Battelle VP Turned Consultant Discusses Bio-Cluster Challenges of Ariz., Md., Pa.

Walter Plosila has spent the past 25 years helping 45 states and US regions realign their economies by showing them how to use their academic research and business activity to grow life-science clusters.

 

Plosila will still be engaged in that work for a while, but has begun cutting back on his workload. He retired March 1 after 10 years as a vice president heading the technology partnership practice of the Battelle Memorial Institute, the global R&D and laboratory-management organization headquartered in Columbus, Ohio.

 

But Plosila remains connected with the global R&D and laboratory-management organization as a senior consultant, allowing him to continue overseeing some of his Battelle projects. Among them is Arizona, where the Flinn Foundation retained the firm to develop the original Arizona’s Bioscience Roadmap, the 2002 report that has helped the Grand Canyon State develop its life-science cluster.

 

Plosila joined Battelle in 1998 from the North Carolina Alliance for Competitive Technologies, where he served as executive director. For eight years starting in 1986, Plosila served as president of the non-profit Suburban Maryland Technology Council, now known as the Technology Council of Maryland. There, he helped fuse Maryland’s concentration of federal agencies, biotech businesses, and research institutes into a top-five life-science cluster.

 

Before Maryland, Plosila spent 11 years as deputy secretary of Pennsylvania’s Department of Commerce and director of the Pennsylvania Governor's Office of Policy and Planning. While there, Plosila helped establish one of the country's most comprehensive technology efforts: the Ben Franklin Technology Partners programs, which provide entrepreneurial support and financial assistance to technology firms and early stage companies.

 

BioRegion News last week interviewed Plosila about his work, namely the progress achieved, and the challenges that remain, in developing regional life science clusters — especially in Arizona, Maryland and Pennsylvania.

 

 

I’m 63 and just had a heart valve [operation], so I’ve got to reduce the stress. So working on four or five things instead of 26 things, I figured would help my stress level. I’m not really retired. I’m just not on the payroll full-time. I’m still a consultant to the group, so I’m working one-third time instead of full-time. But I’m actually working as much as I ever did with all the Arizona projects, so there it will be no different than before.

 

No. In addition to the Flinn Foundation, I’ll be doing work with a company in Columbus, Ohio, and doing work for Colorado on their bioscience strategy — going to update it. I’m in the process of updating it now.

 

 

I had been doing the strategic retreats for the Arizona BioIndustry Association, trying to get them to think in terms of what their strengths and weaknesses and opportunities were. The last one we did, we reached a conclusion of the board members that we were facilitating that they really needed this strong statewide association. I wouldn’t say I brought them together. I played more of a facilitator role than any kind of directive role.

 

 

The Flinn Foundation decided back in the 2001-02 time period that they wanted to focus the foundation — which was founded by one of the first medical doctors in Arizona, Robert Flinn — on biosciences. They saw what we were doing elsewhere, and said they really needed some kind of strategic roadmap for the state. And given what was happening in state government at the time, they didn’t really expect quick initiative from the state level, so they decided they wanted us to do a strategic plan, and find out who had the best track record of doing this effectively and successfully. They came to us. I went out there and explained how we do things and what we do. That led to our initial work doing the strategy, which has led to our ongoing work over five or six years now in implementation of that strategy.

 

 

First of all, the research base at Arizona’s universities is not as strong as those places. Back in 2002 on a population basis alone, their share of [National Institutes of Health] funding alone was just $150 million a year less than it should be otherwise. They did not have the research base, which is the absolute pre-requisite for doing any of the rest of the stuff. From the economic development side, if you don’t have a strong research base, you can’t do tech commercialization and business formation. That was one issue.

 

What we also did that was unique in the strategy and Roadmap for Arizona was not talk about them being good at all fields across the board, not trying to turn it into a California or a Massachusetts, but really focus on where they had strengths. We have a technique called core competency technology platform identification, where we can take the peer review system citations in publications, peer-reviewed federal grants, those kinds of things that actually identify research clusters. And from those research clusters, we then identified which of that research was most likely to have commercial value as technology platforms. 

