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The Best Place for Your Biotech is Here. No, Here!

Biotech revenues soared 845% in Europe and 193% in Canada between 1998 and 2002, according to a 2004 report from the Biotechnology Industry Organization (BIO).

By | April 25, 2005

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Courtesy of JTC Corporation and the Singapore EDC

Biotech revenues soared 845% in Europe and 193% in Canada between 1998 and 2002, according to a 2004 report from the Biotechnology Industry Organization (BIO). Countries in Asia-Pacific are currently posting an annual biotech growth rate in excess of 25% annually.

Clearly there's money in biotechnology, and countries around the world want a piece of the action. Economic Development Councils (EDCs) are typically charged with the task of luring biotechs and other companies to a region. Their names tend to vary, as do their specific roles and the tools they use in boosting their local economies and job availability. "We try to confuse people," jokes Jeff Finkle, president and CEO of the International Economic Development Council, a Washington, DC-based economic development organization. He estimates the number of EDCs in the United States at 15,000 to 20,000. Even more are based overseas.

Some EDCs offer small-business assistance while others specialize in small-business finance. Some do external marketing while others focus exclusively on land and real estate development. And many EDCs work at attracting business, including biotechs, to an area to help it flourish economically, says Finkle.

Where do they get their money? "Public agencies get their money from taxpayer dollars. Finance agencies tend to have initial grants which are taxpayer dollars and then churn that money through revolving loan funds, then earn new money based on interest repayment," says Finkle. "The marketing organizations tend to get private-sector contributions."

EDCs are located in most counties in the United States except for the poorest and most rural, says Finkle. "Scranton, Pennsylvania, operates an EDC through its chamber of commerce; here in Washington, DC, the District of Columbia has an economic development office. Arlington County has an economic development office. Prince Georges County, Montgomery County, the City of Alexandria, they all have economic development offices. On top of that, the Greater Washington Board of Trade has a thing called the Greater Washington Initiative, which does the external marketing for the region. So it's complex."

EDCs range from large to tiny. New York City has a large economic development organization with several hundred people on the payroll working on combined economic development efforts, says Finkle. "Some small community in North Dakota may have a half-time person working for them."

"And there are more of them chasing biotech than there is biotech to be chased," says Finkle. EDCs offer biotechs a host of different incentives to come to an area. They lure scientists and science-related businesses via tax breaks, cheap real estate, biotech incubators, and biotech parks. Local governments do their part by passing laws that support businesses, such as legislation promoting embryonic stem cell research.

Currently, more than 60% of biotech companies are located outside the United States, with significant clusters in the United Kingdom, Germany, Australia, Singapore, China, and Taiwan. Each country has economic development boards working to beat the competition in attracting business. Some countries have been particularly active in building science infrastructures and offering incentives to biotechnology and pharma companies, according to Caroline Ruggieri, manager of international relations for BIO. In particular, Singapore now has a reputation for offering too-good-to-pass-up deals. "The Singapore Economic Development Board is hugely active," she says.

SINGAPORE: FRENZIED ACTIVITY

Scientists in Singapore

– SYDNEY BRENNER, distinguished professor at the Salk Institute for Biological Studies in La Jolla, California, chairs Sinapore's Agency for Science, Technology and Research (A*Star)'s Biomedical Research Council and helped set up the Institute of Molecular and Cell Biology in 1987.

– ALAN COLMAN, a cocreator of Dolly the sheep in 1996, is CEO at ES Cell International.

– YOSHI ITO, from the University of Kyoto in Japan, is principal investigator at the Institute of Molecular and Cell Biology.

– EDISON LIU, former director of Clinical Sciences at the US National Cancer Institute, is now executive director of the Genome Institute of Singapore.

– AXEL ULLRICH, director of the Max Planck Institute of Biochemistry in Martinsried, Germany, and a world-renowned cancer researcher, came to Singapore in 2004 to head the Singapore Onco Genome Laboratory and develop novel anticancer therapies, in collaboration with other local institutes.

