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In Maryland, Competing Interests, 'Market Confusion' Slow Baltimore Biotech Growth

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Maryland must streamline and increase its effort to attract life science companies to the Baltimore region before the area can emerge as the state’s second-largest biotech cluster after Montgomery County, a new report by a public-private economic development group concluded.
 
The Economic Alliance of Greater Baltimore said Greater Baltimore and the broader Baltimore-Washington, DC, region are well-positioned to nurture early-stage biotechs into maturity given the region’s concentration of universities, its highly educated workforce, the ability of local firms to win venture capital, and the activity of a state agency in funding startups.
 
But in its 40-page report, called Biosciences in Greater Baltimore and issued June 29, the economic alliance also said the Baltimore area fell short of the critical mass of companies needed to maximize biotech growth. The report, generated from interviews of more than 100 life sciences business leaders in the state, said issues retarding Baltimore’s effort to become a top-tier bio cluster include duplication of efforts by multiple state and local agencies, an unduly narrow economic development focus, and a dearth of space tailored for startups.
 
“Maryland is often mentioned as a state that is a top investor in bioscience, given its venture capital funds and investments in university facilities, bio parks and incubators,” According to the report. “However, bioscience leaders believe that the immense opportunities and increasing competition should challenge Maryland to raise its political and financial commitment to the industry.
 
“Just as the region is attaining the required critical mass, there is rising concern that there are too many state and local economic-development groups focused on biosciences in Maryland,” the report added. “Firms in the market are confused by who does what. They do not view economic developers as a unified team with specific roles working toward common goals.”
 
Brad McDearman, executive vice president of the alliance, told BioRegion News that Maryland has most of the puzzle pieces needed to become a top-tier biotech cluster.
 
“It’s not necessarily that anyone needs to bow out of what they’re doing. It’s that we need to make the roadmap clearer. And what we hear from bioscience firms is that they just get confused by who does what,” said McDearman, who previously worked as a site selection consultant. “The other thing we heard, too, was that [business leaders interviewed] would like to see some kind of key leadership organization or leadership to help drive the bio effort overall in the region.”
 
According to Paul Silber, president of Celsis-In Vitro Technologies, who was quoted in the report, there is “so much wasted energy duplicating efforts among all these groups. There are too many cooks in the kitchen.”
 
Silber told the economic alliance the region is “starting to get a critical mass” for biotech but leaders “need to define what really needs to be done and who does what. One of the biggest things we could do is get all these groups to stop competing.”
 
Timm Johnson, director of business development for Next Breath, a contract services provider for pharmaceutical, biotech, and medical device companies marketing new inhalation products, agreed, saying that these groups “could craft a better message. We need a better pitch in the bio world.”
 
The groups at issue are the hodgepodge of local and state government agencies, public-private economic-development groups, and business trade groups with a claim to advancing the interests of biotech in greater Baltimore and the rest of Maryland.
 
McDearman said life sciences companies are unsure who to turn to when they consider expanding existing facilities or creating new ones in the Baltimore region, even though Maryland communities don’t often compete against each other for jobs. That’s a reflection, he said, of how the state lacks the staunch home-rule tradition of New York and New England in which counties, not localities, handle land-use decisions.
 
Developing a common direction for all those groups, as well as private bioscience businesses, in order to raise Maryland’s commitment to the industry was a key purpose of the new Life Sciences Advisory Board that Gov. Martin O’Malley signed into law on May 8 [BioRegion News, June 18].
 
During his Jan. 31 State of the State address, O’Malley said the panel will be “a potential precursor to a Life Sciences Authority” that would help Maryland expand its biotech base by offering biotech companies a single point for contacting officials, then pursuing approvals and incentives from the state and local governments — akin to the public-private North Carolina Biotechnology Center [see April 3 edition of BioRegion News sister publication GenomeWeb Daily News]
 
The state has yet to announce any appointments to the advisory panel. How soon that happens could not be learned at deadline; a spokeswoman for Maryland’s Department of Business and Economic Development did not return messages left by BioRegion News.
 
The Life Sciences Advisory Board will consist of Maryland DBED Secretary David Edgerley and 14 others — one person from the state Technology Development Corp.; three from federal agencies in the state with life sciences missions; four with executive experience with life sciences businesses in the state; four from higher education, one of them a community college; one with life sciences marketing experience; and a member of the general public.
 
“I think it could help a lot,” McDearman said.
 
Other ideas for growing of greater Baltimore’s biotech cluster recommended by the report include:
  • Expanding existing businesses, especially those recently spun off from universities and research institutes;
  • Pursuing large bioscience firms, viewed as “landing parties” for spin-off businesses;
  • Wooing small biotech companies now located in areas of the US that also lack critical mass needed to develop a top-tier biotech cluster;
  • Attracting scientists or groups of researchers to the region’s universities; and
  •  Working with other East Coast biotech groups on issues of mutual interest.
“The bioscience companies are telling us [they] don’t see these political jurisdictions. And they really stressed that as we talked with them,” McDearman said. “If you look at California, it gets treated as one market because it’s in one state, whereas in the East Coast it’s broken up into a lot of small states.
 
“We thought, what would happen if we took California and flipped it onto the East Coast? What we found was that it was 502 miles from San Francisco to San Diego and only 442 from Washington to Boston,” McDearman said.
 
