Biotech Clusters

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Alex Robinson and Taren Grom, Editor

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held in Toronto in June, drew exhibitors from 28 countries and 47 U.S. states many of whom were in attendance to unveil their region’s assets as biotechnology centers of excellence. The message being delivered was biotech “cluster.” State and city officials were eager to reach out to the 15,000 plus attendees from 52 countries. There was plenty for attendees to learn with a record number of biotech regions attending the conference. Bottomline numbers help explain why. Bioscience revenue grew to $25.7 billion in 2000 from $8 billion in 1993, while market capitalization grew to $350.2 billion in 2000 from $137 billion in 1999, according to data from Walter Plosila, Ph.D., VP, public technology management at Battelle Memorial Institute. But numbers don’t tell the whole the story, says Dr. Plosila, who notes that the terms bio science and cluster go together. Bioscience, he says, refers to a gamut of lifescience enterprises: companies, research organizations, hospitals, academic health centers. A cluster is a wide range of interrelated establishments drawn to a geographical area by, in this instance, the collaboration and connectivity that drive bioscience. “In the bioscience industry, a cluster is either what an area has or what it’s trying to develop,” he says. Dr. Plosila says a cluster can be developed on an existing base, for example, the 5,000 people who work in the medicaldevice industry in Pittsburgh, or from a strong base in organic chemicals, such as the one that Georgia boasts, or it can be built on a higher education core competency. “Whatever the model, clusters do not suddenly appear,” he says. “They develop. At some point in time, they are emerging. At some point in time, they become mature. There are a range of factors that contribute to building a cluster. Regions need to survey where they stand on these factors and what needs to be done to address these factors.” Cluster Ingredients First and foremost, a cluster needs an anchor: research organizations or institutes of higher education. It helps if this anchor has a clear focus on the research the region does well. And because research is nonlinear, Dr. Plosila says, “Industry needs to be involved from the start in developing, defining the problems, and defining the issues to be addressed in the research agenda — the research leads to market pull not technology push.” A cluster requires an entrepreneurial mind set, with networking, collaboration, and tech nology transfer mechanisms. A vision, a set of strategies for the long haul and local champions also are important ele ments to success. In addition, a cluster needs an infusion, or access, to capital. “Without the ability to do the earlystage deals — $200,000 to $2 mil lion — a cluster won’t be able to commercial ize its research,” Dr. Plosila says. “Discretionary federal money and institutes have helped some successful regions.” According to Dr. Plosila, it helps if tax and business regulations are attuned to the bio science industry, although most state and local codes are not as up to date as they should be. “Tax benefits don’t necessarily reflect the growth going forward,” he says. “Regions and states have been adjusting these, but they still need some tweaking in some cases.” A talented workforce pool is another neces sity for successful clusters, as are specialized facilities, including incubators, accelerators, test beds, and pilot plants. Last, but not least, Dr. Plosila says clusters require a patient, longterm perspective. He cites Maryland as an example of a region that was able to develop a bioscience cluster in record time, 12 years to 14 years. But it can take up to 20 years to develop a fully mature cluster. PharmaVOICE has taken snapshots of the strategies and the work under way to develop or maintain bioscience clusters in several U.S. centers. IMPACT Cluster

BY ALEX ROBINSON AND TAREN GROM

Biotech centers of excellence are popping up around the country. Cuttingedge research Access to capital Government leveraged investment Strong educational institutions Entrepreneurial culture and support network Presence of vibrant industry clusters Experienced professional service providers A catalyzing organization in the life sciences High quality of life NECESSARY ELEMENTS TOBUILDABIOTECH CLUSTER OF EXCELLENCE BIO2002

BIOTECH clusters PENNSYLVANIA — A Greenhouse Effect One of the biggest initiatives unveiled at BIO 2002 was Pennsylvania’s three Life Sciences Greenhouses, which are spread among three regions of the state: Southeast, South west, and Central Pennsylvania. “Our goal is nothing less than to lead the revolution in healthcare that breakthroughs in biotechnology will make possible, and to ensure that those qualityoflife and economic opportunities reach all Pennsylvanians,” Gov ernor Mark Schweiker says. To achieve that goal, Pennsylvania is investing $2 billion of its estimated $11.3 bil lion tobacco settlement on health and lifesci ences initiatives for venture funding. “Pennsylvania is the only state in the country to use every penny of the proceeds from the tobacco settlement for healthy living and nurtur ing the life sciences,” Gov. Schweiker says. “No other state can make that claim. We’re also the only state that is setting up a $60 million ven turecapital fund to endow the research of these lifesaving and lifeenhancing applications.” spark those dreams to become products and companies.” The plan builds on a solid base. Pennsylvania is home to more than 1,500 lifescience relat ed companies, including 413 research and development compa nies, 454 testing labs, 285 research organizations, and 83 pharmaceutical companies. Penn sylvania ranks second in the U.S. in pharmaceutical employment and third in biotechnology employment. Its lifescience com panies employ more than 66,000 people. In 2001, Pennsylvania received $1.1 billion in NIH funding for biomedical research, and the University of Pittsburgh led the nation in NIH funding for bioengineering projects. Gov. Schweiker believes busi nesses are attracted by a nurtur ing environment where venture capital is avail GOV.MARK SCHWEIKER Our goal is nothing less than to lead the revolution in healthcare that breakthroughs in biotechnology will make possible LOCATION Website ARIZONABIOINDUSTRY CLUSTER — www.azbiocluster.org ARKANSASBIOVENTURES — www.arkansasbioventures.uams.edu/ ARKANSASDEPT.OF ECONOMICDEVELOPMENT — www.aedc.state.ar.us/ BIO FORTWORTH — www.biotechfortworth.org BIOBELT ST. LOUIS — www.biobelt.org BIOCOM/SAN DIEGO — www.biocom.org BIOFLORIDA — www.bioflorida.com BIOKENTUCKY — www.biokentucky.org BIOTECHNOLOGY GREENHOUSE CORPORATIONOF SOUTHEASTERNPENNSYLVANIA — www.pabiotech.org/GreenHouse/EasternPA.html BIOTEXAS — www.txed.state.tx.us BUFFALO NIAGRA ENTERPRISE — www.buffaloniagara.org BUFFALO NIAGRA LIFE SCIENCES INC. — www.buffaloniagara.org COLORADOBIOTECHNOLOGY ASSOCIATION — www.colobio.com CONNECTICUT INNOVATIONS INC.— www.ctinnovations.com CURE CONNECTICUT’S BIOSCIENCE CLUSTER — www.curenet.org DESTINATION IRVINE — www.destinationirvine.com EMPIRE STATE DEVELOPMENTCORPORATION — www.nylovesbiz.com FAIRFAX COUNTYECONOMIC DEVELOPMENT AUTHORITY — www.fceda.org FORWARDWISCONSIN — www.ForwardWI.com FREDERICK COUNTYOFFICE OFECONOMIC DEVELOPMENT — www.discoverfrederickmd.com GEORGIA LIFE SCIENCES — www.gabio.org GREATERAUSTINCHAMBEROFCOMMERCE — www.austinchamber.org GREATERROCKVILLE PARTNERSHIP — www.greaterrockville.org HAWAII BIODIVERSITY/HAWAII BIOTECH COUNCIL — no website INNOVATION PHILADELPHIA — www.Ipphila.com IOWADEPARTMENTOF ECONOMICDEVELOPMENT — www.iowasmart.com KANSASCITY AREA DEVELOPMENT COUNCIL — www.smartkc.com KANSASCITY AREA LIFE SCIENCES INSTITUTE INC.— www.kclifesciences.org LIFE SCIENCES GREENHOUSE OF CENTRAL PENNSYLVANIA — www.lsgcentralpa.org MASSACHUSETTSWORKS! — www.massbio.org MICHIGANBIOSCIENCES INDUSTRYASSOCIATION (MICHBIO) — www.MichBio.org MICHIGAN LIFE SCIENCES CORRIDOR — www.michigan.org MINNESOTABIOTECHNOLOGY — www.positivelyminnesota.com MISSOURI DEPARTMENTOF ECONOMICDEVELOPMENT — www.missouridevelopment.org MONTGOMERY COUNTY,MARYLANDDEPARTMENT OF ECONOMIC DEVELOPMENT — www.co.mo.md.us/busdev NEWMEXICO ECONOMIC DEVELOPMENT — NewMexicoDevelopment.com NEWYORK ECONOMIC DEVELOPMENT CORP.— www.newyorkbiz.com NORTHCAROLINABIOTECHNOLOGY CENTER — www.ncbiotech.org OKLAHOMABIOSCIENCE CLUSTER — no website PENNSYLVANIA BIOTECHNOLOGY ASSOCIATION — www.pabiotech.org PENNSYLVANIA LIFE SCIENCES GREENHOUSE — www.inventpa.com PITTSBURGH LIFE SCIENCE GREENHOUSE — www.pittsburghlifesciences.com ROANOKEAND NEW RIVERVALLEY ECONOMIC DEVELOPMENT — www.roanoke.org SANANTONIO — no website SOUTHWEST MICHIGAN FIRST — www.southwestmichiganfirst.com STATE OF DELAWARE — www.delaware.gov STATE OF ILLINOIS DCCA — www.commerce.state.il.us/ STATE OF INDIANA/INDIANA DEPARTMENT OF COMMERCE — www.indianacommerce.com STATE OFTENNESSEE — www.soundsgood.org TEAM PENNSYLVANIAWEST — no website THE MARYLANDTECHNOLOGYDEVELOPMENT CENTER — no website VIRGINIA ECONOMICDEVELOPMENTPARTNERSHIP — www.yesvirginia.org Source: Biotechnology Industry Association,BIO 2002 Annual Convention Program.Note:This chart contains economic development, lifescience cluster initiatives, and staterun development agencies, and is not meant to be inclusive of U.S. biotech economic development initiatives. Emerging Biotech Clusters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . The $60 million venturecapital fund to be used by startup companies is expected to lever age an additional $150 million to $200 million in funding. These monies will help ensure that entrepreneurs have the resources to expand their companies in the state. The $2 billion investment