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Biotech Location Strategies, Special Advertising Section from Site Selection magazine, September 2003

n April 25, 1953 Francis Crick and James Watson launched the modern era of molecular biology with their discovery of the structure of DNA. Fifty years later, on June 23, 2003, President George W. Bush spoke at the Bio 2003 Convention Center and Exhibition and said, “Our biotechnology industry is the strongest in the world … Your industry is in the forefront of improving healthcare for all Americans.”

        It should be no surprise that the U.S. biotech industry is so strong because it is backed by big numbers. According to the Washington, DC-based Biotechnology Industry Organization (BIO) – the voice to the public for more than 1,000 biotechnology companies, academic institutions, and state biotech centers in 50 U.S. states and 33 other countries – there are 1,457 biotechnology companies in the United States employing 191,000 people.

        The biotech industry has grown tremendously over the past decade, with revenues increasing from $8 billion in 1992 to $34.8 billion in 2001. What’s more, biotechnology is one of the most research-intensive industries in the world. The United States alone spent $15.7 billion on research and development in 2001. Put in other terms, the top five biotech companies spent an average of $133,600 per employee on R&D in 2001.

        Ernst & Young LLP recently released “Beyond Borders 2003,” the first year-to-year tracking of the biotechnology industry on a global scale. The report states that “despite the challenges of a prolonged depression in global capital markets, the biotechnology industry remains strong.”

A Key Industry in the Keystone State

Biotech is burgeoning in the Keystone State. Over $775 million in federal health research takes place in Pennsylvania each year, and the state is also home to 300 life sciences companies.

        To keep pace with this rapid growth, the Life Sciences Greenhouse of Central Pennsylvania (LSGPA) has been formed to provide pre-seed stage capital and to accelerate economic growth and job creation through funding for technology development, relocation services, intellectual property protection, and incubator services. A public/private venture with input and resources from government, business, universities, and economic development partners, LSGPA services a wide geographic area built upon the research base provided by Penn State University, Penn State Milton S. Hershey Medical Center, and Lehigh University

        In June 2003, LSGPA announced plans to invest nearly $1 million in two promising biotechnology startup companies headquartered in State College, Pa. NanoHorizons, Inc., a developer and producer of state-of-the-art nanotechnology products and processes, will receive $500,000. QuantumBio, Inc., a software company that seeks to accelerate drug discovery efforts using unique molecular modeling tools, will receive $425,000. These represent the first of LSGPA’s pre-seed stage investments, which are expected to total roughly $10 million over five years. Additionally, the companies received matching fund commitments exceeding $4 million.

Rising Southern Numbers

In Ernst & Young’s “Beyond Borders 2003,” Georgia ranked as the ninth-best state in the country for biotechnology business, a ranking consistent with last year’s numbers. World-renowned research universities, the Centers for Disease Control, and the American Cancer Society anchor Georgia. The 2003 Ernst & Young study also reported a big jump in the regional ranking, as the Southeast moved from a fifth place ranking over the last two years to third place, ahead of the Mid-Atlantic and San Diego regions.

        Currently, there are about 200 bioscience companies employing more than 10,000 in metro Atlanta, including the headquarters of such major pharmaceutical and biotechnology companies as Solvay, UCB Pharma, Merial, and Serologicals.

        With metro Atlanta’s biosciences sector growing by more than 150 percent over the past decade, it is no surprise that 75 percent of Georgia’s bioscience jobs are in metro Atlanta. The Metro Atlanta Chambers Bioscience Council works to grow the area’s bioscience industry. Through the collaboration of business and bioscience, Atlanta offers an environment of interaction between academics, business leaders, economic development groups, and capital and infrastructure resources.

        Four leading incubators and business centers are bringing bioscience licenses to the market in metro Atlanta. Emory University and Georgia Institute of Technology support EmTech Bio. Georgia Tech also offers the Advanced Technology Development Center, recognized as one of the nation’s most successful business incubators. Georgia State University is the force behind CollabTech, and the University of Georgia has created the Georgia BioBusiness Center.

        “The Atlanta area has become one of the world’s leaders in business innovation and information technology both on the business side and on the academic side,” noted Georgia State University’s Lars Mathiassen, Ph.D. in a brochure produced by the Georgia Research Alliance in Atlanta. “This area of the world, therefore, offers fantastic opportunities for a researcher that studies innovation practices enabled by information technology.”

Fresh Ideas are Born at Purdue Research Park

Less than two miles from Purdue University’s main campus in West Lafayette, Indiana sits the sprawling Purdue Research Park on more than 650 acres. Home to more than 90 companies that employ 2,500 people, the park provides what life sciences companies require: high-speed Internet connections within the park and to Purdue University; state-of-the-art presentation and teleconferencing facilities; access to Purdue University equipment; and employee recruitment.

        The Purdue Research Foundation founded the park’s first incubator in 1993 to provide a place for faculty who wish to commercialize their ideas or for companies who want to develop businesses based on licensed Purdue technologies. The park’s incubator concept is designed to provide these start-up companies with a supportive environment of equipment, services, and resources offered at minimal cost.

        In addition to the incubation complex, Innovation Center houses those companies that mature out of the incubator stage but still want to remain close to Purdue and its faculty expertise. This 48,000 square-foot building provides a place for tenants whose success requires quite a bit more office or lab space, but also allows them to afford higher rental rates.

        In October 2001, construction was completed on Vistech 1, a $6 million office building funded by private investment group Research Properties LLC. The 73,000 square-foot facility was built to provide another rental option for rapidly growing high-tech companies within the park’s business incubation complex.

        Current life science tenants at the park include Bioanalytical Systems, Inc., Cook Biotech, Inc., Endocyte, Inc., Gerald P. Murphy Cancer Foundation, MED Institute, and SSCI, Inc.

Opportunities North of the Border

In Canada, a $30 million Biotechnology Cluster Innovation Program (BCIP) has been implemented to accelerate the development of Ontario’s biotechnology clusters by supporting commercialization infrastructure projects that will help create new companies and introduce biotechnology in other knowledge-based and traditional industry sectors.

        The first phase of the BCIP initiative will award up to $2.2 million for innovation strategies. The second phase will provide funding of up to $27.8 million for infrastructure projects outlined in the strategies, which could include commercialization centers, research parks and other regional initiatives to support entrepreneurship and innovation.

        The BCIP is part of the government’s $51 million biotechnology strategy to ensure the province reaches its goal in becoming one of the top three biotechnology jurisdictions in North America. Combined with current and upcoming government initiatives, the strategy will lever an estimated $10 billion of industry investments over 10 years, creating up to 75,000 new full-time jobs in the province.

        “This program will offer many benefits for the people of Ontario,” says Jim Flaherty, Opportunity and Innovation Minister. “The BCIP will improve the economy through the commercialization of bioproducts and creation of new businesses. The scientific discoveries made through the BCIP will also improve our standard of living through life-saving medical treatments and a cleaner environment.”

An Ever-Advancing, Far-Reaching Science

As biotech discoveries and advancements continue to rise, expect the site selection opportunities to also escalate. Cities across the world want biotech. Biotech is growing and biotech is here to stay. Since many biotech companies tend to cluster around major research centers, where large pools of experienced workers can be easily tapped into, the location choices can be easily defined.