REGION TRIES TO WOO BIOTECH COMPANIES
Christopher Davis

06/11/2004
Pittsburgh Business Times
June 11, 2004, Vol. 23, No. 48; Pg. 1; ISSN: 0883-7910

SAN FRANCISCO - State and local economic development and life sciences officials who gathered here this week for the BIO 2004 Annual International Convention said they are encouraged by significant strides made by the state and Western Pennsylvania in terms of biotech-related job growth and business development.

They're also happy with the reception they've gotten from prospective companies interested in doing biobusiness in the Commonwealth.

However, they admit there's still much work to be done in getting the word out that Pennsylvania is working to establish itself as a key player in the potentially lucrative life sciences industry.

Two reports issued at the conference this week—one commissioned by a Pennsylvania bio-industry trade group, the other from a nonprofit organization that benchmarks technology-related issues—showed the state is doing well in the global competition to establish itself as a bio hub.

A report from the Pennsylvania Biotechnology Association, or PA BIO, showed that the state's life sciences industry generated more than $5.5 billion in overall wages for its work force in 2002, accounting for 83,860 jobs.

Those figures, which were the latest available and excluded the contributions of the state's general health care industry, increased dramatically from 1998, the last time a similar study was conducted.

Life sciences jobs generated $3 billion in total wages and accounted for 59,000 jobs in 1998, according to the report.

The number of Pennsylvania's biotech companies and research organizations also grew 85 percent from 1998 to 2002—to 2,038 from 1,100, the report showed.

In addition, out of 19 venture capital deals consummated in Pennsylvania during the first quarter of 2004 and totaling $200 million, 12 involved biotech and life sciences companies, according to the report. That venture investment ranked the state fifth in the nation, in terms of total dollars invested during that period.

Still, many outside the region are unaware of Pennsylvania's growing role in the bio industry.

Pittsburgh Regional Alliance president and COO Ronnie Bryant, who was one of the roughly 250 Pennsylvania delegates who made the cross-country trek to BIO 2004, said one company he spoke with was unaware of the efforts of state officials to cultivate the fledgling industry, such as the ovation of the Life Sciences Greenhouse initiative—a network of three biotech incubators in Western, central and southeastern Pennsylvania that the state bankrolled with $100 million in tobacco settlement money. Mr. Bryant said the prospect was excited by the concept when he told him about it.

EVERYBODY'S HERE

Pennsylvania officials were on a mission to get the word out about the states recent bio-business successes to a BIO 2OD4 audience of nearly 18,000 attendees representing 59 countries. The conference was a virtual world's fair of life sciences companies and research organizations.

But the field was crowded at BIO 2004. This year's conference marked the first time that all 50 states were represented, and the competition was fierce. Just feet away from the Pennsylvania exhibit, Florida Gov. Jeb Bush drew a large crowd Tuesday afternoon when he visited the exhibition floor.

Pennsylvania spent about $250,0000 on the conference, including travel costs and construction of an elaborate pavilion with space for 31 exhibitors and two floors of private meeting rooms for one-on-one sessions to woo out-of-state companies.

PA BIO president Fritz Bittenbender said during an interview at the conference that his organization released its study at BIO to help market the state as a biotech hub, something he said the progeny of Walt Whitman have not done a good job of in the past.

"We come from, I think, a very strong, important sort of Quaker mentality in Pennsylvania, and we're not really good necessarily about promoting ourselves," Mr. Bittenbender said. "We need to be screaming from the highest mountaintop that we are a global leader in the life sciences. That's how you attract partners, that's how you attract venture capital."

Mr. Bryant, whose nonprofit economic development organization is responsible for marketing 10 counties in Western Pennsylvania, said he was working during the conference to get word out to companies about the benefits of doing business in Pittsburgh.

He said he attended about five meetings with companies, including some in Santa Cruz and Sunnydale, Calif. He declined to disclose which companies he met with.

Mr. Bryant said PRA senior vice president of business investment Bernard McShea also attended a handful of meetings with companies.

"We're just continuing to be aggressive," Mr. Bryant said. "You might not make a deal here, but you will pique interest."

"Success is measured (at the conference) by the number of contacts we're able to make."

David Palmer, COO of the Pittsburgh Life Sciences Greenhouse, said the BIO 2004 meeting is an integral part of the organization's efforts to lure biotech companies and venture capital to Pittsburgh.

"The beauty of this conference is everybody's here," Mr. Palmer said. "It makes it so easy to coordinate meetings with all the appropriate people."

A Greenhouse spokeswoman said the organization was still tallying the number of meetings it held with prospective companies.

A MARATHON, NOT A SPRINT

Pennsylvania Department of Community and Economic Development Secretary Dennis Yablonsky said his office was also meeting during the conference with an undisclosed number of firms.

"My schedule is jammed as it could possibly be with individual meetings, which I'm real encouraged by," said Mr. Yablonsky, who previously headed the Pittsburgh Life Sciences Greenhouse.

He said the life sciences industry is key to Pennsylvania's new economy.

"This is one of our better opportunities for growth. Personally, I don't think every region of Pennsylvania can be a bio or life science region. I think that's unrealistic, but I do think there are a number of regions that do line potential," Mr. Yablonsky said.

"Philadelphia clearly is the leader in terms of critical mass on the pharmaceutical and bio side, but I still believe strongly that Pittsburgh will continue to succeed and grow. They have all of the elements that you need to make it work."

He pointed to Western Pennsylvania's research institutions, such as the University of Pittsburgh and Carnegie Mellon University, as two of those key elements. Overall, Pennsylvania research institutions attracted more than $13 billion in National Institutes of Health funding in 2003, ranking the state fourth in the nation for such giants.

Mr. Yablonsky said industry officials are also starting to take notice of Pennsylvania's growing number of commercial life sciences firms and the role that the state has played in helping them expand. The state has set aside $2 billion in tobacco settlement money for development of the industry.

"It's always been known as a good place to do research," Mr. Yablonsky said. "I think now we're being known for the commercialization and the partnership aspect of it, and that's getting a lot of attention."

That attention was apparent in another report released at BIO 2004.

The Battelle Memorial Institute, a private, nonprofit Columbus, Ohio-based organization that specializes in technology development, management and commercialization, issued a joint report with the Biotechnology Industry Organization, the Washington, D.C.-based trade group that organizes the annual BIO conference, that showed Pennsylvania is one of only three states in the nation that have large employment bases in three out of four key bioscience subsectors, such as drugs and pharmaceuticals, medical devices and equipment, agricultural feedstock and chemicals and research and testing.

The other two states with large employment bases in three of the four subsectors were California and Illinois.

Walter Plosila, Vice President of Battelle's Technology Partnership Practice, called Pennsylvania "a very innovative leader" in the area of public-private biotech partnerships.

While the state lags biotech hotbeds such as the metro Washington, D.C., area, San Diego and the San Francisco Bay area, he said a decade ago some of those places were not established leaders either.

"It really is the nature of economic development that there's not anywhere where you don't have a chance (to establish a biotech cluster)," Mr. Plosila said. "This is a marathon, not a sprint. I think there are many market niches and many opportunities moving forward."