Rising Tide

The Biotechnology Industry Organization and its state affiliates will soon find out if they will be getting A’s, B’s or C’s on their biennial report cards at this year’s BIO International Convention in San Diego.

The highly anticipated release of Battelle’s Technology Partnership Practice research report on the current status and recent trends propelling growth in the US bioscience industry is generating apprehension as well as excitement as this June’s convention approaches. The projected 15,000 attendees at the world’s largest annual gathering of the biotechnology industry expect the national numbers for company formations and rising job salaries will be impressive. Soaring prices on Wall Street for biotech stocks is proof positive the upward trend is intact. But how are the nation’s 50 states, Puerto Rico and the District of Columbia faring in their intense competition for these high-quality, high-pay jobs and bragging rights?

The country’s perennial state leaders in the life sciences — California, Massachusetts, New Jersey, Pennsylvania, North Carolina, Washington — know that their status as front runners, for now, is still secure. But for how long? New Jersey, for example, known as the “pharmaceutical capital of the nation,” has been hurt by big pharma’s decision to cut employees as they reduce research funding and the size of their sales forces and focus on acquiring biotechs with promising drug pipelines.

Is the biotech rising tide lifting all states? We take a look at four states that are seeking to show marked improvement.

New Map Illustrates Arizona’s Advances

Arizona is on a course to rocket higher in the national state rankings of life science centers thanks to its “collaborative gene,” says Joan Koerber-Walker, the leader of the Arizona BioIndustry Association. She sees Arizona climbing to a II rank from its prior III. Arizona’s impressive progress along the growth path has been guided by its Arizona Bioscience Road Map and a steering committee of over 100 leaders from philanthropy, industry, government, and academia who work together to map out objectives, establish programs and measure progress thanks to the long-term commitment of the Flinn Foundation in shepherding the process. The foundation is a privately endowed, philanthropic grantmaking organization established in 1965 by Dr. Robert S. and Irene P. Flinn to improve the quality of life in Arizona to benefit future generations.

“They’ve been guiding the process since 2002, making this collaborative effort the longest-running bioscience industry development project of its kind in the country,” she says.

“Arizona’s Bioscience Roadmap: 2014-2025” was unveiled April 8 at events in Phoenix, Tucson, and Flagstaff, the state’s three metropolitan areas that feature growing bioscience hubs (the stats released in this report are the same as those reported at BIO).

“The updated Bioscience Roadmap builds on the successes of its first decade and adds contemporary strategies to take Arizona’s bioscience base to the next level,” said Jack Jewett, president and CEO of the Flinn Foundation, which commissioned the update and the original Bioscience Roadmap in 2002. The updated Roadmap will continue to focus on developing Arizona’s biomedical research infrastructure but will emphasize turning this research into new therapies, products, diagnostics, jobs, firms, and other benefits to Arizona. Commercialization, entrepreneurship, creating a critical mass of bioscience firms, and the development of talent are prime themes. The Roadmap’s overarching vision is for Arizona to become a global competitor and national leader in select areas of the biosciences by 2025.

In 2010, the Battelle Report credited Arizona with 785 life science establishments (excluding hospitals) and 17,163 life science jobs. In the new 2014 report prepared for the Flinn Foundation by Battelle, those numbers have grown to 1,266 establishments, 23,545 jobs, and average annual wages of $85,567 at end of 2012. Growth in the non-hospital segments accelerated dramatically over the last few years.

Arizona’s bioscience industry generated more than $30 billion in economic activity in 2010. Arizona’s market niches include medical devices, diagnostics, therapeutics, clinical trials and industrial biotech. Key drivers for growth include Arizona State University, ASU Biodesign, the Virginia G. Piper Cancer Center at Scottsdale Healthcare, TGen, the University of Arizona College of Medicine (Phoenix and Tucson), UA BIO5, Mayo Clinic, and a new Mayo Medical School in partnership with ASU, which is under development. The state is also home to over a dozen life science incubators and accelerators that support both university tech transfer and entrepreneurial life science enterprises.

Arizona has made tremendous progress in the past decade and is continuing to step up its game. “To become a top-tier bioscience state, Arizona must master the three Ds — Discovery, Development and Delivery [taking products to market] — to support our stated intentions with and sustainable investment across Arizona’s public, private and philanthropic sectors,” says Koerber-Walker. “When we do, we grow. If we do not, Arizona life science innovations will still emerge, but the benefits of increased employment and an increased tax base will be harvested somewhere else. That’s not the way we do things in Arizona.”

