SAN DIEGO — In part by outspending the nation’s top-tier bioclusters, in part by emulating one of them, Maryland Gov. Martin O’Malley last week unveiled a $1.1 billion, 10-year package of economic subsidies and other tax incentives designed to grow the state’s life sciences industry — and bring it in the direction that leaders have sought for years.
O’Malley’s Bio 2020 Initiative costs $100 million more than the Massachusetts Life Sciences Initiative signed into law last week by Gov. Deval Patrick — as well as the biotech package for Maryland called for last January by a political rival of the governor, Maryland Comptroller Peter Franchot, who has also expressed support for the state’s life sciences industry.
Two press releases issued by O’Malley trumpet Bio 2020 as “the largest per-capita investment in the biosciences made by any state in the country,” a criterion that positions Maryland ahead of even California and its $3 billion, 10-year stem-cell research funding effort, since Maryland’s population of 5.6 million results in a per-capita figure of $195.88, more than double California’s $82.29 resulting from that state’s population of 36.5 million, according to 2006 US Census Bureau estimates.
However, O’Malley dismisses the idea he sought to one-up Patrick, or anyone else, with Bio 2020’s price tag: “It’s just coincidental,” the Maryland governor said in an interview at the Biotechnology Industry Organization’s 2008 BIO International Convention, held here.
Coincidental or not, Maryland will use the $1.1 billion to expand several existing programs and create some new ones. The anchor of Bio 2020 is a planned new Maryland Biotechnology Center that would serve as a proverbial “one-stop shop” or single agency for life sciences companies seeking to relocate to Maryland or expand within the state.
Maryland would spend $91.5 million over 10 years, starting with $6 million in FY 2010, to launch and operate the center. The center “will be a one-stop facility that showcases and supports biotechnology innovation and entrepreneurship in Maryland [as well as] an accessible and welcoming office staffed with knowledgeable and enthusiastic experts,” according to a promotional brochure from the state’s Department of Business and Economic Development.
The center would house the Maryland Technology Development Corp. or TEDCO’s tech transfer support operations; the life sciences industry regulatory functions now overseen by Maryland’s Department of Labor, Licensing and Regulation; several industry experts charged with building and expanding state relationships with federal labs, universities, and businesses; as well as a statewide group charged with marketing the state’s science and technology efforts.
Other highlights of Bio 2020:
- $300 million for several planned new life sciences facilities. They include Science + Technology Park at Johns Hopkins, the East Baltimore biocampus being developed by a consortium led by Forest City; the third building, Health Sciences Facility III, within UMB’s BioPark campus; Howard Hall, a medical research facility also planned for UMB; the University of Maryland Biotechnology Institute’s Center for Agricultural and Environmental Biotechnology; the Montgomery College Bioscience Center; TEDCO; and the Maryland Stem Cell Research Fund.
- $222 million over 10 years to expand Maryland’s Biotech Investment Tax Credit, by doubling the current $6 million credit in FY 2010, and raising spending each year to $24 million starting in FY 2013. The state expects to leverage $444 million in private investment for life sciences companies over the next decade;
- $152 million over 10 years, starting with $2 million next fiscal year, for the Maryland Venture Fund, which awards challenge grants to startups and takes equity in later-stage businesses. O’Malley has projected that money will generate nearly $2 billion in additional private equity for those companies;
- $118 million over 10 years — starting with a more-than-doubling, from $2.4 million this fiscal year to $5 million in FY 2010 — for research grants and incentives to attract faculty members specializing in nanobiotechnology and nanotechnology;
- $107 million over 10 years — starting with a more-than-doubling, from $2 million this fiscal year to $5 million in FY 2010 — in additional funding for the Maryland Technology Transfer Fund. The governor said that sum will generate another $3.75 billion in additional private and federal subsidies;
- $60 million over 10 years to build new incubators statewide, a project O’Malley said will generate 10,000 new jobs as well as $120 million in additional federal government and private funds for the facilities. Maryland now has a total 453,061 square feet of incubators that employ more than 14,000 people and, according to the state, generate a total $104 million in state and local taxes;
- $5.7 million over 10 years, starting with $500,000 next fiscal year, to expand a University of Maryland Law School program that works with entrepreneurs to protect and provide valuations for intellectual property;
- $1 million of state funds in FY 2010, to be combined with $2 million from local governments, toward infrastructure improvements for new life sciences facilities. The money is expected to generate another $99 million for projects statewide;
- $200 million or more for stem cell research. That’s at least $1 million more than the $19 million approved in this fiscal year’s budget, starting with FY 2010 — but still less than last year’s budgeted $23 million, as state lawmakers scrambled to plug a $332.9 million budget shortfall through June 30, 2009. The state’s stem cell program has awarded $36 million in funds to 86 research applications.
