Expanding biotech companies have myriad choices for site location projects: states invest billions of dollars to attract these growing companies and t
BYLINE: Krizner, Ken
EVERY STATE IN THE COUNTRY--AND MANY CITIES AND REGIONS in those states--have some type of program aimed at attracting biotechnology and life sciences companies.
Combined, the states are spending billions of dollars to support bioscience research and the infrastructure (facilities and equipment) needed to support it. California leads the way in terms of research funding, with voters approving $3 billion in bond funding to create the California Institute of Regenerative Medicine.
But other states are also investing large sums in R&D generally and the biosciences specifically. The state of Washington created a $350 million Life Sciences Discovery Fund that will begin allocating $35million annually from tobacco settlement dollars to support bioscience research with economic development potential. Michigan has allocated $100 million for research, commercialization and infrastructure from its $2 billion 21st Century Jobs Fund, an initiative targeting development of four sectors, including biosciences.
States that have not traditionally invested in developing their bioscience base are also beginning to do so.
Alabama has committed $50 million, which is being matched by $80 million in private resources, to construct a facility to house the Hudson-Alpha Institute for Biotechnology in Huntsville. Since 2004, Montana has created the Montana BioScience Alliance, opened two wet lab-capable incubators and is developing a venture capital initiative. North Dakota has created a Center of Excellence in Life Science and Advanced Technologies at the University of North Dakota. South Dakota created three new Centers of Excellence focusing on the biosciences.
Like Washington, some states, Virginia and North Carolina, for example, are using a portion of their tobacco settlement money to fund programs directly related to biotechnology and life sciences.
The states are also allocating billions of dollars for the construction, expansion and modernization of their academic and medical research facilities, with funding coming from state, federal and private sources. Forty-four states reported that major new bioscience research buildings have been constructed since 2004, or are currently under construction.
States are attracted to the lure of the biotechnology industry because it holds the promise of high-paying jobs and economic growth. But that's a bet on the future.
In the present, many biotechnology companies are in the startup stage, with a work force of five or fewer employees and little capital to spend. These companies work mostly on research and development of their product or process, hoping one day to receive the FDA approval necessary to launch them beyond the startup stage.
So, these startup companies have a certain set of location criteria when they decide where to site their first facility. This criteria surrounds two issues: work force and facility space.
Knowledge-based work force. An absolute must for any startup biotechnology company. That's why many of these companies locate near a research-intensive university. Research Triangle Park near Raleigh, N.C., is located between Duke University, North Carolina State University and the University of North Carolina. Austin, Texas, benefits from the University of Texas. Biotechnology companies choose to locate in New Haven, Conn., to be near Yale.
"If a community wants to grow a biotechnology cluster, there needsto be a research-intensive university," said Rana Gupta, interim CEOof HistoRX Inc., a startup company that located in New Haven, in part, because of Yale. "It is the engine of ideas."
Availability of incubator space. Again, this is usually tied to a university environment. Startup companies, which cannot afford high rent costs or to own their own equipment, can lease just the amount ofspace they need at below-market rates and share office and laboratory equipment with like-minded companies. As a company grows, it can move into a larger space until it is ready to graduate from the incubator and into a facility of its own.
Expansion Leads to More Research
BIOTECHNOLOGY AND OTHER LIFE SCIENCES companies, though they may be working on different products and processes, do have one thing in common: They are attempting to improve the quality of life for people.Few tasks are more worthy than working to unravel the mysteries of diseases that affect the lives of people.
At the Burnham Institute for Medical Research in Orlando, Fla., scientists are working to find treatments and cures for Alzheimer's, cancer, diabetes and other diseases.
This is a commitment that the Orlando metro and the state of Florida have lent their support.
Within the next few years, Burnham plans to create 300 research jobs and build a 175,000 square foot facility in Orlando's Lake Nona area.
The company's goals for its Florida location include expansion of capabilities in chemistry, pharmacology and functional genomics. The new facility is expected to be a catalyst for future growth of biotech/life sciences companies in the Orlando metro.
The effort to lure Burnham was the result of a partnership betweenmany different organizations, universities and governments. The approval of a new medical school at the University of Central Florida helped solidify Burnham's choice of Orlando, said John Reed, president and CEO of Burnham.
