of Southwest Michigan First, the Kalamazoo community has been working on three tactics to keep Pfizer in the area, as well as other initiatives to promote the growth of lifesciences activities in the region. “We offered a $635 million incentive package to Pfizer,which is the largest incentive package ever offered by a commu nity in Michigan,”Mr.Broome says. After Pfizer’s acquisition of Pharmacia was announced, the group asked Booz Allen Hamilton to provide an independent analysis of the output of Pharmacia’s Kalamazoo County operations, based on publicly available data. The firm found that the Kala mazoo campus is the only Pharmacia site able to take a pharmaceutical compound from the preclinical stage to production and distribution. Research also showed that the Kalamazoo operations have issued more patents and approved more new drug applica tions than any other Pharmacia facility in the United States. In addition,Ernst &Young was retained to per form a cost analysis, which found that the Kalamazoo site is a lowcost provider of services to Pfizer. Another strategy the group is working on is an advertising campaign called “Stick Around.”The cam paign is targeted at science leaders who may not be provided job opportunities within Pfizer, to keep them in the community to launch a company in the bioscience corridor. The Michigan team also has unveiled details of an incentive package valued at up to $635 million over a 20year period based on the company investing $784 million in four expansion projects and creating 2,100 new jobs in the Kalamazoo area.The majority of the incentives offered are only available to Pfizer if it maintains 8,500 jobs in Michigan, including 5,000 in research and development. Holding on to a Cluster Barry Broome Obviously, Kalamazoo is going to take some cuts and the goal is to make sure that we keep our core business in the community so that over time, through performance, the area can grow. T is about to happen in Texas and New York as it relates to nanotechnolo gy, biotechnology, and life sciences, as well as microelectronics.” Mr. Dennis believes advances in technology will change the existing model of cluster development and new strategies will have to be adopted. “There is a strategy that espouses that a region has to emulate the Boston area or the Bay area to be able to generate a cluster and that is no longer true,” he says. “Technology has matured substantially and a lot of the fundamental skills previously available only at universities, such as Harvard and MIT, are now available off the shelf. Emerging clusters are not going to be as dependent on universities for basic research technolo gy. Robust and emerging clusters will be able to take offtheshelf tech nology and use it in clever ways.” Regardless of the strategies employed by regions, the biotechnology industry is expected to shrink during the year. “Today, there are about 1,700 biotechnology companies in the Unit ed States; we predict that by the first quarter of 2004 that number will “This is largest incentive any community can possibly give,” Mr. Broome says.“It is called a pharmaceutical renaissance zone and it was special legislation that Southwest Michigan First wrote and had passed and signed by the governor in October.” Another strategy Southwest Michigan First is using to retain Pfizer is working with the governor to revamp the formulary andprescription drug program in Michigan.The group is trying to alter the programs to give Pfizer the ability to have unrestricted access to sell its drugs in Michigan. As of press time a final decision hadn’t been made,but Pfizer exec utives have shown their support of the Kalamazoo community through the company’s recent announcement that it will support start up companies in the region. In the event of Pfizer job cuts in Kalama zoo, the company believes it can help workers find new employment by supporting aspiring entrepreneurs and spinoff companies. Pfizer’s Chairman and CEO,Hank McKinnell,has said the company’s first objec tive is to make sure any employees that are displaced have access to jobs elsewhere. Mr. McKinnell also has announced Pfizer’s intention to help fund spinoff companies in the Kalamazoo area. This fits in with Southwest Michigan First’s plan to aid in the development of such companies.The group has been working to develop The Southwest Michigan Innova tion Center (SMIC), which is slated to open this month. The SMIC is a 58,000squarefoot facility featuring stateoftheart wet labs. It has been designed to nurture private and university technologies into viable startup companies.The center will offer a resource package that includes professional business support services as well as shared equip ment and office services.This will sustain and speed the growth of life sciences innovations and hightech earlystage businesses. 