State Associations Promote Biotech Growth

The agency's plans to fund up to 80 facilities at universities now seem doomed by harsh criticism and funding shortages In Texas, the so-called third coast of biotechnology, a new statewide association of biotechnology companies hopes to put local investors in touch with scientist entrepreneurs. Its California counterpart successfully lobbied last year against a bill restricting animal testing. A Pennsylvania association is in the process of developing a high school curriculum on biotechnology as a way to familiarize future generations with this evolving technology. And in the Bay State, the Massachusetts Biotechnology Council is particularly proud of its softball league -- and the networking that goes on between companies during the games. Hundreds of companies and thousands of scientists, from lone entrepreneurs to the employees of large firms, are finding strength in numbers and a common voice for their political and professional concerns through affiliation with the growing number of biotech trade associations being formed at the state level . In the past five years, biotechnology firms in 16 states have organized their own trade associations. Their work parallels on the local level the efforts of the two Washington-based national biotech organizations, the Industrial Biotechnology Association (IBA) and the Association of Biotechnology Companies (ABC). And the ranks of these trade associations are growing as biotech companies continue to cluster and create industrial centers (see map and list on page 5) throughout the nation. Pennsylvania, for example, has an estimated 26 biotech companies, New York has 33, and Texas 31. These state-based trade associations take on missions that, because of their proximity and focused constituency, they can do more effectively than the IBA and the ABC. Association representatives pound state legislature corridors, peddling their positions on biomedical waste legislation, labeling of products derived from biotechnology, and other issues. Their meetings often provide a forum for keeping company scientists up to date on Food and Drug Administration drug approval policy, company financing, and personnel recruitment. Some associations also promote public awareness of biotechnology through education programs. In some cases, an association's focus is on the individual investigator. "One of the reasons we started our trade association," explains Martin McGregor, attorney for the Houston-based Southwest Biotechnology Association (SBA), which was established late last December, "was to help that scientist in an academic institution who has a breakthrough idea, and who wants to make that leap to entrepreneurship." Trade associations are essential to fostering young biotech companies' success, McGregor says, because they can help solve some of their unique growth problems. "The long lead time in getting products to market requires significant investments of venture capital," he says. "By organizing our companies into a group and being committed to the field's development, we help make the investment community comfortable in putting their money into biotech and not the latest shopping mall. We in Texas, at least, are trying to show them [investors] that we are not drilling dry holes here." Massachusetts Biotechnology Council (MBC) meetings have helped forge relationships between local universities and companies, "and this can be essential to a company scientist's work," according to Sally Seaver, a cell biologist and associate director of research and development at Hygeia Sciences of Newtonville, Mass. "Scientists can tap into resources that might otherwise not be available to a company." Such resources include libraries, equipment, expert personnel, and scientific and technical symposia sponsored by local universities. Trade associations often serve as good indicators, say their leaders, of the stability of the biotechnology industry in a state. Gary Schweikhardt, the former chair of the Washington Biotechnology Association, which started in July 1989, says the fact that WBA exists proves that there are enough opportunities "so that if someone leaves a local company, they don't have to move back to New Jersey to get a job. We get lots of calls from people looking for jobs, and we put them in touch with recruiters." Memberships in some of these associations is restricted and expensive, while others open their ranks to associate members -- such as accounting and law firms and other companies and individuals that service the industry -- and are less costly. The California Industrial Biotechnology Association (CIBA), for example, has only 27 members, while the Pennsylvania Biotechnology Association (PBA) has 79. That's because ClBA's graduated dues are still pricey -- $4,000 for a company of more than 150 employees, $1,500 for associate members, and $1,000 for a company with 24 or fewer employees. PBA's dues, on the other hand, range from $1,500 for a company with more than 500 employees to $100 for individuals or associate members. "The main objective of these trade associations is to enhance the growth of the biotech industry in their locale," says Richard Koehn, an academic biologist and secretary of the New York Biotechnology Association (NYBA), which incorporated last November "Industries are strengthened by communication and interaction, and when issues do arise, be they legislative or financial in nature, they are easier to solve as a group. Historically, that is a demonstrable fact." The methods for achieving that objective can vary widely, depending on where the associations are located and the maturity of the industry in the state. Some organizations, like the five-year-old California Industrial Biotechnology Association; mainly lobby state legislatures rather than, say, promote new businesses. California already is home to about 150 biotechnology