The company's choice also speaks to the quality of the metro area's research and science communities, from the work being done at UCF to the breakthrough treatment provided through two of the largest hospital systems in the world, Florida Hospital and Orlando Regional Healthcare, both of which are headquartered in Orlando, Reed said.
The Burnham facility will anchor the region's new "medical city" in Lake Nona, which will also include the University of Central Florida's new medical school and a University of Florida medical research lab.
In addition, the Burnham Institute is expected to be a catalyst for future growth of biotech and life sciences companies in the Orlandometro. Already home to 150 such companies, since the announcement inAugust, interest in biotech in the region has already significantly increased, said Ray Gilley, president and CEO of the Metro Orlando Economic Development Commission.
Experts believe job creation from additional expansions in life sciences could exceed 10,000 in a decade.
Sector Grows in Florida
BIOTECHNOLOGY AND LIFE SCIENCES expansions are happening across Florida.
The Scripps Research Institute is building a 100-acre Scripps Florida campus, dedicated to advanced biomedical research and the application of the latest technologies in drug discovery, in Palm Beach County.
The first phase of development, including construction of three buildings totaling 350,000 square feet of laboratory and research support facilities, is scheduled for completion by the end of the year. The buildings will ultimately provide work space for a minimum of 545 employees. Scripps Florida is currently operating at temporary facilities on the campus of Florida Atlantic University in Jupiter.
Research will be conducted in a number of areas at the Scripps facility, and the state of Florida expects that it will serve as a magnet for other biotechnology and life sciences companies.
Further south in Florida, PAL Laboratories Inc. has expanded its operations in Miami-Dade County with the completion of a state-of-the-art manufacturing facility.
PAL Laboratories, a manufacturer of nutraceutical supplements, upgraded its equipment to create a new facility of more than 40,000 square feet that will serve as a single source to better serve its customers, according to the company.
The facility, located in Northwest Miami-Dade County, represents acapital investment of $8 million. The investment was used to retrofit and convert an existing structure into a state-of-the-art, FDA-approved manufacturing facility, which will house the 25 jobs generated by the expansion.
Yale Attracts Startup
HISTORX, A THREE-YEAR-OLD COMPANY with 30 employees, has worked out of administrative and laboratory space in a corporate and research complex located adjacent to the Yale University School of Medicine since 2005.
The company has grown quickly during its first three years of operations, and it required additional space designed to meet its specific needs, Gupta said.
HistoRX commercially introduced the first tissue-based quantitative molecular assessment tool for pathology--the AQUA Platform for Digital Quantitative Pathology.
AQUA provides researchers with the ability to localize single or multiple biomarker proteins within subcellular compartments in tissue using a specific antibody, to follow development of the disease stateby localizing critical cellular events such as translocation of biomarkers from one subcellular compartment to another, and to closely study relationships of more than one biomarker (through multiplexing) during the disease process.
A cluster biotechnology and life sciences companies is also on therise in the Phoenix metro.
Chicago-based Cancer Treatment Centers of America (CTCA) announcedits plans to build a facility in Phoenix, which will provide cancer patients from the western United States easier access to its treatment model that fully integrates state-of-the-art medical treatments andtechnologies with scientifically based complementary therapies like nutrition, naturopathy, physical therapy and mind-body medicine.
The Phoenix facility will be the fourth for CTCA, along with facilities in suburban Chicago, Philadelphia and Tulsa, Okla., as well as an outpatient care program in Seattle.
Patients at CTCA are empowered and encouraged to be part of their treatment decisions. Known as Patient Empowerment Medicine, CTCA putspatients at the center of all care decisions and encourages them to voice their opinions and perspectives about their care. Patient Empowerment Medicine provides clear, ongoing discussions among patients, caregivers and their clinical team about treatment options that best meet each individuals' specific needs and concerns.
"The CTCA mission is to provide hope and healing for cancer patients and caregivers everywhere, which is why we are bringing our treatment philosophy and care model to the western United States," said Stephen B. Bonner, president and CEO of CTCA. "On average, our patients are traveling more than 500 miles one way to one of our hospitals. So, our patients have asked us to build hospitals closer to their homes. This new facility in Phoenix will help our patients in the western region of the United States eliminate some of the stress associated with traveling so they can focus on beating their disease."
