New York Times
June 11, 2002
Cities and States Clamor to Be Bio Town, U.S.A.
By ANDREW POLLACK

http://www.nytimes.com/2002/06/11/business/11BIOT.html

TORONTO, June 10 - Michigan is spending $1 billion to create a "life
sciences corridor." St. Louis bills itself as the BioBelt, while Hawaii
boasts of its biodiversity.
Cities and states across the United States are committing billions of
dollars to become centers of the biotechnology industry, just as they once
tried to attract computer and microchip companies to emulate Silicon Valley.
"This used to be a bicoastal phenomenon," said Walter H. Plosila, a vice
president of the Battelle Memorial Institute, a technology research and
development organization in Columbus, Ohio, referring to the fact that most
biotechnology companies are on the East and West Coasts. "But clearly you're
seeing bioscience as a much bigger focus across places that people wouldn't
think about."
The recruitment of biotechnology companies reached a fever pitch at the
industry's annual convention here. And, with the conference this year being
held outside the United States, it seems the fever, and the sloganeering,
has spread internationally. The Netherlands has its Bio-Delta; Switzerland
has the BioAlps near Geneva and Basel's BioValley; Singapore claims to be
"the Biopolis of Asia"; and even Saudi Arabia is laying plans for Jeddah
BioCity.
In the United States, 41 states have some program aimed at spurring
development of the life sciences, according to a survey last year by
Battelle for the Biotechnology Industry Organization, the trade group that
is sponsoring the convention. At least 16 states are spending part of the
money they received from the tobacco lawsuit settlement on items like
research and commercial development.
For BIO, as the trade group is called, the efforts mean more than money. "It
extends our political reach," said Carl B. Feldbaum, the group's president.
In some states, industry leaders are fighting proposed restrictions on
therapeutic cloning or genetically engineered crops by arguing that such
legislation would make the state inhospitable to the industry.
The reason for the state interest is clear. Biotechnology is perceived to be
an industry of the future with high-paying jobs, especially now that the
Internet bubble has burst.
"You go where the money is," the commissioner of the Tennessee Department of
Economic and Community Development, Tony Grande, said recently.
But luring such industries will require new economic development strategies
for many states, which have focused on attracting large factories like
Nissan's auto plant in Tennessee, which employs nearly 5,000. "Now we're
trying to make our incentives apply to companies that might be bringing in
only 50 people," Mr. Grande said.
Some economic development experts say that many places trying to become
biotechnology centers will fail. "The apparent scale of research funding
required for becoming a biotechnology center may be beyond the reach of most
metropolitan areas," according to a report being issued this week by the
Brookings Institution. The report says that nine areas, all on the coasts,
account for three-quarters of the biotechnology companies formed in the last
decade.
The Boston and San Francisco areas, where the industry had its start in the
1970's, are the leaders, the report said, with San Diego, Seattle and
Raleigh-Durham in North Carolina having developed substantial industries.
The other four are New York and Philadelphia, the homes of the
pharmaceutical industry; Washington-Baltimore, which benefits from being
near the National Institutes of Health; and Los Angeles, home of Amgen
</redirect/marketwatch/redirect.ctx?MW=http://custom.marketwatch.com/custom/
nyt-com/html-companyprofile.asp&symb=AMGN>, the largest biotech company.
The nine areas accounted for more than 60 percent of spending by the
National Institutes of Health, which finances medical research, the report
says. Another necessary ingredient is venture capital, the report says, and
eight of nine venture capital dollars invested in biotechnology in the last
six years were in the nine centers, the report said.
Even for places that succeed, biotechnology might not be the economic
salvation some envision because the industry does not employ many people,
especially blue-collar workers. The biotech industry in the United States,
with 1,457 companies, employs 191,000 people, according to a report by Ernst
& Young.
The Brookings report notes that even in the nine major centers, the sector
accounts for only 3.5 percent of all manufacturing employment.
Because of their concentration, the biotech centers can attract companies
even though costs are higher there. Novartis
</redirect/marketwatch/redirect.ctx?MW=http://custom.marketwatch.com/custom/
nyt-com/html-companyprofile.asp&symb=NVS> recently said it would build a
research headquarters near Boston to tap into the activity there.
IDEC Pharmaceuticals
</redirect/marketwatch/redirect.ctx?MW=http://custom.marketwatch.com/custom/
nyt-com/html-companyprofile.asp&symb=IDPH>, a San Diego company, considered
building a plant in San Antonio, where land was less expensive than in
California. But it decided to build 20 miles north of its headquarters, so
it could monitor the project better, said the chief financial officer,
Phillip M. Scheider.
Still, officials in many states say the industry is in its infancy with many
opportunities. Some say they will focus on specific niches, like agriculture
for St. Louis, marine biotechnology for Hawaii and genetically modified
tobacco for Kentucky.
Kentucky has been trying to lure academic stars to the universities by
supplementing their salaries with its "Bucks for Brains" program. Wisconsin
has directed that about $65 million of its public employee pension funds be
invested in young life-sciences companies.
Perhaps the most prominent effort is in Michigan, which is spending $50
million a year for 20 years, or $1 billion, from the state's share of the
tobacco settlement to nurture a life sciences corridor from Detroit to Grand
Rapids. The money supports academic research and commercial development.
Douglas Rothwell, president of the Michigan Economic Development
Corporation, said 22 companies had either started up or moved to the state
last year, up from almost none before the program began a few years ago.
One company, Asterand, which supplies tissue samples for biomedical
research, set up in the middle of Detroit at Wayne State University, from
where burnt-out buildings are visible.
Randal Charlton, the chief executive of Asterand, who had been working in
Florida, said he had misgivings on his first visit to the proposed site. "I
went down with my wife and I said, `Don't stop, Honey, just drive straight
by.' It was terrible."
But Mr. Charlton said laboratory space cost a quarter of what it did in
Boston, and Wayne State provided a faculty member to work for the company
for a reasonable fee.
Pennsylvania says it will spend $2 billion of its tobacco money. It recently
committed $100 million to set up incubators to help companies start.
New York State this year allocated $225 million for the Gen*NY*sis program
to support biotech research. In New York City, a business incubator to house
fledgling companies is being set up at the State University of New York
Downstate Medical Center in Brooklyn. Other incubators are proposed,
including one for Lower Manhattan. New York City has leading medical
research centers but has not been considered a good place to start
companies, in part because of the expensive real estate.
So far, there has been little opposition to state and local efforts to spur
biotechnology development. But experts say it will take 10 to 20 years for
the efforts to bear fruit. But governments may have trouble sustaining
support for the bio industry, especially during budget squeezes like the
ones many states and municipalities are now enduring.
Faced with more immediate needs or competing demands, officials or various
interest groups have proposed cutting back biotech financing in several
states. New York State's Gen*NY*sis program is getting less than half the
money initially envisioned.

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