States Woo Biotech Firms

From miracle drugs that cure cancer to genetically-modified foods, the multi-billion dollar biotechnology industry is hot, and states are doing their best to get a piece of the action.

Nine governors and more than a dozen states used the June 22-25 Biotechnology Industry Organization’s (BIO) annual meeting in Washington, D.C., to aggressively woo the industry. States pitched tax breaks, use of state university research labs and one-on-one face-time with governors to attract biotech business to their states.

States covet the industry’s promise of thousands of high-paying jobs and boosts to regional economies. Although most biotechnology firms currently don’t turn profits, that could change. A June report from consultant Ernst & Young predicts within five years the industry could post its first year of profitability since it began more than 25 years ago.

Biotech firms research and produce a wide range of products, from drug vaccines to environmental technology that make it easier to clean up hazardous waste. Even fingerprinting and home pregnancy tests are products of biotech. The more controversial aspects focus on cloning and genetically altered agricultural products that some opponents dub “Franken-food.”

The industry has grown to nearly 1,500 companies in the United States, employing nearly 195,000 workers, with revenues of $33.6 billion in 2002, according to Ernst & Young. That is up from a decade ago when the industry employed 79,000 workers in nearly 1,200 U.S. companies with revenues of $8 billion.

Despite the controversies surrounding biotechnology, states like Iowa and Delaware are trying to get on the list of the top 10 states with biotech firms while states like California and Massachusetts are trying to keep their No. 1 and 2 spots.

Governors such as Mitt Romney (R) of Massachusetts and Mark R. Warner (D) of Virginia made the rounds during the BIO 2003 conference, meeting with biotech representatives while other governors hosted receptions. But political schmoozing was just part of it . States also hyped their tax breaks, partnerships with premier universities and other incentives.

“The opportunities for the state of Iowa are pretty extraordinary,” Iowa Gov. Tom Vilsack (D) told Stateline.org when he was in Washington, D.C., to tout his newly enacted Iowa Values Fund. It includes $250 million in “seed” money for the life sciences.

Vilsack also announced at the BIO 2003 conference that the state recently inked a new agreement with a province of India that is emerging as a biotech center. “It’s all about building relationships,” he said.

Iowa has joined forces with other Midwest states in a coordinated attack called Bio Midwest. “Right now, the Midwest is the place to fly over, not to do business,” said Matt Schutte, spokesman for Omeris, a company that gets state funds to promote Ohio bioscience industry. “We want to change that,” he told Stateline.org.

Ohio’s Republican Gov. Robert Taft’s Third Frontier Project aims to expand Ohio’s high-tech sector by providing $500 million for biomedical research and is part of the larger Bio Midwest campaign.

The initiative also includes Michigan’s Life Sciences Corridor, which has allocated $1 billion over 20 years to boost life sciences projects; Indiana’s21st Century Fund, which has doled out nearly $80 million to high-tech projects including bioengineering, and Wisconsin’s Third Coast and Forward Wisconsin, efforts to promote bioscience in the Badger state, including $50 million in tax incentives to insurance firms that invest in Wisconsin venture funds.

“It is imperative that we help to nurture, create and attract more life science businesses,” Wisconsin Gov. Jim Doyle (D) said in a statement.

California and Massachusetts know they have other states nipping at their heels. “A lot of states are competing for the biotech business,” said Kevin O’Sullivan, president and chief executive officer of Massachusetts Biomedical Initiatives, a public-private venture that promotes biotechnology and medical device companies in the Bay State. “We’re fortunate we have brain power” from Harvard University, Massachusetts Institute of Technology and Tufts University, he said. Massachusetts estimates that biotechnology could create 20,000 to 150,000 new jobs by 2010.

Other states also showed off their tax breaks and close ties to leading universities and research centers. Connecticut, for example, offers biotech firms the opportunity to exchange unused research and development credits for 65 percent of their value while Florida boasts that it has allocated $30 million to create three high-tech “centers of excellence” associated with state universities to stimulate research.

Rhode Island touted its Slater Center for Biomedical Technology that has helped launch 15 new companies in the past five years while Pennsylvania promoted its nearly $2 billion Life Sciences Enterprise, which the state said is the largest life science initiative ever funded by a single state. Pennsylvania is using money from the tobacco settlement to fund the initiative.

And Maryland state officials reminded conference goers that it is the home to more than a dozen federal regulatory agencies that are key to biotech, including the National Institutes of Health and the Food and Drug Administration.

Other governors who attended the conference hailed from Delaware, Kentucky, Maryland, Missouri and Pennsylvania. Some 30 state biotech organizations were on hand at the BIO conference, and 17 states had “pavilions” that highlighted incentives to attract biotech industry.

States are not just competing against each other for biotech business, but also foreign countries. Representatives from some 55 countries also attended the conference, including Japan, Taiwan, Australia, Sweden and Germany. The event was billed as the world’s largest biotech conference.