companies, more than any other state in the nation. Says CIBA spokesman Peter Sensen: "Our main concern for 1991 is watching and working with the new administration in Sacramento to ensure continued support of the product rather than the process approach to biotechnology legislation. We don't have a finance committee. We're not really interested in developing the industry in the state." Last year, CUBA lobbied against state legislation that prohibited the use of animals in testing the safety of household products. "Although it didn't affect our industry directly, we fought against it because we were concerned that the whole tenor of the bill was antiscientific and that it would have hindered science in the state as a whole," says Jensen. Other associations, like WBA, stress business concerns, such as giving members advice on personnel recruitment, investment strategies, or buying fermentation equipment from a local supplier. WBA has an open house program that takes commercial scientists to see other companies' labs and facilities for informational and potential collaboration purposes. And between eggs and coffee, members at a recent Pennsylvania Biotechnology Association breakfast meeting held in Malvern, Pa., heard about biotechnology company employee statistics and compensation issues. PBA maintains both legislative and economic mandates, but also gets involved with public education. "We feel that the public's familiarity with the field through the media or the educational system doesn't breed contempt," says Jeff Davidson, executive director for PBA. His group is in the process of developing a curriculum guide about biotechnology for high school students that he hopes will be picked up by other states across the United States. "It would have a glossy magazine format with experiments to do and a catchy articles on issues in biotechnology," says Davidson. "Our first issue would deal with bioremediation. We're in the process of applying to the National Science Foundation for a grant for assistance." In Massachusetts, its five-year old association successfully lobbied against a piece of capital gains legislation last year that would have reduced compensation received by biotech company scientist employees in that state. "Since many company scientists are paid in stock, this bill would have reduced the value of their stock and therefore of an individual's revenue," says MBC administrative director Peter Feinstein. Sometimes, an association is called upon to protect the industry in the political arena, as was the Wisconsin Biotechnology Association last year The use of recombinant bovine somatotropin (rBST) to increase milk production in cows became a particularly explosive issue d in Wisconsin. The association lobbied against legislation that sought to ban rBST products in the state. Wisconsin's independent farmers, however, were more successful than the biotech industry in convincing the legislature and the governor s to implement the ban. Many of the smaller farmers argued that since they can't afford the hormone they would be put at an economic disadvantage. There is currently a one-year moratorium on use of rBSt s products in Wisconsin, due to expire June 1, independent of pending commercial FDA approval of the hormone. Part of the impetus for establishing the New York State Biotechnology Association and the Southwest Biotechnology Association, according to NYBA's Koehn and SBA's McGregor, was to get a better estimate of the number of biotechnology companies there were in their respective regions. "Published numbers are underestimates of the activity in the state," says Koehn."They miss the small companies with two and three members. These reports give a false impression about the activity in the state." Both associations are in the process of surveying their regions for better company counts. The state associations communicate with each other for a variety of reasons. Younger groups often lean on older groups for guidance before officially establishing themselves. And legislative and economic concerns often cross state boundaries. While many of these groups are similar, they fall into two very different categories, depending on their not-for-profit tax status. The majority of the 16 state biotechnology associations hold 501-C6 nonprofit tax status. This designation allows the groups to collect dues from members as business expenses and also enables them to lobby legislatures. The others usually hold a 501-C3 nonprofit tax status. These associations spend a significant portion of their assets lobbying, and donations to them are considered charitable donations and not business deductions. Although the primary mission of these groups isn't lobbying, association representatives can still give testimony at hearings and organization members can speak to legislators on their own time. While most of the state biotech associations have some ties to the national trade associations, they are independent and have different agendas. National organizations mainly do federal lobbying. But IBA and ABC are beginning to realize the importance of the state associations and are implementing programs to beef up better relations. "ABC is in the process of finalizing guidelines that provide a framework for state associations, should they elect to become a chapter of the national group," says Pamela Bridgen, executive director of ABC. These guidelines are due to be approved within the next eight weeks. The small size of IBA's staff in the past hindered its state governmental relations activities, but that's changing. Says Lisa Raines, IBA's director of government relations: "There's a lot going on at the state level that is useful for us to know, and since our association is growing, we are now able to devote more resources to state issues."

State Associations Promote Biotech Growth

Feb 3, 1991

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