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Biotechnology Locations: Hitting The Mark

With so many locations targeting the biotech industry, how do you sort through all the information out there and find the right location?

By Mary Ellen McCandless

As an executive in the biotechnology industry--especially if your company is planning to relocate or expand in the near future--you already know that companies like yours are among the most frequently targeted by state and economic developers. Indeed, when it comes to the kinds of companies states are competing to attract, biotechnology is all the rage these days.

In the past four years, interest in the biosciences--which include a broad range of biological and life-science-related activities--from state economic development organizations has skyrocketed, according to "Laboratories of Innovation: State Bioscience Initiatives 2004" by the Battelle Memorial Institute and the State Science and Technology Institute (SSTI) for the Biotechnology Industry Organization (BIO). The study is a comprehensive analysis that quantifies the scope and impact of bioscience employment in all 50 states. It also examines programs in each state to promote the development of bioscience companies. This state-by-state analysis expands on a 2001 study that looked at activities in 42 states.

According to the BIO report, "In 2004, 40 states specifically target the biosciences for development and all 50 states have economic development initiatives available to assist bioscience companies." In comparison, in 2001 a mere 14 states were targeting the bioscience sector as an opportunity for development, according to BIO. Investments have grown--as much as $500 million in Florida, and experimental approaches--such as tax credits to encourage investment in private venture capital funds--have also increased significantly.

One of the reasons the BIO study cites for this growing interest in the industry is that the biosciences cut across manufacturing, services, and research. There are five major bioscience sub-sectors, according to the BIO report: agricultural feedstock and chemicals; drugs and pharmaceuticals; medical devices and equipment; research and testing; and academic health centers, research hospitals, and research institutes.

Thankfully, states and regions that are promoting bioscience development are focusing on the activities best suited for the area, according to BIO. For example, North Dakota is focusing on bioprocessing in value-added agriculture, while Missouri is seeking to become a leading center in plant and animal health. States such as Colorado, Massachusetts, Minnesota, and Utah are working in the area of medical devices, while other states are devoting their attention to research and testing.

"The states realize that the biosciences have the potential to generate vibrant economies," says Walt Plosila, Ph.D., vice president, Technology Partnership Practice, Battelle Memorial Institute, a private nonprofit organization for technology development, management, and commercialization. "What is exciting is that many states appear to be setting realistic and achievable development goals."

Factors that appear to influence a state's ability to grow bioscience employment include the degree of involvement by research institutions, available capital, access to facilities and equipment, a stable and supportive tax and regulatory environment, and a long-term perspective, according to the report. Recent state initiatives highlighted in the report include Connecticut's creation of a $5 million BioSeed Fund, which invests up to $500,000 in early-stage companies; Kentucky's $5 million Natural Product Fund; and North Carolina's Life Sciences Industry Revenue Bonding Authority, which finances biomanufacturing equipment and lab fit-outs.

Of course, some states have already proven they are committed to helping bioscience companies succeed. The BIO report cites Maryland's Industrial Partnership Program, which provided some initial support for development of the manufacturing facility for MedImmune's $1.6 billion Synagis®, and Martek Bioscience's infant formula additive, which helped it generate $114 million in revenue in 2003.

Although most states are vying for research development parks, the critical components have to be there for those efforts to be successful, according to Patricia H.C. Ardigo, First Vice President, Director, Life Science Group, CB Richard Ellis. Those critical components include the aforementioned universities, scientific institutions, and clinical hospitals. But they also include another entity--a research developer that can build the kind of multi-tenanted buildings growing biotechnology companies need.

"Unless the developer has knowledge of how to build a research facility and the deep pockets to finance them, it doesn't work," says Ardigo. "For a company, working with real estate people that have the expertise in this field cuts through the amount of time that they have to work on it."

That theory is why Ardigo created CB Richard Ellis' Life Science Group. "We are in all the tier one, two, and three states and I am constantly going to different states seeing what they have to offer," she explains. "States offer different things depending on what type of research they do. Companies like to go where the science is, as it leads to partnerships and collaborations."

Sorting it all out

So, with almost every state targeting the biotechnology industry and claiming to be a good fit, how can you sort through the information out there and find the right location? Is all the attention biotechnology getting making a tough job even tougher? To find out, we talked to biotechnology executives who recently expanded their companies' facilities.

In early 2003, Taxolog, Inc., a research company specializing in the development and clinical testing of new drugs for the treatment of cancer and other diseases, opened a cutting-edge biomedical research facility in Tallahassee, FL. Headquartered in Fairfield, NJ, Taxolog is an outgrowth of research conducted in the laboratory of Dr. Robert A. Holton, Professor of Chemistry at Florida State University (FSU) and Taxolog's Chief Scientific Officer. Dr. Holton invented the commercial process used to manufacture Taxol¨, one of the most effective cancer-fighting drugs in the world. While the Taxolog facility in New Jersey continues to concentrate on chemistry research, the Tallahassee branch emphasizes biological research.

"We've entered a brave new world, and do not yet fully understand the ways in which these cancer fighting compounds work," says Holton. "With the addition of a second facility, we can give full attention to learning how they work and pinpointing the biological processes that will lead to the elimination of cancer cells."

Taxolog's Tallahassee facility includes office space, laboratories, and state-of-the-art scientific equipment. The building features seven laboratories for various disciplines, an ultralow freezer and liquid nitrogen cryopreservation system designed to preserve materials prone to chemical changes, 12 biosafety cabinets used to conduct experiments under a sterile airflow, and a Dual Laser Flow Cytometer (an instrument used to isolate populations of cells in order to study their cycle, death, and reactions to drugs). It is estimated that the building and equipment costs will reach $6 million at completion.

