RECENT NEWS that Maryland slipped from third to fourth among the nation's biotechnology centers hit hard in a state well positioned to pin a lot of its hopes for economic growth on emerging high-tech industries. But that ranking, by the Ernst & Young accounting firm, was based on the number of biotech firms that have achieved their first round of financing, a measure on which North Carolina moved ahead in the last year. By perhaps more meaningful standards - total revenue, research spending and assets - Maryland remains solidly in third place, behind biotech's giants, San Francisco and Boston.
Still, in endeavoring to spawn such industries, there's a snowball effect in which success draws more entrepreneurs. Thus the new report is not just a blow to Maryland's ego, it's lousy advertising amid heavy competition. At the industry's annual conference in San Francisco next week, state after state - including such late-comers as Florida and Wisconsin - will be aggressively trolling for biotech. Fortunately, the industry has already taken root along Maryland's Interstate 270 corridor and in Baltimore, grounded in the state's significant competitive advantage: its world-leading concentration of biomedical research labs and scientists.
Developing biological products is a risky business requiring patience, deep pockets and speculators; after a slump, it's again drawing buzz and money. But for Maryland right now, biotech still is more a symbol of an advanced economy than a sizable economic engine. The industry here, defined more broadly by state officials than Ernst & Young, includes more than 300 firms, with perhaps just several billion dollars in revenue. For biotech to become a much more significant factor in Maryland's economy - and for the state to compete nationally - there must be a much firmer connection between the wealth of research done here, often in federal labs, and venture capital. This includes Maryland investors, who studies show have tended to invest elsewhere.
That was a key conclusion of a January report by a state panel on advanced technology appointed by the Ehrlich administration. Among its top recommendations: Invest a larger share of state pension assets in Maryland start-ups and provide certain tax credits for in-state high-tech investors. The good news is that the state pension board already has voted to increase its seed-money investments, albeit still capping them at a prudently low level; the governor will be going to Asia this fall in search of investments; and the state has hired a chief marketing officer to more distinctly "brand" Maryland technology. The bad news is the state legislature this spring voted down a bill to provide $12 million a year worth of tax credits to Maryland investors in early-stage Maryland biotech firms.
Meanwhile, other states (and nations) are desperate to offer various incentives to biotech start-ups. North Carolina - Maryland's perennial competitor for third place - even turned $42 million of its tobacco settlement money into biotech seed money.
In seeking to develop a leading biotech center - with its high-paying jobs and promise of cutting-edge growth - Maryland has a big natural advantages over other wannabes. The Ehrlich administration has been smart to highlight the economic potential of advanced technologies, including biotech; it's time for the state legislature to follow up.