Regions competing for edge in biotech

The international flavor of the crowd at a Philadelphia convention hints at the economic potential of biotechnology.

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

PHILADELPHIA'S evening arrived, Austria brought out its ballroom dancers. Puerto Rico carted in a rum bar and band. Florida flaunted a cheese platter and its governor, Jeb Bush.

And Maryland relied on fluorescent martinis and kitsch - yellow, floppy Frisbees reading "Maryland: Where Bioscience is Contagious!" along with a grab bag full of faux viruses and plush, stuffed crabs. What crabs and viruses had to do with one another, no one was asking.

The organizers had spent all day on their feet, game faces on, trying to attract attention to their particular corners of the sprawling conference room in Philadelphia, where the BIO 2005 Annual International Convention was wrapping up last month.

The biotech industry's annual conference, in its 13th year, used to be led by scientists and segmented by austere and technical company displays.

But now it is led by economic developers and segmented by geographic regions as governments across the world pursue biotechnology - the science of manipulating systems at the molecular level - as the next big economic catch.

Never mind the industry's checkered history. While its research and treatments are proclaimed as the bridge to curing disease, the business side lost $5.3 billion globally last year.

Still, with heavy industry years ago shifting to Asia and elsewhere, the dot-com boom having failed to generate the jobs once envisioned, and tourism in an uncertain stage after the Sept. 11, 2001, attacks, cities, states and nations see biotech as the next, best promised land for economic development.

"It's the new economy," said Lawrence C. Mahan, director of the bioscience business strategy for Maryland's Department of Business and Economic Development. "Every place is looking to see what assets they have to help them find their niche in the biotech industry."

Greater focus

Over the past four years, the number of states claiming a biotech focus has tripled, to 40 from 14. Regions in states are battling for biotech business. And foreign countries are trying to catch up to, and surpass, America's 30-year hold on the industry.

Analysts say overseas leaders are emerging, particularly Japan, India and China. Competition for stem cell business is ramping up in Sweden and Singapore, which have fewer restrictions on the research.

Areas that can be real players in biotech have several "common denominators," experts say: academia, a cluster of companies, an available and qualified work force, and ample infrastructure.

Most studies identify the key U.S. regions as California, Massachusetts, North Carolina and Maryland - with its biotech-laden Interstate 270 corridor in Montgomery County and its proximity to the nation's capital and federal agencies such as the National Institutes of Health and the U.S. Food and Drug Administration.

Other areas might be chasing clouds, some experts contend.

"The train has left the station on biotech," Mark Heesen, president of the National Venture Capital Association, said at a recent biotech meeting at the University of Maryland. "The winners are already chosen."

Birth of an industry

The term "biotechnology" was coined in 1919 by a Hungarian engineer, who used it to describe the mingling of biology and technology. But many point to the 1976 creation of a California DNA company, Genentech Inc., as the birth of the industry. It wasn't until the late 1990s that the science began to captivate government and business leaders as public and private factions raced to map the human genetic code.

Media coverage of the quest helped more than double the collective value of the industry practically overnight - to $354 billion in 2000 from $138 billion in 1999, according to the Biotechnology Industry Organization in Washington.

But the bottom dropped out of the genome industry after investors realized there was little money to be made quickly. Private financing plummeted to $10 billion in 2002 from $38 billion just two years earlier.

By then, governments had begun to pick up some of the slack, fueled by security concerns after the terrorist attacks of Sept. 11. Spending from the Department of Health and Human Services, for example, increased nearly 14-fold in the past four years to $4 billion from $271 million, according to Ernst & Young. Last year's Bioshield Act also allocated $5.6 billion for bio products that could fight pathogens such as anthrax.

Plodding, uncertain

Unlike auto manufacturing, which many states chased as an instant job fix through the 1980s, or information technology, the "it" business of the 1990s, biotechnology is more plodding and uncertain. It often takes a dozen years to bring a drug to market, and hundreds of millions of dollars.

Even the country's biggest biotech companies - such as Gaithersburg's MedImmune Inc., maker of the FluMist spray and Synagis, a treatment for respiratory infection in infants - are not turning a regular profit.

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