A Capital Locale for Life Sciences

Editor's Note: This is the third installment of a 4 part series on regional hot spots for life sciences employment. The final installment focusing on Research Triangle, N.C. will appear in the October 29 issue. When starting his biotech firm, Psychiatric Genomics, Inc., in Massachusetts last year, Michael Palfreyman found the life sciences business environment a little cramped. "In Boston, real estate prices are through the roof," he says. "There's no good access to incubator space and there's constant competition from other, larger companies for staff." So Palfreyman moved to Gaithersburg, Md., just minutes from the National Institutes of Health and many of the world's foremost genomics firms. Today, his company, which mines the human genome to generate therapies for mental illnesses, has grown to 30 employees, a growth Palfreyman credits, in part, to the new locale. The Washington, D.C. region "has a strong infrastructure in biotechnology and computer sciences," he notes. "That combination, plus the proximity to NIH and academia, is what makes this area so powerful for genomics." Compared to Boston, he says, the Washington area seems more entrepreneurial, having a Silicon Valley "feel" to it. "This is a very business-friendly climate in which to build a top-notch scientific team." The national capital region, which stretches into both suburban Maryland and Virginia, does have its drawbacks, to some, of course: traffic is horrendous (third worst in the nation, after Los Angeles and San Francisco); the summers can be positively torrid; prime lab space rents for a premium; and national policy wonks crowd the neighborhoods. But biologists crowd more than a few environs too. With 300 bioscience companies, the region hosts the third-largest biotech community in the country after Boston1 and the San Francisco Bay area.2 The Washington area also boasts a lower cost of living than does Boston or the Bay Area, while equaling or outdoing those regions in salaries, abundant cultural opportunities, and quality K-12 public education in many suburbs. With 15,317 companies, the Washington, D.C. region also has the largest number of high-tech businesses in the United States, beating out Silicon Valley (14,014), Los Angeles (13,152), Chicago (11,645), and Boston (8,581), according to a GWI analysis of Dun & Bradstreet MarketPlace data for January 2001.3 A study by the Brookings Institution Center on Urban and Metropolitan Policy4 suggests Washington's local technology sector, including biotech, is poised for growth again this year. Many larger biotech companies have 50 to 75 job openings at any given time. "I'm very bullish on this area, says Morrie Ruffin, vice president for business development at the Biotechnology Industries Organization (BIO), a national trade group based in Washington, D.C. "It already is a biotech hub and has all the ingredients needed to grow, especially the people. The success of any region is having access to talent - and that is here." Maryland Boosts Biotech Maryland lays claim to more than 330 bioscience companies employing about 16,000 workers. Roughly two-thirds of these businesses are concentrated in Montgomery County, a District of Columbia suburb that houses the NIH, Food and Drug Administration, and several other health-related government agencies. The county's life science companies, situated along Interstate 270 north of the District, range from incubators and start-ups to some of the largest biotech companies and institutes anywhere, including MedImmune, Inc., Celera Genomics, Inc., Human Genome Sciences, Inc. (HGSI), and The Institute for Genomic Research (TIGR). Celera, HGSI, and TIGR got started on specially designated county-owned land 20 years ago. "We were the first local jurisdiction to take a piece of property and specifically zone it for research and development," boasts Amy Finan, director of technology programs for Montgomery County's Department of Economic Development. Fourteen biotech companies are taking advantage of the county government's new $8 million, 50,000-square-foot incubator, the Life Sciences Center in Shady Grove, one of more than a dozen such biotech hatcheries in the region. Most of these companies are in proof-of-concept, early-stage development working in such areas as biological sensors and they employ three to 20 researchers, according to Dua Duong, program manager. In suburban Maryland within driving distance of the NIH, the federal Agricultural Research Center in Beltsville, Naval Medical Research Institute in Bethesda, and Walter Reed Army Institute of Research in Silver Spring offer access to government resources. Maryland also hosts a biotech cluster situated along Interstate 270 north of the District and several world-class university-based research centers, including the Howard Hughes Medical Institute (HHMI) Research Laboratories; the University of Maryland's research centers, including its Biotechnology Institute; and the Johns Hopkins University. Virginia Tries Harder Unlike Maryland, Virginia has staked out only small patches on the biotech atlas: 200 life science companies employ about 15,000 workers. About half live in Northern Virginia. With more information technology (IT) than life-science resources--especially along the Interstate 66 corridor west of the Potomac River to Washington Dulles International Airport--the Old Dominion remains the biotech kid brother to Maryland. The state's new Internet economy has proven a attractive to biocomputing and bioinformatics startups, however. "I think the big driver for us in Northern Virginia is the presence of the IT community," says Jerry Coughter, director of biotechnology and medical applications at Virginia's Center for