CTCA will begin construction of its 210,000 square foot facility this year, which will include more than 20 in-patient rooms, intensivecare unit rooms and surgical suites; state-of-the-art radiation therapy and infusion departments; an on-site, outpatient clinic for rehabilitation and physical therapy; and on-site residential accommodations for outpatients and their families.
"That's just part of our commitment to patient-centered care and our focus on what cancer patients value most," Bonner said. "Instead of guessing, we believe it's important to ask cancer patients what functional design elements help improve their treatment and healing. We don't walk in their shoes as patients, so it's important to listen, respect and address what our patients value most--from the treatments we offer to the hospital environment."
The Phoenix metro's biotechnology industry cluster is anchored by the Translational Genomics Research Institute (TGen), a nonprofit biomedical research institute focused on developing earlier diagnostics and smarter treatments.
TGen has more than 25 active research teams and employs 200 workers. It anchors the Phoenix Biomedical Campus, a 15-acre academic and research park. When fully developed, the campus will include 1 millionsquare feet of labs, office, classrooms and other facilities.
GenPhar Chooses South Carolina
ANOTHER REASON WHY CITIES AND STATES CHASE BIOTECH COMPANIES IS BECAUSE THESE are these type of jobs that college graduates are lookingfor--knowledge-based. GenPhar Inc., a biopharmaceutical company developing vaccines that protect against infectious diseases, is expanding its operations in the Charleston, S.C., metro and will construct South Carolina's first Good Manufacturing Practice (GMP) facility for biological medicine. In the process, GenPhar will grow from 20 employees to more than 140 employees with an average hourly wage of $40.
The company plans to make a $33 million capital investment in its move to Mount Pleasant's Innovation Park, located in the economic development zone of The Markets at Oakland. The 50,000 square foot facility will also provide corporate office and laboratory space and is scheduled for completion in 2008.
GenPhar focuses on developing vaccines with significant national security, military and socio-economic impacts and is one of just two organizations in the world developing a vaccine for the Ebola virus, which is only a year away from starting the FDA approval process.
The company has received support from the Department of Defense and Congress, and it has the opportunity to access the $5.6 billion allocated to the BioShield program and billions of dollars for the future commercial vaccine market.
The new GMP facility will be one of a handful in the nation and will include clean rooms, with class 100 super clean air to ensure the quality of the vaccines. However, the managers have clearly indicatedthe actual viruses will never be at the Mount Pleasant facility.
All virus work can only be performed at the U.S. Army's biosafety level 4 facility at Fort Detrick, Md. GenPhar's facility in Mount Pleasant is a biosafety level 2 operation and will only handle safe and clean medical products to be used in humans.
GenPhar chose the Charleston metro over San Francisco, Seattle, Houston, Pittsburgh and the Research Triangle Park in North Carolina, thanks mainly to the Medical University of South Carolina (MUSC), saidJohn Dong, president and CEO of the company,
"There is an untapped talent pool in this region," Dong said. "I believe MUSC has teaching and research programs in the same class as many Ivy League schools. The fresh technology developed at MUSC is thebest kept secret in the nation, and I'm hoping other biotech companies will capitalize on these resources, and at the same time, enjoy one of the most beautiful natural environments in the world."
The announcement was facilitated by the Charleston Regional Development Alliance.
"This expansion is a huge win for our region," said William A. Finn, chairman of the organization. "This company can help to attract other biotech firms that will provide high-tech, high-paying jobs for local citizens. It is helping to position the region as a destination of choice for companies that could literally locate anywhere around the world."
Keeping college graduates from leaving the region is one reason why North Carolina A&T University has launched its first spinoff company based on research conducted in the School of Agriculture and Environmental Sciences.
Provagen is a biotechnology company that plans to produce and market a protein, Protein V, that can be used in medical research, and inmanufacturing treatments and diagnostic tests for disease.
The University will retain equity in the company and earn royalties on the product.
"Creating commercial ventures out of research is important becauseit ensures that our research makes it out of the laboratory and intothe marketplace, where it can benefit consumers and society," said Alton Thompson, dean of the School of Agriculture and Environmental Sciences. "That's what a land-grant university is all about. We are in the business of finding solutions and then getting the information tothe people who need it."
As with any biotech startup, many regulatory and market and product development hurdles must be overcome in advance of production, but in the best-case scenario, the company could be ready to start production in three years, Thompson said.
