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At
first glance it could be just another study. But
what Governor Mark R. Warner really proposed in his
June Executive Order 14, "The Virginia
Biotechnology Initiative," is a hard and fast
look (recommendations due in November) at whether
the Commonwealth can muster a statewide strategy in
biotech. Good question in a state where many hear
"sweet mystery of life" as a scientific
conclusion, not just a lyric.
The
timing of the review couldn't be better. Decisions
by Eli Lilly to locate a huge new pharmaceutical
facility in Prince William County and the Howard
Hughes Medical Institute plans to break ground in
Loudoun County in 2003 illustrate the economic
development upside. A 1999 study by
Virginia's Center
for Innovative Technology already has suggested
potential for an $8 to $10 billion a year biotech
industry in Virginia
by 2010
employing 70,000 and generating $400 million a year
in state and local taxes. Bode Systems of
Springfield pushed its own sophisticated DNA
identification techniques to new heights in helping
families and authorities in New York
put the
tragedies of
September
11, 2001
to rest.
PPL Theurapeutics in Blacksburg
just
figured out how to disable the porcine gene that
provokes an immune system reaction in a pig-to-human
organ transplant.
The
review panel is an impressive group. Technology and
hospital executives, scientists, university
representatives, cabinet secretaries, legislators
and economic development professionals are among its
members. After its initial meeting in
Richmond, it plans
meetings at the University of Virginia, Virginia
Tech and William and Mary before concluding its
public discussions at the VaBio Technology Summit in
McLean
in
mid-October. There will be interactive discussions
via a site hosted by Virginia's Center
for Innovative Technology, which is staffing the
study.
But
positive developments and suggestions of potential
also need reality checks. Virginia
has an
identity problem as a biotech state. A new Brookings
Institution report (Signs
of Life: The Growth of Biotechnology Centers in the
U.S.) has
Northern
Virginia
on the
biotech map only as a part of the consolidated
Washington-Baltimore metropolitan statistical area, Richmond
in the
middle tier and Hampton Roads way below average.
Charlottesville
and Blacksburg, of
course, aren't in top 50 metro areas so the
University
of Virginia
and
Virginia Tech show up only tangentially.
One
problem is access to capital. Ernst & Young
reported to the Biotechnology Industry Association
in June that private biotech financing – initial
public offerings, secondary offerings and venture
capital -- plummeted from $32.7 billion in 2000 to
$7.9 billion in 2001. The volatility of capital
markets continues for biotech as for every other
sector. Private funding tends to cluster at the
commercially viable product end of the funding line,
where returns on investment happen more quickly.
Virginia
has a
growing number of competitors, both globally and in
the United
States, even
outside of traditional centers, such as California
or
Massachusetts. Michigan
has
committed $50 million a year to biosciences and
biotechnology over the next twenty years. Pennsylvania
has set
aside $60 million a year to fund basic biotech
research, $100 million for life sciences greenhouses
and $160 million for venture funds. Ohio
cut its
budget by $1 billion, but at the same time proposed
a $1.6 billion biotech initiative over the next
decade. The
Commonwealth
of Virginia
purposely
has kept its investment cupboard relatively bare in
good times and bad.
A
biotech strategy remains a big question for a state
that remains ideologically bound, risk adverse and
slow to embrace change. The last administration, for
example, upon learning of stem cell research
breakthroughs at the Jones Institute at the Eastern
Virginia Medical School (EVMS), didn't want credit,
just assurances that no state funds were used in the
work. Members of the General Assembly members
readily discuss which avenues of scientific inquiry
to criminalize and reject R&D tax credits, a
state-backed biotech venture fund or other
incentives recommended by their own Joint Commission
on Technology & Science.
While
CalPers, one of the world's largest public pension
funds, is adding another $500 million to California
biotech investments to build on that state's sector
successes and diversify its investments further, the
Virginia Retirement System still considers such
alternative investments in emerging technologies and
companies too risky (as if mainstream equity markets
were not). The Wisconsin Investment Board,
meanwhile, dedicated $50 million in pension funds to
life science investments, determined and confident
that it would capture the commercial spin-offs of
the decade-long $317 million research initiative
announced by state government in Madison.
Against
this backdrop and competitive landscape, Governor
Warner's advisory board will examine the biotech
investment and job potential in Virginia, determine
if the state has any comparative advantages and
assess how biotech players in Virginia might work
together to meet economic development and workforce
challenges. At its first meeting last week, Walter
Plosila from the Battelle Institute in Cleveland
told the
panel that successful states and regions
strategically identify their niches and
competencies, address their gaps and commit to
multi-year efforts to build their bioscience
industry. Plosila called world-class research
institutions "absolutely essential." For Virginia
those
observations suggest changes in policy and culture,
money and incentives.
Strong
research capacity and the ability to convert
research into successful commercial activity --
venture capital and local entrepreneurship -- are
why the Brookings Institution study ranks Boston
and San
Francisco
as the
strongest biotech regions in the U.S.
These are
strengths built where smart, innovative people drive
cultures that embrace and invest in change.
Certainly
the door to the biotech future is open. Niches in
genomics, proteomics, bioinformatics and dozens of
other specialties are opening all the time.
San Diego,
Seattle
and
Raleigh-Durham have climbed steadily with sustained
efforts in getting education, research, venture
capital, commercial deals, law, policy and
innovative people together. But there are more
obstacles for Virginia
than just
the competition from other biotech centers.
In
getting a biotech life, Virginia
will be
changing its culture. A biotech future values
information more than ignorance. Science, not
politics or ideologues, drives research. Government
and the private sector embrace new, different,
pragmatic roles. Geography doesn't define
universities or communities of interest. And the
pay-off periods are longer than anyone's four-year
term or six-year budget planning cycle.
Can
Virginia
get ready?
Panel co-chairmen Michael Schewel, Secretary of
Commerce and Trade, outlined a "realistic,
aspirational report" objective that will
include action areas, if not every specific step.
Dr. Brandon Price, chairman of the Virginia
Biotechnology Association, made it clear that his
vision is not to catch up, but to position Virginia
to grow
forward into innovative and commercially viable
biotech niches that are emerging. Price added that Virginia
would have
to be "incredibly creative" to seize a
broader life science future.
Biotech
advocates across the state hope the Warner
initiative provides both a comprehensive framework
and a jumpstart. They already have seen one positive
sign. The Science Museum of Virginia named EVMS
researcher Dr. Aaron Vinik one of its 2002
Outstanding Scientists in April and Governor Warner
was there to present the award.
--
August 26, 2002
A version of this commentary appeared initially in the July/August 2002
issue of The Voice, a monthly publication of the
Northern Virginia Technology Council
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