Taxolog was founded in 1997 by Holton and fellow chemist, Dr. Lewis L. Metts, who serves as the company's president and CEO.

"As graduates of FSU's doctoral program, the opportunity to open a research facility in Tallahassee has special significance to both Dr. Holton and me," says Metts. "It is a homecoming of sorts and we are thrilled to continue our quest of discovery amidst the scientifically fertile environment that exists at FSU and in Tallahassee."

According to Ross E. Longley, Ph.D., Taxolog's Senior Vice President and Head of Tallahassee Operations, Preclinical R&D, the most important factor when choosing a location for a biotechnology company is a local pool of technically trained people for technician positions at the B.S. and M.S. experience level. Having a university or other biotechnology companies nearby helps a great deal in this regard.

"For positions at the advanced degree and experience level, being in a location with similar biotechnology companies could help provide an area magnet to attract these types of individuals and make recruiting easier and more time effective, rather than having to rely on national advertising to bring in suitable candidates," adds Longley.

Another factor that is important to consider is a large enough population center to provide appropriate services, including contracting for site building, major equipment, and supply houses nearby, according to Longley. Access to local technical representatives from major scientific equipment suppliers to provide services for equipment repair and maintenance also helps.

It's important to note that these factors do vary greatly depending on the type of biotechnology company in question. For example, for biotech research and development, the needs are different and the factors mentioned above are less important, according to Longley. And for biotechnology manufacturing, additional factors such as site planning and potential environmental impact are paramount.

Longley also has views on what he considers to be prime locations for biotechnology companies. For traditional and current hot spots, Longley singled out the Northeast corridor (including New York, New Jersey, Connecticut, Washington, DC, and Maryland), North Carolina (Research Triangle Park), and California (San Francisco Area and San Diego). Up and coming biotechnology hot spots, according to Longley, are Texas (Dallas and Houston), and Florida.

It's important to consider areas with a successful group of biotech companies, as a cluster of thriving firms can also be an advantage to you, according to Tom Whitaker, Ph.D., President & CEO, Atom Sciences, Inc. of Oak Ridge, TN.

"Probably the most important factor is the presence of other biotechnology companies--preferably very successful biotechnology companies," says Whitaker, who offers his own list of expected, and not-so-expected, promising biotechnology locations.

Choosing a location that already is home to successful biotechnology companies can make it much easier for up-and-coming firms to find employees. "Biotechnology companies need highly trained people and one way to get them is to pirate them from other companies," Whitaker explains. "The presence of a number of biotechnology companies also assures that vendors servicing the biotechnology community will be close by and it means that venture capital, which is the life-blood of the biotech industry, is already active in the area.

"The usual suspects include Boston, San Diego, San Francisco, Seattle, the DC Beltway, Baltimore, Research Triangle, and New York," Whitaker says. "A more recent contender is San Antonio. Places like Memphis with its Memphis BioWorks Foundation and Richmond with the new Virginia Biotechnology Research park are certainly making a push to become major players."

Whitaker points out that a number of states that don't already have a highly successful biotechnology base are spending hundreds of millions each--some using money they received from 1998's Tobacco Master Settlement Agreement--to try to grow their own biotechnology hubs. "It will be interesting to see if regions that were not known for biotechnology can really use multi-hundred million dollar--in some cases, billion dollar--investments to generate a self-supporting biotechnology industry," he says.

"Assuming you have neither the existing companies nor the money to grow a biotechnology cluster quickly, you need to convince prospects of the importance of what you do have," Whitaker advises communities. "In my own region--East Tennessee--the positive factors would be intellectual resources (major universities and the Oak Ridge National Lab), low cost of living, and good quality of life. Other important factors include access to rapid shipping/receiving and a friendly tax environment for companies and employees."

However, Whitaker agrees that the importance of these factors varies greatly depending on the type of biotech company in question. "One of the main factors that varies is the need for transportation," he explains. "If your company has time-sensitive products or receives time-sensitive samples, access to rapid shipping is essential. Memphis has gotten more than one company to come in because of [the local presence of] FedEx."

Getting information about an area's biotechnology assets into executives' hands is an important part of the process for locations that want to attract these growing companies, according to Whitaker. Because biotech companies are generally small and very few are profitable, it's rare that a biotechnology company will move into an area far from its current location unless (1) it has roots in the new area, or (2) there is a compelling need that is somehow met by the area (for example, shipping requirements and FedEx in Memphis, or imaging requirements and the Spallation Neutron Source in Oak Ridge).

"A biotechnology executive that is looking to move because of either of these reasons will already know which area meets his or her criteria," explains Whitaker. "So it isn't so much that they need to wade through a lot of information. However, they do need to be convinced that the area will be receptive to the company and the aforementioned factors are all in place.

"I believe that one of the most critical aspects of biotechnology development in a region is the care and feeding of existing companies," Whitaker continues. "The development of a biotechnology industry in San Diego can be largely attributed to the early success of a single company. As a successful company matures, top executives tend to break away and form other start-ups, which often grow into successful companies, starting a chain reaction of success. Whatever can be done to give fledgling start-ups a chance to become that first success story is effort well-spent."

If you have questions or comments about this article, please e-mail them to maryellen@groupc.com.

For the complete BIO "Laboratories of Innovation" report, please visit www.bio.org/local/battelle2004.