– JACKIE YING, from the Massachusetts Institute of Technology, is executive director of the Institute of Bioengineering and Nanotechnology.

In 2000, the Singapore government decided to invest more than €3 billion ($1.8 billion, US) over five years to make biomedicine one of the key pillars of its economy. As a cornerstone of this effort, the government spent another €500 million to build Biopolis, a science complex near the downtown area that is linked by skybridges. Biopolis has lured some of the world's top scientists since its official opening in October 2003. [See "Scientists in Singapore," this page]

Singapore's vision is to become a global hub for the biomedical sciences, says Beh Swan Gin, director of the biomedical sciences group of the Singapore Economic Development Board. The EDB was set up in 1961, when Singapore was a developing country with a poor infrastructure and little capital. Low-end commerce was the mainstay of the economy, according to the EDB.

Now several major pharmaceutical companies have set up corporate R&D facilities in Singapore. The nonprofit Novartis Institute for Tropical Diseases (NITD) opened there last year, according to Philip Yeo, cochair of the biomedical sciences group at the EDB. The presence of NITD and its activities have raised Singapore's profile in the global research arena, said Yeo at the March 2005 ground-breaking of the €310 million Novartis Singapore Pharma Manufacturing facility.

Singapore has a three-pronged strategy to beef up the intellectual, industrial, and human capital of the city-state, according to Gin. The EDB's biomedical sciences group handles industrial development; the EDB's venture capital arm, Bio*One Capital, invests in companies; and the Biomedical Research Council under the Agency for Science, Technology and Research is responsible for coordinating and funding research in both the public sector and academia, as well as supporting the training of scientists.

On the financial plane, Bio*One Capital manages more than €1.2 billion in several funds dedicated to biomedical science investment. Last year, Bio*One committed €95 million in investments to 16 projects, 90% of them in Singapore or with Singapore links.

Singapore has also launched an aggressive program to increase the number of PhDs and postdoctoral students both locally and around the world. It has flexible immigration policies for professionals as well as top-flight facilities, Gin says. Singapore's biomedical sciences industry exceeded its 2005 target – €12 billion in manufacturing output – one year ahead of schedule. Leading players with a manufacturing presence in Singapore now include Aventis, GlaxoSmithKline, Merck, Novartis, and Eli Lilly, according to Gin. Singapore is also the Asian hub for many leading pharmaceutical companies and contract research organizations, including Bristol-Myers Squibb, Sanofi-Aventis, and Schering-Plough.

Asked whether Singapore plans to take on other biotech hubs such as California, Gin replies: "California has had a big head start and is the world leader in biotechnology. However, the biotech pie is very big, and there is plenty of room for other biotech hubs such as Singapore."

TAIWAN, UK, AND ISRAEL

While Singapore has been successful at attracting large multinationals to produce drugs, Taiwan has more homegrown R&D-based companies, according to Johnsee Lee, president of the Taiwan BioIndustrial Association.

"Sometimes they describe Singapore as an orchestra and Taiwan as a jazz band," says Lee, president of the Industrial Technology Research Institute, Taiwan's largest such institute. "Singapore is a smaller country with a very top-down approach and central planning so they can execute things fast. Singapore has attracted more multinationals and has been very successful. Singapore is more centralized, more coordinated. Taiwan is more decentralized."

In 2000, the Taiwanese government launched three biotechnology programs, focusing on agricultural biotech, genomic medicine, and biopharmaceuticals, says Lee. Several biomedical parks were developed in cooperation with large medical centers. In the next five years, the government hopes to induce a substantial investment in biotech industrial development. This would be a matching fund program, one-third supported by the government, and partly supported by the private sector.

"Bridge Pharmaceutical was launched six months ago to build a bridge between the US and Taiwan," says Lee. "It's a bridge over troubled waters. It's a joint investment by several US organizations and investors and initiated by SRI International in Menlo Park, California, and by our institute, the Industrial Technology Research Institute in Taiwan," says Lee.

In the United Kingdom, which bills itself as the European market leader in the biotech industry and the second-largest after the United States, both the national government and regional development agencies are putting money into biotech, according to Aisling Burnand, chief executive of the BioIndustry Association, the London-based 350-member biotech trade association.

<p>Singapore's Biopolis at Night</p>

Courtesy of JTC Corporation and the Singapore EDC

Burnand says the jury is out on exactly how successful they will be in launching biotech hubs in places like Wales. "You can't implant these things. They've got to grow organically," says Burnand. "In the UK, there are strong clusters in Cambridge, Oxford, Scotland in the northwest and a couple of young ones in Wales and the southwest."

In 2004, local industry and academic institutions invested about $800 million in Israel's life sciences, according to the Israel Life Science Industry Organization. The funding came mainly from the Israeli government (38.5%), self-funding companies (34.3%), venture capital (25%), and binational government-supported foundations (2.2%). Binational R&D includes joint venture funds with the United States, Canada, Singapore, Korea, and the United Kingdom.

Yossi Bornstein, a founder of the Israel Life Science Industry Organization in Tel Aviv, says the effort is paying off. "We are very strong in Israel in the area of stem cells," says Bornstein, owner and CEO of Shizim near Tel Aviv. "If we are not leading, we are second for sure." Bornstein's organization now wants to build a biotech cluster in Israel modeled on the San Diego cluster.

US: STATES COMPETE WITH EACH OTHER

In the United States, some states are currently using stem cell legislation to try to lure biotechs, often competing with their neighbors. Greg Horowitt is executive director of Global CONNECT, an organization of the University of California, San Diego, which links high-tech regions around the world to facilitate commercialization. Horowitt has been communicating with the United Kingdom, Australia, Kansas City, and other US cities about collaborating on stem cell research with San Diego.

San Diego is one of a half-dozen California communities vying to be the headquarters for Proposition 71, the $3 billion bond for stem cell research. By law, the state must decide on the headquarters' location within 75 days of March 16, 2005. Among the incentives San Diego offered was free rent from the landlord, legal services, a readiness team to quickly get the organization up-and-running, help with hiring, and free meeting facilities and hotel rooms for the ten years of the initiative, Horowitt says.

Being the Prop 71 hub would increase the region's visibility and create even more biotech synergy, says Horowitt. "What's interesting in this new economy is that jobs are going to go where the people are, and that means intellectual capital as well as human capital," says Horowitt.

Not every community chasing biotech is an appropriate place for biotechs to locate, Finkle notes. Nor should businesses rely solely on incentives as a reason to come to an area. "That's an awful game. Businesses shouldn't be looking at the world as who's willing to fork over money," he says. "If you're a businessperson and you're located in my hometown of Newark, Ohio, you don't want to think of your taxpayer dollars subsidizing a competitor."

The same applies internationally. "We get regions from all over the world visiting us and saying, 'We want to be just like San Diego, we want to be a major biotech center, how do we do it?"' Horowitt says. "The first thing we tell them is what's relevant is to understand your own regional genetics: your assets, resources, and research." He says it's no accident that major biotech clusters form in areas that already have a strong research component, whether it's academic, private, or government. Such research is what ends up being commercialized into the private sector, he says.

Ten years ago, Larry Goldstein moved to California to found a biotechnology company because he saw the state as a biotech hub. "We thought we were the center of the universe even before Prop 71; that's why I moved here from Harvard," says Goldstein, a cofounder of Cytokinetics, a south San Francisco-based company that develops cancer and cardiovascular therapies based on a certain class of molecular motors. "Harvard likes to think it's the center of the universe, but we in California know better."

California's move to fund stem cell research has created a whole new paradigm, says Robert Lanza, medical director at Advanced Cell Technology, a 10-year-old Worcester, Mass., stem-cell company whose president and CEO have moved to California to take advantage of Prop 71. "For the first time, we have a funding source other than the NIH. What they have done is very courageous," he says. "The money is going to follow the research, whether it's to California, Singapore, or the UK."

See also: Chasing Science: Can bioscience drive economic development? It depends. (Bill Fair)

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