FUNDING ARIZ. INDUSTRY IS AN ONGOING CHALLENGE
BYLINE: Ken Alltucker, The Arizona Republic
Even the most ardent boosters acknowledge that the public's lucrative investment in the biosciences can sometimes be viewed as a leap of faith.
The state's bio playbook calls for investing $1.4 billion over a decade to build a research-based economy hinging on things such as developing drugs, making medical devices and transferring discoveries from university labs to doctors' offices and supermarket shelves.
So how is Arizona faring?
The public's investment so far has spawned shiny new university research facilities in Phoenix and Tucson. Some of the nation's top scientific minds have relocated to the Valley to seek cures for diseases such as Alzheimer's and cancer. And the state's share of federal grants is increasing at a time when such money is difficult to come by.
Still, despite Arizona's rapid advances, the state's bio economy remains in its developmental stages.
"It takes a decade or more to turn a state or regional economy around," said Walt Plosila, a vice president of Battelle Technology Partnership Practice who has advised and tracked Arizona's progress.
Plosila thinks Arizona already has raised more than $700 million to put it at the halfway point of its 10-year goal, but he won't have a final figure until he crunches the numbers for a roadmap update in December.
Even though Arizona has added state-of-the-art research facilities such as the Translational Genomics Research Institute, or TGen, in downtown Phoenix and Arizona State University's Biodesign Institute, securing money to conduct research remains a challenge.
"The state and private sector have to support researchers to do their work," Plosila said. "You have to plant the seeds."
One example of that funding challenge is Science Foundation Arizona, the non-profit research group established by business interests statewide.
The group is taking baby steps toward becoming a statewide educational research organization. The group hired a reputable CEO from a similar group in Ireland, and it is slowly adding staffers. But the group has survived mainly on private donations so far without public funds.
On Wednesday, the group secured $35 million in state funds that it will give away mainly as grants to promising research projects. The group will fund projects that improve the state's science, engineering, medical research and technology efforts.
Seed money
The Bioscience Roadmap, written by Battelle and commissioned by the Flinn Foundation, has guided the state's bio efforts since 2002. The roadmap establishes the goal of raising $1.4 billion over a decade to return investment, grants, venture capital and other funding of $2.8 billion.
Arizona is ahead of its roadmap targets in several key areas.
Arizona committed $440 million to build top-notch research facilities through the state research facilities bill. That legislation helped pay for ASU's $151 million, two-building Biodesign Institute and University of Arizona research facilities such as its new School of Medicine and Bio5, which will open next month.
These research facilities have been a boon for university recruitment efforts. For example, Biodesign operates on a $60 million budget and employs 131 faculty members, and it has spun off two companies that were acquired by larger firms in the past year.
Overall, Arizona has made strides in attracting more grant dollars, led by the universities, hospitals and non-profit groups.
From 2001 through 2005, the National Institutes of Health awarded a 40 percent increase in research grants to Arizona researchers. That included a 10 percent increase over the past year, compared with a 3 percent national average, according to figures provided by the Flinn Foundation.
Arizona researchers collected $176 million in research grants through last year. The roadmap's goal calls for that amount to grow to $214 million by 2007.
Despite Arizona's improvements at securing grants, the state's federal grant dollars significantly trail other research states such as Massachusetts, Texas and California. As recently as 2000, Arizona's universities secured only 1.3 percent of $30 billion issued nationwide to universities, according to research by the Morrison Institute for Public Policy at ASU.
"These agencies give out grants based on competition," said Bill Harris, CEO of Science Foundation Arizona. "And historically, Arizona has not done very well."
Seeking research support
Despite the state's effort to raise more funds for research buildings, Plosila said Arizona still lags in a couple of key areas. Those shortcomings include supporting research and raising venture capital.
"The biggest weakness we've observed is support for research," Plosila said.
Arizona's biggest research gift came in 2000 when voters passed Proposition 301, dedicating an estimated $1 billion over two decades to beef up science and technology capacity at the state's three public universities.
Other private non-profit groups such as TGen have survived primarily on research grants from the National Institutes of Health, National Science Foundation and others.
Some bioscience watchers say Arizona's research economy truly won't develop until larger, more successful private employers spin out of the universities and research institutes.
"If I can have one thing, I need a success story," said Jon McGarity, president of Arizona Bio Industry Association.
The Valley has landed a couple of private bio companies over the past year. Drug development and research company Covance plans to open a testing facility in Chandler, and Canadian-based InNexus established an office at Mayo Clinic's facility in Scottsdale.
"We're not at critical mass yet," McGarity said. "One of the things that will help us is when things start to spin out of TGen, the Biodesign Institute and Bio5 in Tucson. That will definitely help attract more companies."
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Following the money
The Bioscience Roadmap in 2002 set the goal of raising $1.4billion over a decade from public and private sources to propel the state's bioscience efforts.
Some major sources of funding through 2005 include:
$198million: Proposition 301 (passed in 2000).
$440million: Research facilities bill passed in 2003 to build university research labs.
$122.6million: Private venture capital.
$176million: National Institutes of Health grants.
*Total funding through fiscal year 2005, not all money is bioscience related.
** For years 2002-2004, includes biotech, healthcare and medical devices.
Source: Flinn Foundation, Battelle Technology Partnership Practice, Arizona Board of Regents, Republic research
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Reach the reporter at ken.alltucker@arizonarepublicor www.bizblogs.azcentral.com.