Stronger Yields in Nebraska

In Nebraska, the life science sector is thriving because its workforce has a flair for technology and the state’s tax incentive programs make it profitable for internationally known companies to expand to the Cornhusker State, according to Phil Kozera, executive director of Bio Nebraska, the state’s life science advocacy organization. A recent influx of venture capital from the Silicon Valley, Chicago, New York City, and elsewhere has combined with Nebraska’s major medical centers in Omaha, the University of Nebraska bioscience research centers in Lincoln, and two technology parks, to make Nebraska an appealing place to do business.

Agriculture, Nebraska’s dominant occupational pursuit, has evolved into one of the state›s biotech niches. The state›s chief farm products are cattle, corn, hogs, soybeans, and wheat; they all contribute to the state›s dominant roles in animal science and health, veterinary supplies, biofuels, and plant cell–derived vaccines. The state is also enjoying growth in its medical device sector, agricultural feedstock and chemicals and bioscience related distribution.

Kozera says private investments totaling $3.65 million helped Gretna-based Pellet Technology USA, a biotechnology and manufacturing firm with roots in agriculture, continue to grow. The company processes agricultural residue like corn stover — the stalks, leaves and husks left over from harvest — into products used as a clean power supplement that can be burned with coal for energy or as feed for livestock in lieu of corn. “We’re definitely a startup, but we’re hoping to break ground on a very large commercial facility this year,” says Russ Zeeck, an owner and chief operating officer at Pellet Technology USA.

Virtual Incision Corp., which develops surgical robotic instruments in Lincoln, has received $3 million in investment; Trak Surgical, an Omaha biomedical startup that has developed technology aiming to simplify orthopedic surgeries, raised $3.2 million last year. That capital included investments from angel investors from California, Texas and Arizona, as well as $500,000 from homegrown Invest Nebraska. Both Virtual Incision Corp. and Trak Surgical each were developed through UNeMed, which commercializes research from scientists in the University of Nebraska system.

A recent Journal Star article noted the state’s leadership in bioscience was nothing new. The newspaper reported that the oldest among the state’s healthy animal science players was Norden Labs, which got its start a century ago. It merged with SmithKline Beecham Animal Health in 1989 and was acquired by Pfizer in 1995. Zoetis, the largest animal health company in the world, spun off from Pfizer last year. It’s in the midst of expanding its Lincoln facilities, which are the center for the firm’s research and vaccine manufacturing.

Another animal science company that started its operations in Lincoln is GeneSeek, regarded by many industry analysts as the best animal genomics company in the world. GeneSeek, now a Neogen company, was founded in 1998 and has developed into a comprehensive agricultural biotechnology service provider, including genomic testing, molecular testing for disease surveillance, and antibody-based testing. GeneSeek, which is expanding its facilities in Lincoln’s Technology Park, boasts the world’s largest animal genomics laboratory and services the majority of cattle producers in North America.

For 2014, Kozera says he spending more time focusing on increasing opportunities in animal health, human health and biofuels. “Based on our geographical location, existing infrastructure and the state’s exceptional educational resources that already exist, that’s where I see expanding growth,” he says.

Florida’s Institutional Ballast

The Sunshine State set its sights on breaking into the nation’s elite bracket of life science centers more than a decade ago. Its bold strategy of spending hundreds of millions of dollars to attract the satellite operations of the nation’s leading research institutions — the Max Planck Institute, the Scripps Florida Research Institute, the Torrey Pines Institute for Molecular Studies, and the Vaccine and Gene Therapy Institute — is now paying dividends.

Recruiting top researchers from around the globe was undertaken while the research institutes were under construction. Collaborative research initiatives were set up with the state›s major universities, which already enjoyed a strong reputation for their life science research and drug-related patents. The universities, in turn, were showered with state dollars for their own research labs. The University of Miami received an $80-million grant in 2008 to expand its genetics research institution. It received a more recent infusion of capital to build the UM Life Science & Technology Park. Under a proposed master plan, the University may develop up to 1.8 million sq. ft. (167,220 sq. m.) of high-rise laboratory, office and retail space on 10 acres (4 hectares). The first building opened during the summer of 2011 with 250,000 sq. ft. (23,225 sq. m.) of space on six floors with flexible, modular wet laboratories and prep rooms.