O’Malley and life sciences industry leaders salvaged funding for the stem-cell program in April, after the state Senate voted for just $5 million in stem cell funding, while the House of Delegates approved $15 million, plus an up-to-$8 million transfer of profits from the state lottery.
Despite that recent history, O’Malley told BRN, he expects to forge the consensus with the state legislature needed to implement Bio 2020. Rather then complain about the stem-cell funding cut, he said it helped achieve a greater goal of wiping out a $1.7 billion budget deficit — a shortfall the Democratic governor blames on his Republican predecessor, Robert Ehrlich, who has countered that he would have cut spending further, and that he inherited a deficit from his Democratic predecessor, Parris Glendening.
“As Marylanders, we believe that fiscal responsibility is absolutely essential to making progress in life sciences, in the skills and training and education of our people in the next generation,” O’Malley said. “I believe we’ll have consensus, because [Bio 2020 is] not only forward-looking; they’re also based on the tremendous competitive assets and strengths that we already possess as a state.”
‘Building on Our Strengths’
“It’s not as if we’re creating a life sciences industry of whole cloth. We’re building on our strengths,” O’Malley added.
Those strengths are well known and often cited: Federal agencies that include the US Food and Drug Administration and the National Institutes of Health; academic research institutions, such as Johns Hopkins University and the University of Maryland Baltimore; and more than 300 life sciences businesses — the biggest, and one of the oldest, being MedImmune, which was acquired last year by AstraZeneca for $15.6 billion.
“At some level, it’s surprising that the state hasn’t historically grown as rapidly as it could have — if you look at NIH, it’s extraordinary intellectual capital within NIH, all of which is in Maryland,” G. Steven Burrill, CEO of Burrill and Co., the San Francisco-based life sciences investment firm and industry tracker, told BRN.
“It’s not as if we’re creating a life sciences industry of whole cloth. We’re building on our strengths.”
The state’s historically slower life sciences growth, Burrill said in an interview, is a consequence of Maryland’s government and academic anchors once being content with smaller year-to-year funding increases than the entrepreneurs who anchor other clusters – a situation that has changed in recent years as Maryland has striven to get competitive, he added.
“If you look around the country, if you look at Boston, you look at North Carolina, you look at the Bay Area, you look at San Diego, they’ve been built around very powerful educational establishments. Even in Maryland, industry didn’t grow up where the pharmaceutical industry was; it grew up where academic research was really powerful, and then made a niche,” Burrill added. “In Maryland, if you think about the NIH, Johns Hopkins and other institutions in Maryland, those have cutting-edge strengths. It didn’t need to [craft Bio 2020] before; it may need to now.”
Indeed for years, several political, civic and industry leaders have questioned whether, in the case of Maryland’s biocluster, the whole has been less than the sum of its parts.
Franchot sought to reassure life sciences leaders and others last December by hosting a one-day biotech conference in which he portrayed the industry in Maryland as healthy and growing enough to justify the title of a 28-page economic impact study he released at the event, Maryland: The Nation’s Bioscience Leader. According to that report, Maryland is home to 370 public and private life sciences employers employing a combined 120,000 people, with half of those employers concentrated in Montgomery County. Soon after his conference, Franchot told BRN the state should spend $1 billion on a package of life sciences incentives and programs.
But two months later at the Technology Council of Maryland’s Biz/Bio meeting, speakers agreed that the state had many shortcomings to go with its strengths – faulting what they termed shortages of experienced CEOs and capital, as well as lack of coordination among the state’s life sciences stakeholders, according to accounts in local newspapers and blogs.
The issue of fractiousness also surfaced in a report released a year ago next week by the Economic Alliance of Greater Baltimore. Biosciences in Greater Baltimore, based on interviews with more than 100 life sciences business leaders in the state, concluded that the region could not emerge as Maryland’s second biotech mecca after Montgomery County until duplication among multiple state and local agencies was eliminated, and more lab space for startups was developed.
Fractiousness was also evident earlier this decade, when the all-life sciences group MdBio and the technology council competed to serve the state’s life sciences companies, all the while talking on and off about joining forces. The two groups merged in 2005 when MdBio became a unit of the broader-based tech council. MdBio’s longtime president and CEO Robert Eaton resigned two years later; he now heads the Arizona BioIndustry Association, while Ric Zakour succeeded Eaton at MdBio, with the title of executive director.