The Northeast biotech corridor stretching from Washington to Boston surpassed California in other areas, the economic alliance concluded. For instance, the Northeast is home to 1,588 biotech firms, compared to 1,174 between San Diego and San Francisco, and the number of bioscience jobs in the Northeast, 255,031, surpassed the California corridor’s 168,555.
 
The two corridors were more aligned in terms of venture capital, with the Northeast’s $8.13 billion edging California’s $8.08 billion.
 
In fact, the report cited venture capital as one of Greater Baltimore’s strongest assets, which also included the presence of research institutes and major universities such as Johns Hopkins, its high concentration of professionals with advanced degrees, access to state funds through DBED and the Maryland Technology Development Corporation, and the region’s proximity to Washington, DC, and the biotech clusters of Philadelphia, New York, and Boston.
 
The economic alliance did not suggest changes in economic development policy, leaving that task to the state and Maryland’s biotech industry group MdBio.
 
McDearman said the report was not a response to the turmoil earlier this year following the resignation of Robert Eaton as president and CEO of MdBio. In an interview with GenomeWeb Daily News in April, Eaton, who cited undisclosed personal reasons for his departure, defended his tenure as one in which MdBio’s membership began to grow, to 110 members, after his group merged into the Tech Council of Maryland, becoming a division of the more than 500-member council, and expanded programs to draw more young people to industry jobs and develop the annual Mid-Atlantic Bio Conference, co-organized with the Virginia Biotechnology Association. Yet MdBio’s membership reflects less than one-third of the state’s 370 biotech companies.
 

There are too many cooks in the kitchen. One of the biggest things we could do is get all these groups to stop competing.”

Also not playing a role in the report was a decision by Novartis last year to choose Holly Springs, NC, over sites in Maryland and Georgia to construct a $600 million manufacturing plant that would be the nation’s first to produce cell culture-derived influenza vaccines.
 
When completed in 2011, the plant is projected to employ 350 people at an average annual salary of about $50,000, compared with the local average of $34,270. By choosing North Carolina, the Swiss biotech giant received $41.3 million in state and local economic-development incentives.
 
Richard Clinch, director of economic development at the Jacob France Institute of the University of Baltimore, said Novartis’ decision reflected North Carolina’s success in integrating many industries that eventually serve biotech — something Maryland has not done.
 
“Maryland has done a good job linking Baltimore City and Montgomery County. What it hasn’t done is what North Carolina has done, which is link the hospitals, the law firms, the VC firms, the R&D companies to areas on the eastern shore that are hemmoraging good jobs,” Clinch said. “Maryland lacks the statewide strategy of a North Carolina, which says, ‘Do your research in our universities, have your corporate headquarters at Research Triangle Park, and manufacture on the [eastern] shore.
 
“I’m at a loss to explain it,” he added. “I would tie it myself to the lack of a coordinated state strategy.”
 
Such a strategy, he said, would better position Maryland to keep within its borders the activity of companies that successfully spin out of Johns Hopkins or NIH. On June 19, AstraZeneca completed a $15.6 billion acquisition of the state’s largest biotech company, MedImmune, turning the company into a wholly owned subsidiary. While British-owned AstraZeneca has promised to keep MedImmune’s home base in Gaithersburg, Md., Clinch said MedImmune’s absorption into a global giant makes that a promise a difficult one to keep.
 
“The next thing that MedImmune developed was likely to be where its headquarters and production plant were. But now that it’s part of a bigger enterprise, there is more than one place [AstraZeneca] can choose to develop something,” he said.
 
Clinch also said Maryland should also enhance its biotech cluster by improving workforce development, especially training entry-level and lower-skilled workers for bio jobs.
 
Beyond that, the city of Baltimore has sought to nurture biotech by approving two research campuses on opposite sides of the city. First is the Forest City Science + Technology Group, which is building an eight-story, 277,000-square-foot building located at 855 North Wolfe St., the first phase of its Science + Technology Park at Johns Hopkins in East Baltimore. When it opens next spring, it will be the first component in an $800 million, 31-acre mixed-use campus of five research buildings totaling 1.1 million square feet — including 1 million square feet of labs.
 
The second is in West Baltimore, where the University of Maryland, Baltimore, is completing a six-story, 240,000-square-foot structure at 801 West Baltimore St., set to open this August. Last month, UMB issued a request for proposals from developers interested in constructing the third of 10 planned buildings totaling 1.2 million square feet at the university’s $500 million BioPark research park next to its campus [BioRegion News, June 25].
 
McDearman said the biotech leaders interviewed for the Biosciences in Greater Baltimore report voiced a preference for more new incubator and post-incubator space required by early-stage companies.
 
Incubator space will comprise 10,000 square feet within UMB’s 801 West Baltimore St., while Forest City will set aside 15,000 to 25,000 square feet of 855 North Wolfe St. as incubator space for Johns Hopkins spin-offs and other potential smaller tenants.
 
Speaking with BioRegion News last month, a Forest City executive said the incubator space had attracted interest from prospective tenants totaling 18,000 square feet.
 
“It doesn’t need to be fancy. If good, basic space that can help them get their work done at various stages in their growth cycle would be built, they felt like they could fill it. Do I have any idea of how much square footage that means? I don’t. I think it’s hard to predict,” McDearman said.
 
The Biosciences in Greater Baltimore report is the first industry report prepared by the economic alliance. The report can be found here.

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