States spend big in feverish biotech pursuit

Niche players face VC gap
Other states aren't as ambitious as Arizona or Florida, but still think they're positioned to get a bigger piece of the biotech pie by pursuing niches where they've already developed some strength.

Alabama, for example, is home to a top 25 NIH research institution, the University of Alabama at Birmingham. The UAB-affiliated Southern Research Institute has developed six cancer drugs that already are on the market. The University of South Alabama recently recruited one of the top scientists from the National Cancer Institute and broke ground on a new cancer research facility.

"We see a lot of communities chasing biotech who don't have a lot of the basic ingredients that we have," says Angela Wier, vice president of the Economic Development Partnership of Alabama.

She acknowledges, however, that Alabama is weak on venture capital, an essential ingredient for building a strong biotech sector.

"That's a gap," she says.

Some states and municipalities are addressing this gap by creating their own venture capital funds or offering tax incentives for investments in local VC firms or university-backed companies.

Plosila, who analyzed states' biotech efforts last year in a study for the Biotechnology Industry Organization, says regions also need to come up with seed funding for early-stage biotech companies.

St. Louis, which wants to be a player in agricultural biotech, did that by creating BioGenerator, a not-for-profit fund that provides funding and expertise to commercialize promising new technologies.

Addressing pre-venture funding "isn't easy," Plosila says, "but it's essential."

Billionaire gambles on biotech
Then there's Kannapolis, N.C., which hopes to transform itself from a textile mill town to a biotech hub with the help of David Murdock, a California financier who plans to spend up to $1 billion to develop a research park at a former Pillowtex plant.

BIOTECH ACROSS THE NATION Dallas-Fort Worth seeking capital, execs Authority, incubator boost Colo. biotech NY's support for biotech research trails rivals' efforts Region's lively biotech sector has long way to go Nashville, going it alone San Antonio leaders defend city's bioscience push Boston: Luring away our biotechs Birmingham eyes growth in biotech Biotech fever in Cincinnati Louisville eyes biotech industry

This initiative is unique because the key player is a private individual rather than a government. Murdock, who owns Dole Food Co. and a real estate development firm, has pledged to establish a $100 million venture capital fund to attract biotech firms to his park, which is about 40 miles northeast of Charlotte.

Murdock's deep pockets and real estate experience is "an interesting combination," DeVol says. The University of North Carolina plans to partner with Murdock on the research park, and Murdock's upfront VC commitment "could potentially attract top research scientists" as well as "capital-starved" biotech firms, DeVol says.

But he says it will take at least 10 years, more likely 15 to 20, for Murdock's gamble to pay off - if it ever does.

Success provides an edge
The current leaders in the biotech race have a significant edge, because success breeds success. Where would a brilliant young biochemist rather be, Cortright asks: in West Palm Beach, where there is only one major medical research institution and no local venture capitalists who understand biotech; or in San Diego, where there are dozens of biotech companies to work for, lots of mentors to learn from and biotech-savvy VCs?

That doesn't mean, however, that biotech champions like Boston and San Francisco aren't vulnerable to "legitimate contenders," DeRocker says.

"Anybody who has that view is a terrible student of history," he says, citing California's loss of the aerospace industry.

One area of vulnerability for both the San Francisco Bay area and Boston is their high cost of real estate.

That's one reason why Xceleron, a British company that has developed technology to speed drug development, chose Montgomery County, Md. - just outside of Washington, D.C. - as the site for its North American headquarters.

Boston "has almost priced itself out of the market for a small company like ours," says Xceleron CEO Colin Garner.

Montgomery County is a hot spot for biotech because it's home to NIH and the Food and Drug Administration.

Areas that don't have an existing biotech infrastructure won't be able to compete on cost alone. Instead, DeRocker says, they need "the political will and financial wherewithal" to spend decades beefing up their medical research institutions and commercialization capacity.

Many places now chasing biotech won't have that kind of patience, he predicts. "Some of these locations," he says, "will wake up and smell the coffee."

"Quite frankly," DeVol says, "most of them aren't going to be successful in the bigger scheme of things."

American City Business Journals, Inc.

MORE FROM LOCAL BUSINESS

Local Business Section Front

'Seinfeld' shop owner hit with tax charges Business is down near new Yankee stadium Worker: I was fired for wearing ‘God’ button The biggest U.S. metro areas in 2025 Tony Las Vegas development struggles Californians debate selling classic landmarks Mich. mayor urges people to buy American San Jose leads as nation's top tech center America’s most affluent communities Small firms: Obama doesn’t understand us Local Business Section Front   Add Local Business headlines to your news reader: