Supplement: A Rich Life Science Cluster

A Rich Life Science Cluster By Mike May This region is a powerhouse of human capital in a network of research institutions, academia, pharmaceuticals, biotechs, and industry-support services. RELATED ARTICLES A Region Defined Did You Know? Greater Philadelphia's Big Pharmas A Robust Support Infrastructure Barbara Schilberg: Champion for the region Bridging the Gap Brenda Gavin: Making a venture capitalist Investment Momentum Building Update Those Resumes Creating Roots Ramping Up Tech Transfer Experts from the Greater Philadelphia region started getting together in 2000 to discuss its life science community. Among the challenges noted in those gatherings, one involved image - or rather, the area's lack of an image as a life science cluster. An image subcommittee planned to change that. "It was a very deliberate strategy," says Karen Hanson, executive director of Biolaunch611+ KIZ and the convener of that image subcommittee. Hanson and her colleagues wanted to bring BIO - the Biotechnology Industry Organization's annual meeting - back to Philadelphia. On BIO's first run in Philadelphia in 1996, it drew fewer than 4,000 attendees. By 2000, though, the meeting had grown to more than 10,000 people, making it a very desirable event to host. So a Greater Philadelphia team visited BIO's Washington, DC, headquarters with a proposal to host an upcoming BIO conference. "They weren't considering us at all," recalls Hanson, "but we made a compelling case." In competition with New York City and Chicago, Philadelphia won, securing BIO 2005. "We came out of nowhere," Hanson says. At the same time, the Philadelphia group came from everywhere - at least, everywhere in the region. "We had fabulous support from Pennsylvania, New Jersey, and Delaware," Hanson says. The image subcommittee's strategy worked. BIO 2005 drew a record crowd of more than 18,000 people to the Philadelphia Convention Center. "BIO 2005 was a bit of a coming-out party for the biosciences here," says Catherine Bonuccelli, vice president in development projects at AstraZeneca. "We got to showcase ourselves on the international scene." A morale booster, for sure, for a region that some have said suffers from an inferiority complex. Moreover, the local teams that brought home the meeting for 2005 still work together today. Milking the Success Many leaders in the Greater Philadelphia region, consisting of 11 counties in Pennsylvania, New Jersey, and Delaware, recognize the value of their life science cluster. "Bioscience is a large focus for the commonwealth," says Rebecca Bagley, deputy secretary for technology investment in Pennsylvania's Department of Community and Economic Development. "It's been one of our most competitive sectors." Beyond attracting people from around the world, BIO 2005 also included the unveiling of a Milken Institute report: "The Greater Philadelphia Life Sciences Cluster: An Economic and Comparative Assessment." In comparison with 10 life science clusters in the United States, the Greater Philadelphia region ranked third overall, just behind Boston and Greater San Francisco. A number of metrics lifted the region up this ladder. For one, life science generates $13.7 billion in earnings in the area. In addition, the region includes a solid life science foundation across a range of areas. "This is a remarkable region for what it offers to life science: a rich academic presence, rich tertiary care, high-end medical-delivery presence, large pharmaceutical companies through small biotechs and startups, plus a rich heritage of the chemical industry and others that supply life sciences," says Bonuccelli. Thinking about how these industries work together, she asks: "How could you live around 'The City of Brotherly Love' and not collaborate?" "How could you live around 'The City of Brotherly Love' and not collaborate?" --Catherine Bonuccelli Indeed, collaboration lies at the heart of the area's life science success. For example the Delaware BioScience Association, the newest trade association in the tristate, evolved with the help of neighboring BIO groups in Pennsylvania and New Jersey. Bob Dayton, president of the Delaware BioScience Association, adds, "We team with Pennsylvania Bio, BioNJ, and other organizations in a local and a regional capacity to expand life science across a broad and diverse tristate region." Success, though, lies in the results, and the Greater Philadelphia region takes emerging technology and grows it into real products or services. "We are able to move products out of the emerging stage," says Dennis "Mickey" Flynn, president of Pennsylvania Bio. As one example Flynn notes that 3D Pharmaceuticals developed its structural biology capabilities to the point that Johnson & Johnson purchased this company. More kudos for the region's life science capabilities come from experts in other areas of the country. "The Philadelphia region includes support for various stages of evolution for a new life science company," says Gerald McDougall, partner in charge of the health sciences practice for PricewaterhouseCoopers in Boston. "There's the workforce for research and development and also to create a company and provide manufacturing." Building Brotherly Love The foundation of the Greater Philadelphia life science cluster was laid long ago. In 1749 Benjamin Franklin produced a pamphlet that led to the founding of the University of Pennsylvania, which also became the home of the country's first medical school. Other firsts followed: the nation's first hospital, Pennsylvania Hospital, in 1751; the first psychiatric hospital, Friends Hospital, in 1813; and America's first pharmacy college, Philadelphia College of Pharmacy, founded in 1821. This early collection of resources triggered others. For example, the Philadelphia College of Pharmacy trained many who later founded major pharmaceutical companies in the region such as Eli Lilly, Wyeth (now part of Wyeth American Home Products), and Burroughs Wellcome (now part of GlaxoSmithKline). The region's health industry grew even more during the Civil War, when local doctors treated wounded soldiers. As a result a medical-device industry developed. In the mid-1880s, for instance, Johnson & Johnson developed ready-to-use surgical dressings. As the life science community expanded, other firsts also emerged. In 1892 The Wistar Institute became the country's first independent research facility. In 1904 the area became home to America's first cancer hospital, Fox Chase Cancer Center. In trying to unravel what spawned the Greater Philadelphia region's life science industry, Thomas Morr, president of Select Greater Philadelphia, says, "I think it was probably not a single moment. I think innovative capacity was always here or near here." Location, Location, Location Part of the region's success depends on its geography. Being within a two-hour drive of Wall Street and Washington, DC, companies gain easy access to economic and government resources. Moreover, the region offers a desirable location on its own; it is home to more than 400 companies involved in life sciences. Some of the best-known Greater Philadelphia companies are leaders in the pharmaceutical world, such as Merck, Wyeth, and GlaxoSmithKline, which Harris InfoSource ranked as the area's top-three life science employers in 2004. "In the Greater Philadelphia Region," says Bonuccelli, "the pharmas acted as anchor companies. That draws bioscience to the area, and it also provides opportunities for smaller startups to build around the pharmas." Cephalon represents one of the younger stars - at least "younger" for such a history-rich area. In just 20 years, Cephalon grew through the vision of scientist and founder, Frank Baldino, Jr., to a 3,000-person, $1.7 billion, global biopharmaceutical company. "We have been successful, in part," says Fritz Bittenbender, senior director of corporate and state government affairs at Cephalon, "because the Greater Philadelphia region is our home. A company can hire and attract world-class employees here, find partnerships with companies in our own backyard, and raise early-stage money right from this region." (See "Many Happy Returns".) These benefits spur growth throughout the tristate region. In New Jersey, for example, the number of life science companies grew from 80 in 1998 to close to 250 today, according to Debbie Hart, president of BioNJ. "This week, I had two calls from companies from other states interested in coming here, and I had five calls last month," she says. New Jersey's growth looks primed to continue. The Greater Philadelphia cluster also hosts many companies that support the life sciences industry. In fact, the Milken Institute's report ranked the Greater Philadelphia region second in support services of the core life sciences. As Morr says, "We have companies that do contracted clinical trials, regulatory work, licensing, partnering agreements, contract manufacturing, marketing, distribution, and packaging." Working Together The Greater Philadelphia cluster is one of the largest centers of academia in the country with 88 colleges and universities. In many ways academia forms the base of local life sciences. "Many academic institutions in the Greater Philadelphia region were established in the mid-1700s through the early 1800s and have evolved innovatively since the early days of our nation," says Philip Gerbino, president of University of the Sciences, "and their mission has always been education, discovery, science, and life science in some way." As examples he points out the history of drug development, the beginnings of the pharmaceutical industry at his institution, and the foundations of medical science at the University of Pennsylvania. Independent research institutes also foster collaboration. "We can only be successful by partnering," says Russel Kaufman, president and CEO of the Wistar Institute. For Wistar, that usually involves colleagues or facilities at the adjoining University of Pennsylvania or the Children's Hospital of Philadelphia. "The climate created by these institutions is almost unmatched, comparable to only what you see in, say, Boston." It's the old '1 + 1 = 3.' The strength of the people and the commitment is hard to beat." --Dennis "Mickey" Flynn Despite all the cooperation, the Milken Institute's report encouraged better technology transfer, and others agree. When asked about technology transfer in the Greater Philadelphia region, McDougall says, "It's not world-renowned. It's not the Bay area or San Diego or Boston." He adds, "There are some initiatives underway, but Philadelphia needs to do some catching up in that area." To that end the CEO Council for Growth, a tristate, 11-county business leadership organization, commissioned the Economy League of Greater Philadelphia to analyze the region's tech transfer efforts and to make targeted recommendations. As a result the council released an extensive report in October 2007 called "Accelerating Technology Transfer in Greater Philadelphia," which identifies specific opportunities for the region's