44 J un e 2 003 PharmaVOICE BIOSCIENCE clusters decline to between 1,300 and 1,400,” Mr. Seline says. “Not only are some of these com panies going to run out of cash, but some companies have a very narrow band of science or technology. During the next 18 months there will be a lot of mergers and acquisitions, and that is not a bad thing for this market place.” He warns that although many regions are working to promote biotechnology and life sciences growth in their communities, not every area in the country is going to be, or should be, a drug development or biotech cluster. PharmaVoice welcomes comments about this article.Email us at feedback@pharmavoice.com. Experts on this topic VIRGINIA AMANN.Account and regional supervisor, Atkins and Associates, San Diego; Atkins and Associates provides strategic public and investor relations exclusively for biobusinesses.For more information, visit atkinsassociates.com. FRITZ BITTENBENDER. President, Pennsylvania Biotechnology Association, Malvern,Pa.;Pennsylvania Biotechnology Association’s mission is to advance the life sciences by creating commercial opportunities and publicpolicy strategies that lead to greater understanding,growth, and community support of biotechnology. For more information,visit pabiotech.org. BARRYBROOME.CEO and executive director,Southwest Michigan First, Kalamazoo,Mich.;Southwest Michigan First’s mission is to create,attract,and retain businesses in the region.For more informa tion, visit southwestmichiganfirst.com. ANTHONYDENNIS,PH.D. President, Omeris,Columbus,Ohio;Omeris’mission is to accelerate bioscience discovery, innovation, and commercialization of global value, driving economic growth and improved quality of life in Ohio.For more information, visit omeris.org. ANGELOM.FATTA,PH.D.President, BuffLink Inc.; Buffalo,N.Y.; BuffLink is a private,nonprofit corporation founded by private sector and university leaders to promote the creation of a lifesciences economy in the BuffaloNiagara region.For more information,visit bufflink.org. DAVIDF.HALE.David F. Hale.Chairman of BIOCOM and president and CEO of Cancer Vax Corp.,San Diego;BIOCOM is a trade association for the lifesciences industry that promotes the growth of all sectors of to attract and create jobs,companies,and entrepreneurial opportunities in its lifesci ences industry,using worldclass research capabilities to make Central Indiana a center of innovation in the business of enhancing health.For more information,visit cilsi.com. RUTHM.SCOTT. President of the Washington Biotechnology and Biomedical Association, Seattle;The Washington Biotechnology and Biomedical Association is a nonprofit association of Washington state biotechnology and biomedical companies, research firms, and related organizations.For more information, visit wabio.com. RICHARD SELINE.Principal and founder, New Economy Strategies,Washington,D.C.; New Economy Strategies is a strategy and implementation firm focused on regional economic development around technology cluster formation and growth. For more information, visit newecon.com. BARRYTEATER.Director of corporate communications,North Carolina Biotechnology Center,Research Triangle Park,N.C.;North Carolina Biotechnology Center is a private,nonprofit corporation established to provide longterm economic benefit to North Carolina through support of biotechnology research,development, and commercialization statewide.For more information,visit ncbiotech.org. CAROLINERAGSDALEYOUNG.Executive director,Tennessee Biotechnology Association,Nashville,Tenn.;TBA is a statewide organization of leading scientists, researchers,academicians,clinicians, legislators,and business professionals work ing to foster,develop,and support the life sciences.For more information,visit tnbio.org. through creation of member value in the areas of public policy,member services,education, and business networking.For more information, visit biocom.org.CancerVax develops biological products for the treatment of cancer.For more information visit cancervax.com. DEBBIE HART.President,Biotechnology Council of New Jersey Inc.,Trenton, N.J.; BCNJ’s mission is to promote a business and public policy environment in the state and enhance the growth and prosperity of New Jersey’s biotechnology companies.For more information, visit newjerseybiotech.org. BARBARAHAYES.Executive director of the Sacramento Area Commerce andTrade Organization,Sacramento,Calif.;SACTO is a private,nonprofit economic development organization established to encourage top quality businesses to place jobgenerating investment in the greater Sacramento area.For more information,visit sactoedc.org. CAROLHENDERSON.Senior project manager, Georgia Department of Industry,Trade and Tourism,Office of Science andTechnology, Atlanta;Georgia’s Office of Science and Technology,part of the Georgia Department of Industry,Trade andTourism,provides the foundation to help informationtechnology and lifesciences companies grow.For more infor mation,visit georgia.org. PATRICK M.KELLY.VP, state government relations, Biotechnology Industry Organization, Washington,D.C.; BIO represents more than 1,000 biotechnology companies,academic institutions, state biotechnology centers, and related organizations in all 50 U.S. states and 33 nations. For more information, visit bio.org. WADE LANGE.President, Indiana Health Indus try Forum and cofounder of the Central Indiana Life Sciences Initiative, Indianapolis;CILSI works

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