 

We did that core competency technology platform identification for Arizona, and said here are three areas in which you’re already strong nationally — such as cancer therapeutics, general sciences, bioengineering. And here are three or four other areas that are mid-term, that you are not nationally as strong yet, but have potential in growth — there is asthma and infectious disease, bioagriculture. We suggested that they focus around those areas of strengths, not Fields of Dreams, if you will. And also, do it through collaboration, because we found that by bringing the three universities together and linking their efforts, they could actually move ahead a lot faster than each school doing it by itself, even in these select areas.

 

 

So the research base was much weaker than Maryland and Pennsylvania. The second difference was that they didn’t have a critical mass of companies. They had a bunch of firms, mostly small, young growing companies around Tucson: Ventana [Medical Systems] was just coming on at that point. The biggest firms were places like Medtronics in Phoenix and WL Gore in Flagstaff.

 

There are naysayers out there that claim that if you don’t have a base already, you’re never going to develop one. But that sort of argues against any sort of industry ever developing into new areas or venues. Because if that were the case, the auto industry should still be in Toledo, Ohio, or Cleveland, Ohio, and not Detroit, Tennessee, or Alabama. The brass and apparel industries would still be driving the industry base of Massachusetts and New England, not IT and now biosciences. I could go on and on. But the point is, clusters change and emerge all the time. And what you want to do with regional economies is look at your existing and emerging clusters – and I emphasize the word emerging, because if you base what you’re doing on the past, you won’t have much of a future.

 

 

I’d say it’s about where it should be, depending on which measure you’re using: Some are ahead and some are a little behind. If you took them all together, they’re right on target for where we said they should be at this point.

 

 

The furthest along has been, though we had a temporary setback last year, research funding. The research funding scale and velocity were much faster than projected for the first four years. Year five, it took a little bit of a setback. But there eventually have been some awards like that big, huge grant award that the University of Arizona won recently, that should reverse that trend [UA’s Bio5 Institute will lead a five-institution collaborative group that will create a global center and computer system to research questions in plant biology that cannot be addressed by a single institution, a $50 million grant from the National Science Foundation — ed.]. Research funding for the whole five-year period has been exceptionally strong.

 

The weaker area has been growing the critical mass of companies, which is why the emphasis of Arizona has been trying to turn that research into commercial value through various technology commercialization vehicles and efforts, and addressing the whole issue of seed and venture capital, to fund those startups and enterprises that can help build that critical mass.

 

 

Maryland, unlike Arizona, had a strong research base back in 1986 when we started that effort. They didn’t have a strong industry base. And now, it ranks in the top five in terms of major bioscience centers in the US, mainly cause of research and testing. The challenge historically in Maryland, and it still remains a challenge, is that it currently is not home to a lot of venture capitalists investing in bio, except for one firm, New Enterprise Associates, which historically invested in California rather than Maryland. That has changed in recent years, but it wasn’t true back in the ‘80s.

 

The challenge in Maryland was to figure out, out of all that research, what could you create companies around? And number two, how could you build that company base? The best thing that ever happened in Maryland was a guy named Wally Steinberg, who is long since deceased, who ran the venture arm of Johnson & Johnson. And he invested, over a two- to three-year period, as I recall, seven to nine Maryland-based bio companies, some of which are familiar names like MedImmune. I remember [founder] Wayne Hockmeyer starting MedImmune when I was running the Tech Council. He had less than a dozen people, and it grew to the fifth largest research and testing company in the world before it got sold [last year when AstraZeneca paid $15.6 billion for the company]. That shows you what can happen between 1986 and 2008 — and while that sounds like a long time, it’s really not that long to grow such a large company, particularly in the biosciences arena.

 

In Maryland, we did a thing called the Maryland Venture Capital Trust, and a number of other vehicles to help address the capital gap. While that gap has been addressed, it still remains, particularly the early-stage money, the pre-seed dollars. Massachusetts would argue they have that problem too, so it’s always a problem at the earliest funding sources. But Maryland has continued to build a research base since 1986: Robert Gallo’s operation [the Institute of Human Virology] at the University of Maryland Baltimore. The university’s research has astronomically grown — there’s one example to illustrate my point. And you’ve still got [the National Institutes of Health] and the regulatory agencies around, like [the US Food and Drug Administration]. So Maryland’s got a strong base of research and industry and needs to address the capital-tech commercialization side much like Arizona and other states are trying to address it.