Speaking with BioRegion News, O’Malley acknowledged Maryland looked to another state as it crafted the life sciences package.
O’Malley said the center would be similar to the North Carolina Biotechnology Center, a state-funded agency credited with transforming the Tar Heel State into one of the nation’s top 10 bioclusters, especially within Research Triangle Park – which last week cheered a Canadian company’s plans to create 100 jobs there by expanding its lab operations and moving its headquarters offices from Toronto.
“North Carolina is the model,” O’Malley told BRN. “That’s our goal; it’s to emulate what they’ve been able to do in North Carolina in terms of organizing in a central location, the promotion and marketing, the business development, the science, and to have that in one easy, centralized place.”
“Over the years, we’ve done very well, but the efforts have been, how shall we say, less centralized than what North Carolina has done. They [Maryland’s efforts] have been successful, but they have not been as centered, and not as cohesive in terms of the pursuit of a long-term strategy,” O’Malley added.
North Carolina and Maryland have competed fiercely for life sciences jobs in recent years. In 2006, Novartis chose Holly Springs, NC, over Maryland and Georgia as the site of a new $600 million manufacturing plant for cell culture-derived influenza vaccines; in return, the Swiss biotech giant was awarded $41.3 million in North Carolina and local economic-development incentives. When completed in 2011, the plant is projected to employ 350 people.
Later that year, O’Malley unseated Ehrlich, in part by promising to step up state support for the life sciences industry.
And two years earlier in 2004, North Carolina pushed Maryland down one notch as it grew into the state with the third largest number of biotech companies, in a once-annual survey by Ernst & Young that the firm hasn’t updated since 2006.
Despite that history, O’Malley said he did not believe that North Carolina’s success has come at Maryland’s expense. “I have a philosophy that this is a growing pie for everyone,” he said.
And last week, Maryland picked up more than a few crumbs of new ammunition of its own – namely a climb to second place in this year’s new State Technology and Science Index, a 50-state study released by the Milken Institute; Maryland finished fourth in 2004, while Massachusetts led in both years’ surveys.
“Certainly our moving up in the ranks is evidence of the fact we’re doing things better than all but one state, and we want to continue to do it,” O’Malley said.
Bring it on, says the governor of California, which slipped from second to fourth place in the Milken Institute study, designed to measure the hospitability of states toward the life sciences and other science and tech activity.
“California loves competition. Coming from the athletic background, competition makes you perform better,” Gov. Arnold Schwarzenegger replied when asked at a press conference about Maryland’s initiative. “It drives our performance up. We make more effort. We do everything that we can to be the number one. And other states are going to try very hard. Other countries are going to try hard.”
The concept of a one-stop biocenter for Maryland is one that state officials have discussed for more than a year, dating back to the formation of the Maryland Life Sciences Advisory Board, an O’Malley-appointed panel charged with mapping out a strategy for Maryland’s life science effort.
The advisory committee is still crafting that strategy. At its next meeting June 26, the panel will hear a presentation on the state’s life sciences industry by a consultant to TEDCO. The presentation by Battelle Memorial Institute, the global R&D and laboratory-management organization headquartered in Columbus, Ohio, will include “analyzing core competencies, benchmarking versus other jurisdictions, addressing strategic growth opportunities, [and] assessing long-term needs,” according to the meeting agenda.
“Maryland has various gaps they’re trying to address, and part of [Bio 2020] is to actually build on what they’re good at already, to stay ahead of the competition. Part of that competition is global; part of it is national. But every state has some kind of gap,” said
Walter Plosila, a senior consultant to Battelle who was instrumental in launching Maryland’s life sciences economic development effort for eight years starting in 1986, while president of the non-profit Suburban Maryland Technology Council, now known as the Technology Council of Maryland.
In an interview with BRN at BIO 2008, Plosila cautioned that while Maryland is striving to stay competitive for life sciences employers and their jobs, even the cost of Bio 2020 may not be as huge as it sounds.
“The interesting thing about these dollar amounts is, to be fair to the 50 states, Arizona has put $600 million into biosciences already in the last five years,” said Plosila, who was hired by the Flinn Foundation to develop the original Arizona’s Bioscience Roadmap in 2002, as vice president heading Battelle’s technology partnership practice.
“If you carry that through five more years, they’re probably over a billion [dollars]. So when people package things in a 10-year cycle, if you’re spending a substantial sum of money, a lot of states end up with that. But most of them don’t package it that way. I think [billion-dollar level programs] are the new way to do things.”