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Signs of Life The Growth of Biotechnology Centers in the U.S.

Signs of Life The Growth of Biotechnology Centers in the U.S.

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Signs of Life The Growth of Biotechnology Centers in the U.S.

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  1. Signs of LifeThe Growth of Biotechnology Centers in the U.S. Joseph Cortright Heike Mayer The Brookings Institution Center on Urban and Metropolitan Policy  June 2002

  2. Roadmap • Introduction to Biotech Industry • Key Findings • Detailed Results • Lessons

  3. Trends in Economic Development • The Next Silicon Valley • Battle for the Dot.Coms • Biotech: NBT (The Next Big Thing) • 83% of local development agenciesplace bio among their top two priorities • 41 States have biotech programs

  4. Definitions & Methods • Biotechnology • Firms using genetic and cellular techniques • Biomedicine: diagnostic/therapeutic • Industry-developed definitions & data • Top 51 Metropolitan Areas • Census-defined CMSA/PMSA list

  5. Industry Segmentation Pharmaceuticals • Very large, global firms • Top ten average $15 billion sales • Assets are products, distribution, manufacturing expertise • Very Profitable Biotechnology • Small, mostly single establishment firms • Top ten average $700 million sales • Principal assets are people, research and future potential • Lose Money

  6. Biotech Basics • 25,000 NIH-funded research projects • 5,000 biomedical patents • 400-500 drugs in development • 100 drugs on or near market • 10 products account for nearly all sales

  7. Nine Metros Dominate Seattle Boston New York Philadelphia San Francisco Pharmaceutical Centers Biotech Leaders Biotech Challengers Why these nine? Special Cases Washington- Los Angeles Research Triangle Park San Diego

  8. NIH Grants Patents Venture Capital R&D Partnerships Startup Firms Established Firms Two Pillars of Biotech Development Research Commercialization

  9. Leaders vs. the Pack Average Levels of Activity Top 9 Bottom Metric Centers 42 NIH$ (millions) 812 104 Patents 2,641 263 Venture Capital 957 27 R&D Alliances 1,089 11 New Firms 35 2.3 Large Firms 24 1.5 _________ Biotech VC Firms 47 4

  10. Research Dispersing Top 9 Centers Share 1980s 1990s NIH$ 63% 59% Patents 71% 68%

  11. Commercialization Concentrating Top 9 Centers Share 1980s 1990s Venture Capital* 81% 86% R&D Alliances* 89% 96% New Firms 61% 77% *Base data from early to mid-1990s

  12. NIH Funding Research Grants, 2000 (Millions) 3rd

  13. Biotech Related Patents Patents Awarded, 1990-1999 5th

  14. Venture Capital Investment, 1995-2001 (Millions) 9th

  15. R&D Alliances Value of R&D Alliances, 1996-2001 (Millions) 6th

  16. Biotech Startups New Biotech Firms Started Since 1990 6th

  17. Established Biotech Companies Firms with 100 or more employees 4th

  18. Washington/Baltimore Cluster • Research Assets • Johns Hopkins, National Institutes of Health • Cadre of Biotech Firms • Human Genome Sciences, Celera, Med-Immune, Alpharma, Genvec, Neurologic, Macrogenics • Dozens of others in biotech & related fields • BIO: National Industry Association

  19. Washington/Baltimore Report Card • Clearly among the top 9 • Very strong in research • High levels of NIH funding • High volume of patents • Not as strong in commercialization • $85 million in venture capital • $17 million in R&D alliances with big Pharma • Heavily concentrated in Rockville-Gaithersburg

  20. Four Lessons • Biotech tends to cluster • Leaders have an edge • Entrepreneurship & venture capital are key • Outlook for biotech-led economic development

  21. Biotech Tends to Cluster • Talent is drawn to where firms are; firms form where talent is • Powerful business advantages from agglomerations • A case of QWERTYnomics • Lock-in to particular arrangements

  22. Leaders have an Edge • Falling (further) behind the Leaders • Biotech is concentrated and growing moreso • Leaders are: • 5 to 10x bigger than followers in research and • 30 to 100x bigger than followers in commercialization

  23. Entrepreneurship is Key • Research base is necessary but not sufficient • Commercialization Assets • Entrepreneurial researchers • Industry-relevant talent • Technical • Managerial • Venture capital--surprisingly localized

  24. Outlook for the “Bottom 42” • Biotech strategies are • Expensive • Risky • Time-consuming

  25. Modest payoffs, so far • No biotech firm is among 25 largest private employers in a metro • Biotech averages about 3.5% of manufacturing employment in 9 leading centers • Most biotech firms stay small; successful firms sell or license to big Pharma

  26. A flawed analogy? • Is biotech the next big thing? • Real breakthroughs and benefits, but: • No “Moore’s Law” for biotech • Not progressively less expensive than preceding generations of projects • More like nuclear power?

  27. Conclusions • Place still matters, even in a quintessential knowledge industry • Not just research, but the ability to turn ideas into businesses • The power of clustering provides decisive business advantages

  28. www.brookings.edu/urban/