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A Site Selection Web Exclusive, June 2012
WEB Exclusive story

Biotech’s Booming in Texas

R&D and state investment power the industry’s strong growth, but challenges remain.

Tom Kowalski

n Texas we equate "pulling yourself up by the boot straps" with achieving success through hard work. That approach to building a life science industry in Texas has begun to reap rich rewards.

The Texas life science marketplace has an estimated economic impact of $75 billion.

As home to more than 3,400 biotechnology R&D firms and manufacturing companies, Texas is one of the leading biotech states in the country. More than 84,100 workers are employed in the biotech sector in Texas, and dozens of global biotechnology companies, such as Novartis, Allergan, Inc., and Endo Pharmaceuticals, have major operations in the state. A concentration of highly trained biotech workers, multiple top-tier medical and research institutions, and a top-ranked business climate all strengthen the state's status as a biotechnology leader.

To give an idea of the size of Texas, the state is 268,601 square miles (695,677 sq. km.), the largest state in the contiguous United States, and the second largest state in the U.S. (only Alaska is bigger). If it were a country, Texas would be the 40th largest in the world. The Lone Star State has plenty of room for its life science industry to continue growing.

There are significant indicators pointing to the robust growth of the Texas Life Science Industry.

First, university research is the lifeblood of our state's innovation, medical treatments and job creation. The Texas Health Science Centers are the crown jewels of our industry.

Second, there has been a significant state investment into the life science industry, which has enabled research technology transfer and commercialization to successfully occur. Much of the state's investment requires academic/private sector collaboration.

The Texas Emerging Technology Fund is one of these programs. The TETF, as it is known, has allocated more than $173 million in funds to 133 early-stage companies and nearly $177 million in grant matching and research superiority funds to Texas Universities.

Investments by the TETF attract additional investment capital to emerging technology companies. Since the fund's inception, more than $592 million in private capital has been invested in TETF-funded businesses – more than three times the state's contribution.

Another key program in Texas is the Cancer Prevention and Research Institute of Texas (CPRIT). The Texas Legislature and the governor authorized the program, which the voters approved in 2007. The program has funded 387 grants totaling more than $670 million for cancer research and prevention. Together with matching funds obligated by grant recipients, more than $902 million has been invested in Texas' extraordinary endeavor to change the face of cancer.

Seeding the Future

The focus in Texas has been to create a strong life science environment. We are working to retain companies and are attracting additional companies to Texas. With these investments, we continue to fine tune our work force and, more importantly, put our graduates to work in Texas companies. In fact, approximately one of every 19 U.S. biotechnology employees works in Texas, while approximately one out of every 15 U.S. biotechnology establishments was in Texas, according to the latest annual data available from the U.S. Bureau of Labor Statistics.

Although the Texas life science industry is top-ranked and healthy, we do have our challenges. Federal issues, such as the timely reauthorization of the Prescription Drug User Fee Act (PDUFA), are critical to our industry. Also, the outcome and implementation of the Affordable Care Act is under way. Its impact on Texas is yet to be determined.

From a state perspective, access to early seed stage capital remains a challenge. The R&D expenditures at Texas institutions of higher education totaled $4.1 billion and NIH grants only totaled over $1 billion. Our engines of research are at full throttle.

At the end of the day, it is the patient who will benefit. The Texas life science industry has certainly "pulled itself up by the bootstraps," and now it is time, as we say in Texas, "to reach for the stars."

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