Japp Donath, senior vice president of research and strategic planning for the Beacon Council, Miami-Dade County’s official economic development partnership, says Miami and South Florida are the biotech hubs for the state. Miami-Dade County has more than 1,700 life science companies with 15,000 employees. Marquee firms include Merck, IVAX, Medtronic, TEVA, MindRay, BD Biosciences, Terumo, Beckman Coulter and Cordis. Life science satellite centers have emerged in and around Tampa, the Central Florida/Orlando area, as well as in Northeast, Northwest, and Southwest Florida.

Miami, he says, has emerged as a leading center for medical devices, clinical research, and bioengineering programs that foster commercialization of laboratory discoveries. The county’s educational institutions are focused on expanding the pool of skilled life sciences employees. They include Miami-Dade College, Florida International University, the University of Miami, Barry University, Florida Memorial University and St. Thomas University. They provide a wide range of degree and certification programs in the life sciences and related fields. “An important trend for our future growth is the linkages that are being established between our colleges and students enrolled in classes from K to 12,” Donath says. “Our state is putting more emphasis on STEM education.

“The key for the Miami area is growing internationally,” he says. “Novartis, Medtronic and other large firms have offices for their Latin America operations — sales, distribution, legal, and HR — based in Miami. They have set up operating and training rooms here. Their Latin American employees are brought here for training.”

Since 2001, an annual survey of Latin America business leaders has ranked Miami as the top (first or second) city for doing business in Latin America. Miami is the only city outside of Latin America listed in these rankings.

Miami-Dade’s proximity to Latin America, Central America and the Caribbean is a key strategic asset that makes the community the ideal location for international commerce in the Western Hemisphere, says Donath. The state’s competitive tax structure and Miami-Dade’s skilled multilingual, multicultural workforce will continue to lure multinational firms.

Enchanting Environment

While not a national powerhouse in medical devices, health diagnostics, renewable bio-based chemicals and materials or personalized medicine, New Mexico enjoys a healthy level of activity in biotech research focused on improving both human and planetary health.

Almost two of every three bioscience jobs in the state are in research, testing, and medical labs. A combination of private sector, university and national laboratory entities contribute to leading-edge developments in bio-defense, nanoscience, diagnostics, therapeutics, agriculture and biomass/biofuels.

“Biotechnology opportunities are on the radar of many of our private sector companies, entrepreneurs and research institutions,” says Andrew Salazar, president of the New Mexico Biotechnology & Biomedical Association (NMBio). “The new and privately financed BioScience Center [a biotech business incubator/accelerator] in Albuquerque is a powerful validation of this. Angel and venture funded start-ups have converted numerous developments into commercialized products in recent years. A new, lower corporate income tax and new rules to lower the effective tax rate on some businesses, when combined with tax credits, have put New Mexico in a very strong position of having the lowest effective manufacturing tax rate in the region. These changes, combined with our highly regarded job training incentive programs, will make us more competitive and set the stage for growth and recruitment of middle market and other biotech manufacturing companies.”

Salazar, who is director of project development and business assistance for Technology Ventures Corp., a nonprofit foundation established by Lockheed Martin, said several key players have emerged as champions for supporting public and private biotech initiatives. Topping his list are the University of New Mexico Health Sciences Center, the Lovelace Respiratory Research Institute, the Mind Research Institute, National Center for Genome Resources, Los Alamos National Laboratory, Sandia National Laboratories, the Center for Integrated Nano Technologies, and New Mexico State University.

Albuquerque and Santa Fe have a combined three incubators that house health science companies, including Innovate ABQ, a collaborative initiative among the University of New Mexico, local government and the business community.

New Mexico enticed Respira Therapeutics, one of the state’s most prestigious start-ups, to return to the Land of Enchantment after it was previously moved to Austin by a group of Texas venture capitalists. Thanks to a new round of funding provided by New Mexico–based investors, the company, whose products are focused on pulmonary delivery of therapeutics for respiratory diseases, returned to New Mexico’s capital city of Santa Fe.

New Mexicans, says Salazar, should be proud of the progress the state has made.

“We’re bringing together all biotechnology participants to create economic opportunities by informing, collaborating and executing activities that advance the application of biotechnology across all sectors,” he says.