includes $1.6 billion — $64 million a year for 25 years — to keep the state’s research at the cutting edge, spur commercialization, train researchers in starting new companies, and develop educa tional partnerships with colleges. The investment provides $100 million for Life Sciences Greenhouses in Pittsburgh, Her shey, and Philadelphia that will leverage an additional $100 million in local funding. The Life Science Greenhouses will: provide services to expand and attract lifesciences companies, seed funding to develop ideas into products, and develop business and worker training. “Our plan is integrated and farreaching,” Gov. Schweiker told PharmaVOICE. “It pro vides support for our best and brightest researchers to pursue their dreams and will help able, by a wealth of welltrained personnel, and support for the rapid commercialization of promising concepts. “I think we have hit the mark on all three,” he says. “The greenhouses will be successful only if a couple of things happen. There has to be job growth and company success. But in the field testing of these applications, we have to involve our community hospitals, and not just the big urban center institutions but the teaching hospitals. There has to be sharing and developing of the intellectual wealth.” Gov. Schweiker is passionate about develop ing that intellectual capital. “We are going to adjust the curriculum across Pennsylvania so that children know that there are rewarding career tracks in life sciences,” he says. INDIANA — In the Race Indiana expects to be known for more than the Indianapolis 500 soon. Central Indiana announced its bid to become a worldclass center for the lifesciences indus try this past February when it unveiled the Central Indiana Life Sciences Initiative. The initiative includes leaders from Indiana’s top research, aca demic, and economic develop ment organizations. Its core goals are to leverage investment capital for lifesciences projects, retain and attract a skilled lifesciences workforce, market the region as a worldclass health and lifesci ences hub, and develop successful collaborations, including a down town research facility. The initiative will build on $1.5 billion invested or commit ted to business, research, labora tory, transportation, facility, manufacturing, and venturecap ital projects through 2005. A committee plans to raise an added $100 million to seed and channel venture funding. The initiative is being spear headed by a core group, includ ing Mayor Peterson; Central Indiana Corporate Partnership President David Goodrigh; Eli Lilly & Co. Chairman, Presi dent, and CEO Sidney Taurel; Indiana University President Myles Brand; and Purdue Uni versity President Martin Jischke. “The time is right for a biotechnology and lifesciences initiative because we have the right partners in place,” says Jeb Conrad, VP of Marion County Economic Development. “We have the necessary assets in our community from which we can nurture this initiative — Lilly, Roche Diagnos tics, Dow Agro Sciences, and the IU Medical Center. Working with Indiana University and Purdue University, we will be better able to capture the talent graduating from these insti tutions, and also the research that is initiated out of these universities.” Karl Queisser, director of client services of The Indy Partnership, an initiative partner, adds: “Life sciences has been part of our culture for quite some time, but not in a concentrated and cohesive fashion. Community assets to nur ture the initiative are in place, including phar maceutical companies, and medical and research centers.” The lifesciences industry is Indiana’s largest private employer, providing more than 82,000 jobs. Indiana ranks second in the U.S. in surgical appliances and sales, fifth in phar maceutical sales, and ninth in surgical and medical instrument sales and employees. MISSOURI — ATale of Two Cities Gov. Schweiker was not the only toplevel state representative to attend BIO 2002. Mis souri Governor Bob Holden also was in atten dance, touting his state’s attributes as a biotech region of excellence. According to Gov. Holden, the state has identified four strategies to position Missouri as a major life sciences state: boosting research capacity by investing in people and facilities; building a culture of entrepreneurship, providing lifescience firms with better access to capital resources and a more responsive state govern ment; ensuring a favorable busi ness climate; and linking the state’s education workforce sys tem with the talent needs of firms and researchers. “We want to spin off and cre ate new firms from our research enterprise, keep and expand our existing base, and attract new firms to our state,” says Gov. Holden, whose goal is for Mis souri to become “a key lifescience cluster in the U.S. and the world.” This fourpoint strategy appears to be paying off. Mis souri’s lifesciences employment is 