The governor readies tax credits to help Maryland compete for biotechnology companies as more states work up their own inducements.

Md. slips in biotech race

February 03, 2005|By Tricia Bishop | Tricia Bishop,SUN STAFF

A month after being elected governor, Robert L. Ehrlich Jr. mounted a podium before several hundred people at a technology convention in downtown Baltimore and vowed greater support for their industry.

"We've done pretty well," said Ehrlich, who co-chaired the biotechnology caucus in the House of Representatives as a Baltimore County congressman, "but we can do better."

Two years later, however, many in technology business - especially the life sciences - are uncertain about the state's progress. Ehrlich appointed a technology commission and has budgeted millions for new Maryland bioscience buildings, including $11 million in his proposed capital budget for fiscal 2006. But some in the industry, especially after this session's legislative agenda was unveiled, remain skeptical about whether such efforts are keeping pace.

States and cities chase the companies that pursue breakthroughs in the fight against disease like they once bid for automobile factories. In the past four years, the number of states that identify biosciences - a high-skills, high-wage sector - as an economic driver rose to 40 from 14. All 50 states offer some kind of technology-development initiative to biotechnology companies.

"It's kind of like a feeding frenzy in terms of economic development," said Patrick J. Kelly, vice president of state government relations for the Biotechnology Industry Organization in Washington.

Maryland has long been considered one of the top biotech areas in the country. But the state dropped to fourth place from third behind California, Massachusetts and North Carolina in a report last year by the accounting firm Ernst & Young - a slip that caused much hand-wringing among biotech boosters in Maryland.

Other states have taken "very aggressive steps to encourage entrepreneurial investments [in biotechnology] ... I don't see it from the state of Maryland, and I don't see it from the legislature," said Edward M. Rudnic, president and chief executive officer of Advancis Pharmaceutical Corp. in Germantown and chairman of Maryland's BioAlliance, an industry coalition of bioscience companies within the Technology Council of Maryland.

California's Proposition 71 designates $3 billion for stem cell research. Pennsylvania and North Carolina are channeling millions of tobacco-settlement funds to nourish life sciences initiatives. Massachusetts gave $35 million toward the establishment of an institute to develop technology initiatives and research centers focusing on biotechnology, nanotechnology and medical devices. New Jersey will invest $380 million to build and promote an institute devoted to stem cell research. New York has spent $95 million on bioscience-related capital investments.

"We are in a fierce competition in this area," Del. John A. Hurson, a Montgomery County Democrat, said during a legislative meeting this week. He fears surrounding states will begin "raiding" Maryland's biotech businesses for talent if the state doesn't keep up.

"I don't think the state has a responsibility to the biotech industry anymore than any other industry," said C. Robert Eaton, president of MdBio Inc., a private, non-profit corporation dedicated to furthering biotechnology in Maryland. "But if they want the industry to thrive here, they have to have the policies and structures in place that encourage companies to remain here and set up shop here."

Venture capital

Biotechnology businesses are drawn to locate in the state by a highly educated work force and the proximity of top research and educational institutions, including the National Institutes of Health in Bethesda, the Food and Drug Administration in Washington and top research institutions such as Johns Hopkins and the University of Maryland. Like many states, Maryland has several biotechnology business incubators that nurture fledgling companies.

But people in the industry say the state's relative paucity of venture capital remains a detriment.

"It's called the financing desert," said Joe Hernandez, founder and chief executive officer of Innovative BioSensors Inc., one of eight companies taking part in the University of Maryland's technology incubator program. While Hernandez says the state has helped his year-old company with attention, facilities, contacts and grants, he sees investment dollars lacking.

Throughout the tech boom of the late 1990s, Maryland ranked last in venture capital funding relative to its number of biotech companies, according to a report by MdBio.

Last year, about 28 of Maryland's 350 biotech companies received venture funding, with each round averaging about $6.5 million, according to the National Venture Capital Association. That was significantly below the average rounds of investment in New Jersey ($13.6 million per round), California ($10.8 million per round) and North Carolina ($8.9 million per round), which could be a factor biotech companies consider when choosing their location.

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