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Floridians Still Waiting for Bio Investments to Pay Off

February 24, 2010

Florida's efforts to boost it's biotechnology sector may not be paying off as quickly as originally hoped. A recent report finds that the $449 million invested through the Innovation Incentive Program has yet to result in industry growth in counties where the program's grantees have their facilities. The report, published by the Florida Office of Program Policy Analysis and Government Accountability (OPPAGA), suggests that the state's lack of early-stage capital for biotech startups may be contributing to the sluggish pace of development.

Florida's Innovation Incentive Program (IIP) was introduced in 2006 to attract high-value research and help bioscience companies expand. Previously, the state had appropriated $310 million to help create the Scripps Florida Research Institute. IIP was appropriated $200 million in FY07 and $250 million in FY08 to continue providing incentives to major research institutions. Using the IIP funds, the state was able to attract seven other research institutions, including the Burnham Institute for Medical research, the Max Planck Florida Corporation, the Miami Institute for Human Genomics, the Vaccine & Gene Therapy Institute Florida, Torrey Pines Institute for Molecular Studies, SRI International and the Charles Stark Draper Laboratory.

The OPPAGA report concludes that despite the strong collaborative relationships established between universities and IIP grantees, the $449 million invested through the program has not led to substantial growth within the state's biotechnology clusters. Though university collaborations could feasibly lead to new companies in the future, few biotech companies have been launched in grantee counties since the beginning of the program.

The report finds that the IIP efforts have succeeded in one of its key goals. The jobs that have been created within the research institutes pay wages that are significantly higher than average for the state. It is less clear if the initiative has led to the creation of new jobs, however. Using data collected in the report, OPPAGA will begin tracking the growth of biotechnology employment within the counties with grantees.

In order to capitalize on the investments that have been made already, the report recommends addressing the lack of early-stage capital available to early-stage biotech companies. OPPAGA suggests shifting the focus of the IIP effort to provide direct grants to startup companies. The report also recommends matching grants for SBIR recipients in the state.

The report, "Biotechnology Clusters Developing Slowly; Startup Assistance May Encourage Growth", is available at: http://www.oppaga.state.fl.us/MonitorDocs/Reports/pdf/1005rpt.pdf.

The OPPAGA findings come after the state's leadership recommended staying the course, however. Governor Charlie Crist's proposed FY11 budget includes $100 million for the IIP fund and $50 million split between two university research programs. Only $15 million would be appropriated for the Florida Institute for Commercialization of Public Research (see the February 10 issue).

The private sector is stepping up its efforts to support commercialization. Two Florida organizations currently are planning to increase their efforts to provide assistance and capital to the state's life sciences industry. BioFlorida, a trade association, recently announced plans to create a new nonprofit foundation to improve statewide science education, support bioscience research and assist entrepreneurs. The BioFlorida Institute will expand the association's previous career and education program for high school students and offer an industry resource center. BioFlorida plans to use the institute to connect early-stage companies with suppliers, partners and service providers in Florida, as well as other assistance for bioscience entrepreneurs. Read more about the BioFlorida Institute at: http://bioflorida.com/web/module/press/pressid/258/interior.asp.

The Florida Opportunity Fund, the state's fund-of-funds initiative, recently announced that it would invest in a venture firm specializing in the biotech industry. The fund will invest in Silicon Valley's 5AM Ventures, which specializes in early-stage life science investments, and has expressed an interest in additional investments in companies associated with the Scripps Research Institute and the Burnham Institute. Florida First Partners, manager of the fund, noted that 5AM Ventures was chosen because of its potential value to the state's biotechnology sector. Read more about the Florida Opportunity Fund at: http://www.floridaopportunityfund.com/