14% higher than the national concentration. The biosciences sector grew 11% in 2001, against a national average of 7.3%, with $42 million in venture capital going to Missouri companies in 2001. Large plant and research centers have opened in St. Louis and Kansas City in the past two years, and funds entering the state have strengthened its bioscience base. “Missouri communities are taking various approaches as they build biotech clusters,” says Richard Fleming, president and CEO of the St. Louis Regional Chamber and Growth Association. “We wanted to be the BioBelt and that has become our brand, the center of plant and life sciences.” St. Louis has begun building an entrepreneurial culture that nurtures young plant and lifesciences companies through a virtual commercialization center involving a seed fund. Mr. Fleming notes this is the glue that connects the technology transfer and commercialization process of St. Louis’ research universities to the marketplace. The region also has begun to develop a local venturecapital base. In 24 months, this effort yielded four venture funds that closed with an aggregate $282 million. In the next six to eight months, two more funds will be added with an anticipated closing of $250 million. In another part of the state, Kansas City (Mo.) is making its mark as a biotech cluster. Home of the Stowers Institute for Medical Research, a $200 million, 600,000square foot genetic research facility supported by a $1.6 billion endowment, the city has a research anchor of eight large research organi zations that, together, are undergoing a $1 bil lion expansion. This research anchor plus pharmaceutical company research and investment, the will ingness of the scientific community to collab orate and the region’s support for bioscience startups and relocat ed companies are among Kansas City’s reasons for believing that now is the right time to develop a bioscience cluster. “There is some concern that Kansas City is behind the curve in terms of timing,” says William Duncan, Ph.D., presi dent of the Kansas City Area Life Sciences Institute Inc. “But the pie is very large and the general feeling is that Kansas City is in the game.” “Kansas City metro has dou bled basic research funding over the last two years,” says Martin Mini, senior VP of marketing communication at the Kansas City Area Development Council. “But what truly distinguishes the region from other biocenters of excellence is the profitable operating envi ronment. Along with our rapidly developing base of research come all of the attributes tra ditional businesses find so important — mod erate costs, quality workforce, low taxes, superb infrastructure, and incentives for grow ing techbased firms.” Today, the Kansas City area’s 800 bio science companies employ about 6% of the city’s workforce. Research funding doubled between 1999 and 2001 and now stands at more than $190 million. 40 J u l y / A u g u s t 2 0 0 2 PharmaVOICE BIOTECH clusters GOV.BOB HOLDEN Governor Holden says his ambition for Missouri is to become a key lifescience cluster in the U.S. and the world. JEB CONRAD The time is right for a biotechnology and lifesciences initiative because wehave the right partners in place. KARL QUEISSER The lifesciences industry is Indiana’s largest private employer,providing more than 82,000 jobs. Kansas City’s premier goal, Dr. Duncan says, is to be recognized as one of the top 10 regions nationally for lifesciences research. Steve Lufkin, general manager at Midwest Research Institute, says, “Our intent is not to be the biggest, but the most efficient and effective. We’re not ever going to be as big as Boston or San Diego, but we have the oppor tunity to be as good as the major lifesciences centers in the country.” TENNESSEE — ForTechnology Tennessee’s claim as the “Center of the South” is behind its move to become a biotech region. Tennessee’s biotech resources form a network span ning the state from Vanderbilt University Medical Center’s sci ence and research expertise to overnight delivery powerhouse FedEx, to the University of Ten nessee Health Sciences Center and St. Jude Children’s Research Center in Memphis to the Oak Ridge National Laboratory in East Tennessee. “The global economy is becoming increasingly depen dent on technologybased indus try, and Tennessee is working aggressively to harness and transform our worldclass life science research and develop ment centers into economic development engines,” says Tony Grande, commissioner of the Tennessee Department of Economic and Community Development. BUFFALONIAGARA — Bioinformatics The Buffalo Niagara region, with a rich history of lifesciences discoveries and research activities, is at a critical turning point. Over the next three years, more than $560 million will be invested in significant lifesciences projects. According to Angelo Fatta, Ph.D., president of BuffLink Inc., these projects will build upon the