 

 

In the states we work with, we try and identify what their strengths are, and their fields of endeavor, and we try to build a base around their competitive advantage, whether it’s the competencies and platforms and the histories they have. Focus on what you’re good at, and what you have the opportunity to be good at. Don’t try and be good at everything, or mimic what somebody else did, because that is a recipe for failure. A lot of states, when they talk about biosciences, really have one or two initiatives. Maybe a dozen states have more sophisticated strategies. I’d encourage more states to do that if they’re serious about being in the biosciences. But for the most part, economic development people want to have something in their toolkit, so they could say they have something when a bio firm knocks on their doors.

 

The fact is, bio firms tend to cluster naturally with each other because they can get the trained workforce and get access to the expertise of the medical centers and universities. There are natural market forces that congregate, maybe not in the areas they used to be, maybe in new areas, but they do tend to congregate because they collaborate so much.

 

I think there’s a lot more sophistication at the state and regional level. And I think most of the emphasis is now at the regional level, not the state level. State governments, for the most part, are supporting what regions are trying to do, not initiating what regions should do. The state is more [of] a support arm, with regional efforts serving as the leadership arm of these [state life science economic development] efforts.

 

 

Last year we did an updated strategy for Ben Franklin Technology Partners, and identified some ways that they could focus on the future. One area was to address some of the pre-venture capital funding needs of startup companies. The Bens tend to fund the $250,000 to $500,000 size deals, and they need funding that’s pre-$250,000 and post-$500,000, up to $2 million. The state has been aggressively putting out a whole set of venture funds in place, and some of them get into the $500,000 to $2 million. But there’s still a fairly strong gap in there that needs to be addressed, both pre- and post-Ben Franklin.

 

The second area we suggested was having the Bens themselves do more intensive managerial mentoring and business planning assistance to startup companies. They have limited staff. Their funding, if you take inflation into account, has been either stable or declining in actual dollars over recent years. They have limits on how much staff resources to actually provide help to entrepreneurs. And entrepreneurs, in interviewing them, expressed a need for more of that kind of business planning and mentoring help. But to do that, the state needs to put more dollars into that.

 

The third area: The Ben Franklin program actually started as a university and industry partnership program. And over the [past] 25 years, they moved away form the university linkages and primarily were being direct funders of companies. [The] third area we suggested they do is re-establish stronger linkages to the public and private colleges and universities and Pennsylvania, particularly in what we talked about earlier with Arizona, on the tech commercialization side, actually funding due diligence with their dollars, proof of concept efforts, providing matching grants for industry to put money in to develop prototypes, that kind of stuff. And it’s stuff that the universities don’t have money to do now, so if the Bens partnered more with the universities, it would be a good marriage of both resources and expertise.

 

 

One thing Arizona did similar to Florida but before Florida was to attract TGen [the Translational Genomics Research Institute] as a research anchor. Florida, though, has been primarily building research anchors, and not addressing until recently these other issues like tech transfer and commercialization, like venture capital, like workforce [development].

 

What I’ve been reading in the media at least suggests that each of the regions where Scripps or Burnham or Torrey Pines or Max Planck are located, at least now all these regional leaders have gotten more cognizant of the fact there’s more to building a bioscience economy than just the research anchors. They are talking about the need to address workforce, how they’ve got to address capital, got to address these other issues, or that research is not going to get turned into economic value, building the economy. But for the most part, when [former Florida governor] Jeb Bush was doing this, all he focused on was building research anchors, as if by themselves they would blossom economically. It’s sort of analogous to what the South has traditionally done – what I call smokestack chasing and recruiting auto plants or whatever, and they sort of were in the mindset, at least initially, of thinking of research anchors like building an auto plant. It isn’t the same thing.