Innovative Technology in Herndon. "For people or businesses with expertise in bioinformatics or anything related to bioinformatics, there couldn't be a better place to be." Virginia officials expect the $500-million biomedical research center that HHMI plans to build near Leesburg, Va., to enhance the biotech marketplace.5 The new facility, to be completed in 2005, will house an undetermined number of life research scientists and support staff on its 281 acres, says HHMI spokesman Jim Keeley. Traffic Tie-ups When Jon Heinrichs accepted a job at MedImmune, Inc. five years ago, the microbiologist, who works in vaccine development and tumor biology, rented a townhouse near his workplace in Gaithersburg. He and his wife took their time--a year and a half--to scout before buying a home. "One of the drawbacks to living in this area is the major traffic problems," Heinrichs says. They found a house just 10 minutes by car to MedImmune. "I'm one of the fortunate ones here. I have a very short and direct commute." Not only is Heinrichs fortunate, he's a virtual rarity. In this region, commuters often spend two or more hours a day snaking across over-crowded bridges or through endless construction zones. The most recent national Roadway Congestion Index6 prepared by the Texas Transportation Institute using 1999 data, found the Washington, D.C. region has the third most-congested roadways. The Washington index was 1.34, based on a ratio of daily traffic volume to the supply of roadway. Only Los Angeles (1.58) and San Francisco-Oakland (1.39) were worse. The quality of schools also preoccupied Heinrichs when he considered the move: He could land in a neighborhood with schools considered among the best in the nation--in Montgomery County, for example, which has produced the highest math scores among large diversified U.S. schools--or end up in a fine neighborhood with a troubled school, like some in Prince George's County, Maryland or the District of Columbia. His son finished kindergarten in Montgomery County in June. "We've been fairly pleased with the school system so far," Heinrichs says. Competitive Salaries Life science salaries in suburban Maryland and Northern Virginia remain competitive to other regions of the country, with pharmaceutical firms paying more than biotech or academia pay, says Coughter of Virginia's Center for Innovative Technology. "This is a relatively expensive place to live but it is not as expensive as the Bay area or Boston," he says. "So if you can get anything close to comparable you are coming out ahead." Indeed, out of 180 metropolitan areas across the United States, the Washington region ranked 49 in housing affordability, according to a study by the National Association of Home Builders.7 The Boston/New Hampshire region came in toward the bottom, with a ranking of 150 while San Francisco came in dead last, at 180, meaning that it was the most expensive. (Washington's numbers may have been skewed slightly upwards in affordability because the study included neighboring parts of West Virginia, which is on a commuter train line from Washington.) The median housing price for existing homes in greater Washington was $187,100 last year--$212,500 in Montgomery County in 1999--compared to $317,800 in Boston, and $417,200 in Silicon Valley, according to the National Association of Realtors. Not Yet Nirvana Courtesy of Greater Washington Initiative Despite its attractions, the region lacks a key ingredient for biotech business development: competitively priced commercial property. "Wet lab space can be at a premium in a lot of areas, particularly Montgomery County," says Robert Eaton, president of MdBio, Inc. a non-profit Maryland bioscience promotion organization. "There's no available commercial space," Coughter adds. "And if you were a company and needed a wet lab, you couldn't find one that you wanted, even at any price around here." Commercial developers say they know about the space shortage, but express a reluctance to develop costly laboratories that can only be used by scientists. Washington's political reputation also has its pros and cons, says BIO's Ruffin. Some scientists may think the region is not as "pure" in science or academia as is Boston, for example. But government predominance has its advantages. "The closeness to federal agencies gives you better access to technology and information that you couldn't get elsewhere," Ruffin says. Plus, for companies that deal with regulatory agencies such as FDA, NIH, and the Patent and Trademark Office, proximity means profits. "There is also a rich talent pool here of regulatory specialists and patent and IP specialists that you can't find elsewhere in the country," he says. "I think that proximity is a real cost savings." Ted Agres (tagres@usa.net) is a freelance writer in Washington, D.C. References 1. "Boston-Worcester biotechnology and pharmaceutical industries heat up life sciences employment market," The Scientist 15[4]:27, Feb. 19, 2001. 2. "San Francisco Bay Area biotechs keep on cooking," The Scientist 15[10]:26, May 14, 2001. 3. "Greater Washington Regional Report 2001," Greater Washington Initiative, Washington, D.C. June 2001. 4. "High Tech Specialization: A Comparison of High Technology Centers," Brookings Institution Center on Urban and Metropolitan Policy, Washington, D.C. January 2001. 5. E. Russo, New center for biomedical technology," The Scientist, 15[4]:1, Feb 19, 2001. 6. Texas Transportation Institute, "1999 Roadway Congestion Index," Texas A&M University System, College Station, Texas, May 2001. 7. "Housing Opportunity Index: Fourth Quarter 2000," National Association of Home Builders, Washington, D.C.

A Capital Locale for Life Sciences

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