lifesciences assets that the region already possesses to cultivate a thriving lifesciences economy. “The region has realized that the opportu nity to expand its lifesciences economy is real, and that the investments taking place are real,” Dr. Fatta says. “Therefore, the public, private, and university sectors are for the first time aligned to support an initiative in the life sciences. A regional strategic plan that brings the region’s assets together has been developed by the community, and over the next several years, the strategies will be implemented. “While there is certainly a recognition that our region and other regions are in a race for investment, companies, and talent, we also real ize that this industry is fairly specialized, and that different regions will have more strengths than others,” Dr. Fatta says. “Our strategy is to play to our strengths and enhance the competi tive advantages in areas where we already excel. Therefore, in many areas, we are already ahead of other regions that are just starting out or try ing to catch up since many of our assets have been in place for years.” During the fall of 2001, BuffLink, a non profit organization aimed at catalyzing growth in the life sciences, began work on a regional lifesciences strategy and implementation plan. “All of the essential ingredients to build a thriving lifesciences economy already exist in Buffalo Niagara,” Dr. Fatta says. “What had been missing is a cohesive, clear `game plan’ to link these assets or focus them on positioning the region as a globally recognized player in the life sciences.” OKLAHOMACITY — O.K. for Biotech Oklahoma City came to BIO 2002 to “co promote the state and its technology,” says Catherine Doray, director of biotechnology development and marketing at the Greater Oklahoma City Chamber of Commerce. “We promote the state as a lowcost speedtomarket location for lifescience manufacturing and we promote the value of our technology to invest ment partners.” Oklahoma City’s goal is to develop recog nition for the Oklahoma Bioscience Industry Cluster, currently about 60 companies, while creating highquality jobs in Oklahoma City. Behind the media campaign stands For ward Oklahoma City II, a $12.8 million, five year economic development program funded by more than 200 companies and operated by the Chamber of Commerce. “Begun in 2001, the program is a major initiative to leverage investment in infrastructure and expand out reach,” Ms. Doray says. F PharmaVoice welcomes comments about this article. Email us at feedback@pharmalinx.com. 42 J u l y / A u g u s t 2 0 0 2 PharmaVOICE BIOTECH clusters TONY GRANDE Tennessee is working aggressively to harness and transform our worldclass lifescience research and development centers into economic development engines. Experts on this topic JEB CONRAD.VP,Marion County Economic Development, Indianapolis; Marion County has teamed up with the Indy Partnership to strengthen the economic growth of the central Indiana region CATHERINE DORAY,MIM,RAC. Director, biotechnology development and marketing,Greater Oklahoma City Chamber of Commerce,Oklahoma City; the organization is spearheading Forward Oklahoma City II, a fiveyear economic development program WILLIAM DUNCAN,PH.D. President, Kansas City Area Life Sciences Institute Inc., Kansas City, Mo.; KCALSI is helping transform the area into a center for excellence in lifesciences R&D ANGELO FATTA,PH.D. President,BuffLink,Inc., Buffalo, N.Y.; BuffLink’s mission is to accelerate the technology transfer process and increase the commercialization of locally generated cuttingedge research RICHARD FLEMING. President and CEO, St. Louis Regional Chamber and Growth Association, St. Louis; the RCGA is the economic development organization for the bistate St. Louis region TONYGRANDE. Commissioner,Tennessee Department of Economic and Community Development,Nashville; the department’s mission is to encourage economic growth GOVERNORBOBHOLDEN. State of Missouri;Mr.Holden took office Jan.8,2001,as Missouri’s 53rd governor STEVE LUFKIN. General manager,Midwest Research Institute, Kansas City, Mo.;MRI is helping transform Kansas City into a center for excellence in lifesciences research and development MARTINMINI.Senior VP, marketing communications,Kansas City Area Development Council, Kansas City, Mo.;KCADC isthe metro area’s umbrella economic development organization WALTERPLOSILA,PH.D.VP,public technology management, Battelle Memorial Institute, Columbus, Ohio; Battelle serves industry and government in developing new technologies and products KARLQUEISSER. Director client services,The Indy Partnership, Indianapolis; the Indy Partnership is dedicated to strengthening the economic growth of the central Indiana region GOVERNORMARK SCHWEIKER. State of Pennsylvania;Mr.Schweiker was sworn in Oct.5,2001,as Pennsylvania’s 44th governor

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