The University is looking at the Gateway University Research Park-North Campus in Greensboro, N.C., as a location for the company.
Protein V is medically important because it forms strong chemical bonds to antibodies, which makes it possible to extract them from blood serum. Antibodies in their purified form are increasingly used to treat and diagnose disease, Thompson said.
The next steps for Provagen will be to hire a CEO, seek small business funding, and continue with market and product development.
New Facility To Produce Biologic Compound
OF COURSE, THE GOAL IS THAT THESE startup companies one day becomeFortune 500 companies that draw jobs and investments from around theworld.
It is these types of companies that have made the state of Massachusetts one of the centers of the biotechnology and life sciences industry.
Bristol-Myers Squibb Co. is adding to that image as the company will build a large-scale, multi-product bulk biologics manufacturing facility in the Devens enterprise zone in North Central Massachusetts.
The facility is projected to be operational in 2009. Commercial production of biologic compounds is anticipated to begin in 2011 with awork force of about 350 employees.
The facility will be modular in design in order to accommodate future expansion, which could lead to a total of about 550 employees at the site.
The Devens site was selected after a thorough evaluation of potential domestic and international sites, including Virginia, New York, Rhode Island and several European countries.
The Devens manufacturing facility would support increased production capacity for commercially available biologic compounds and biologic compounds currently in development.
"Biologics offer tremendous potential in treating a number of serious diseases, and they will play a role in driving our company's future growth and success," said Peter R. Dolan, CEO of Bristol-Myers Squibb. "The investment in the Devens facility represents a significant commitment toward increasing manufacturing capacity so that we can meet future market demand and research production needs for the company's biologic compounds."
The Philadelphia metro area has also become a center for biotechnology and life sciences company expansions.
Osstem, a South Korea-based company that manufacturers dental implants, purchased 28 acres for a new manufacturing facility at the Keystone Industrial Port Complex (KIPC) in Bucks County, Pa., formerly U.S. Steel's Fairless Hills Works.
Osstem anticipates creating 600 jobs during the next five years atthe KIPC.
At the KIPC, Osstem's manufacturing operation will be located in aKeystone Opportunity Improvement Zone (KOIZ), a designated area in which companies may apply for exemption from certain state and local taxes through 2018.
"The KIPC is a great location offering us prime market position and access," said Seung Woo Song, managing director for Osstem. "Our experience in making this decision to locate here has been a great one--the people of the KIPC and Bucks County have welcomed us. We look forward to a long future in Greater Philadelphia."
The Keystone Industrial Port Complex is one of 12 Keystone Improved Opportunity Zones (KOIZ) in Pennsylvania. KOIZ designation providestenants significant tax advantages in order to assist them in locating new facilities within the zones.
A subsidiary of another international company, Lundbeck USA, will base its U.S. commercial headquarters in the Philadelphia metro in King of Prussia. Lundbeck estimates hiring more than 300 employees nationwide during the next several years, with 50 to 75 employees in the Philadelphia metro.
"We evaluated several potential locations," said Patrick Cashman, president of the U.S. sales and marketing operations for Lundbeck. "Greater Philadelphia was the most attractive because of proximity to key talent, a community of pharmaceutical leaders and a state government that cares about life sciences."
There is no industry today that offers more potential than biotechnology and life sciences. There are numerous industry sectors that these companies can influence--from energy to agribusiness to clinical testing.
States are hoping that an investment today will lead to expanding industry clusters in the future. Startup companies are hoping that those investments will lead to a time when they can grow their operations and expand their work force.
FOR MORE INFORMATION
City of Hesperia www.eminfo.org/911.ad slanisberger@cityofhesperia.us
City of Noblesville www.eminfo.org/1578.ad chamm@noblesville.in.us
Enterprise Florida www.eminfo.org/941.ad mhickman@eflorida.com
Iron Range Resources www.eminfo.org/1560.ad alison.perry@ironrangeresources.org
Metro Atlanta www.eminfo.org/859.ad hgant@macoc.com
Roanoke Valley ED Partnership www.eminfo.org/54.ad anne@roanoke.org
Rochester Gas & Electric www.eminfo.org/994.ad clyde_Forbes@rge.com
Syracuse Economic Growth Council www.eminfo.org/904.ad GHitchin@OnGov.net
Ken Krizner is managing editor of Expansion Management. He can be reached at kkrizner@penton. com.