universities and industry to connect. (See "Ramping up Tech Transfer".) Efforts to improve tech transfer are ongoing. Ann Weaver Hart promised a new entrepreneurial spirit in her 2006 inaugural address as the president of Temple University. In 2007 the University of Pennsylvania hired Michael Cleare, who developed a top-notch technology transfer department at Columbia University. Some officials already see change taking place. "I've seen a huge focus from institutions on getting out technology in the past three years," says Bagley. "They've focused less on research for research's sake and more on commercialization. That comes partly from a clear direction from the federal and state governments." She adds, "We want to see commercialization and economic development coming out of the money that we are investing." Technology can also transfer from one company to another. After about 25 years of work at Johnson & Johnson, Geert Cauwenbergh licensed some of this pharmaceutical giant's dermatologic compounds and know-how to start Barrier Therapeutics in Princeton, NJ, in 2001. "That sort of licensing happens often in Europe," says Cauwenbergh, "but it's not very common in the US." Then he adds, "Johnson & Johnson is a bit of a trend setter in the US." Moreover, the entire process worked relatively smoothly, despite Johnson & Johnson's gigantic size. "They really had an open mind," says Cauwenbergh. "They were not giving it away, of course, and I had to negotiate, but they never stalled anything." As a result Barrier already has three products on the market, and half a dozen others in various stages of development. Fueling the Funding Nothing in life sciences takes place without money. From a Pennsylvania state government perspective, says Bagley, "Typically we support applied or translational research that goes on in the universities. We do this through the Keystone Innovation Zones and direct grants." She adds that Pennsylvania also provides venture capital for life science companies, and offers them with other benefits, including tax credits and low-interest loans. Since 2004 the commonwealth has invested roughly $129 million dollars in venture-capital funds to spur life science advances. In addition Pennsylvania used much of its tobacco-settlement money to fund more life science. As an example the state established the greenhouse BioAdvance in southeastern Pennsylvania to enhance technology transfer and to help commercialize research from life science. On the New Jersey side of Greater Philadelphia, researchers can turn to the New Jersey Technology Council. "We actually put our money where our mouths are," says Maxine Ballen, the organization's president and founder. "We have an $80 million venture-capital fund." So far, about 55% of the investing from this fund went to life science companies. New Jersey's state government also is investing in the life sciences. For example, the state allocated $105 million to a fund, managed by Lehman Brothers, in which about 60% is for investments in New Jersey companies and about 40% will go into venture funds. The state also created a fund worth $40 million that is managed by Quaker Bioventures. Another New Jersey fund, to be managed by New Spring Health Ventures, is under development and expected to surpass $100 million. Venture capital keeps expanding. "In the past decade, we've seen more life science venture capital coming to this region," says Bittenbender. As one example he points out Quaker BioVentures, which manages more than $500 million. "We're not top-tier in terms of VC raised like San Francisco, San Diego, or Boston," says Bittenbender, "but we're on a VC growth cycle." (See "Investment Momentum Building".) The state of Delaware is also making large investments in life science companies. From 2004 to 2007 Delaware allocated more than $14.5 million to life science projects or initiatives. Despite all the spending on life sciences around the region, some areas of commercialization still need more funds. Kaufman says, "We're doing pretty well for early-stage, small investments, but the later stage is where investors need to come in and fill the gap." (See "Bridging the Gap".) Continuing the Teamwork Teamwork makes up the most important ongoing trend in the Greater Philadelphia region. "Really, it's the community spirit of us all working together that helps to make us successful," says Flynn. "It's the old 'one plus two equals three.' The strength of the people and the commitment is hard to beat." As a recent example of working together, the governors from Delaware, New Jersey, and Pennsylvania formed the tristate Delaware Valley Innovation Network (DVIN). According to Dayton, "DVIN's initial focus is creating additional education and training resources for an expanding life science workforce to meet industry needs, and DVIN has already secured $6.6 million from the US Department of Labor." What develops in the Greater Philadelphia region in the future will surely depend on what's gone on in the past. "We have [a lot] of foundational support for the life science industry," says Gerbino. He notes the impact of universities and hospitals, but also gives credit to financial-support groups, as well as those from other areas, ranging from information technology to real estate. He says, "It's the integration and convergence of all of those factors that develop the depth of our life science community, which is outstanding in this nation and the world."

Supplement: A Rich Life Science Cluster

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