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Md. Should Focus on Five Tech Platforms to Grow Life-Sci Sector, Battelle Analyst Says

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ROCKVILLE, Md. — Maryland should focus its bioscience effort on growing businesses anchored to one or more of five technology platforms, a consultant told the state’s life-science advisory board last week.

Mitch Horowitz, vice president and managing director of the Battelle Memorial Institute’s Technology Partnership Practice, told the advisory board members the best way to attract and grow life-sciences businesses in the state is to attract companies focused on biopharmaceuticals, contract bioscience research services, molecular diagnostics and personalized medicine, biodefense and emerging infectious diseases, and “bio-based” products such as biofuels.

Building Maryland’s life-sci industry along those five tech platforms, Horowitz said, would go a long way toward solving a riddle that has long vexed life-sci leaders: How should Maryland spin out the discoveries of its formidable array of academic and US government laboratories into successful private businesses?

Some fundamentals in Maryland’s favor, Horowitz said, include a growing life-sci workforce and its first-in-the-nation ranking in how much it spends on federally supported university research.

“The concern is, with all this positive fundamentals, the message still is — and this is something that requires constant diligence about — is that we still have this incredible untapped potential. We’ve got lots of good things going, but boy, we could be so much more,” Horowitz said. “We’ve already diagnosed that in our industry base, we have a long way to go.

“Here’s something you can be excellent in, world-class in, but it’s a small market. So do you not do it? Of course you do it,” Horowitz added.

The tech-platform anchors that Horowitz and Battelle recommend are designed to build on eight core competencies they identified within Maryland’s life-sci effort. The eight are bioengineering and biomedical engineering, bioinformatics and biostatistics, genetics and genomics, immunology, molecular and cellular biology, pharmacology/pharmaceutical sciences, structural biology/biochemistry, and systems biology and biophysics.

Also among Maryland’s core competencies, according to Horowitz and Battelle, are 11 disease and bio-based product applications where special expertise was deemed available in the state: Aging research, asthma and respiratory disorders, cancer and oncology, cardiology and cardiovascular systems, diabetes and metabolic disorders, ecological sustainability and ecosystem management, food/agricultural sciences and bioenergy, infectious diseases, maternal and infant health, neuroscience, and stem cell biology/regenerative medicine.

The 11 were culled between 2004 and July 2008 from more than 12,000 state and federal program summaries, including 6,861 competitive research grants awarded to Maryland-based researchers by the NIH, the National Science Foundation, and the US Department of Agriculture; 3,300 intramural NIH publications citing Maryland-based researchers; and 2,185 patents filed by Maryland institutions.

“We wanted to understand what it is [Maryland life-sci employers] have competence in doing. Then, we asked how do those competencies come together to serve broader technology platforms,” Horowitz said.

Horowitz spoke Oct. 29 during the eighth meeting of the 15-member life sciences-advisory board, which was created by Gov. Martin O’Malley last year with the key goal of mapping a strategy to catapult Maryland’s nationally known life sciences effort into the elite tier more commonly associated with California and Massachusetts .

The meeting, held here at the headquarters of Human Genome Sciences, was intended to present advisory board members Battelle’s formal assessment of the strengths and challenges of Maryland’s life-sci effort.

A copy of Horowitz’s presentation is posted on the panel’s web site. In it, Horowitz detailed leading potential market niches in which Maryland life-sci companies can be formed within each tech-platform anchor:
Biopharmaceuticals: cancer, neurological disorders, infectious diseases, vaccines, cell-based therapies, and gene-based therapies;
Molecular diagnostics and personalized medicine: cancer, infectious disease, advanced nanotechnology-development, genotyping;
Contract bioscience research services: biomanufacturing, pre-clinical and clinical research services;
Bio-based products: algae-based biofuels, nutraceuticals; and
Biodefense and emerging infectious diseases; bioweapon detection, vaccines, and therapeutics.
The meeting occurred soon after the US Department of Homeland Security dedicated the National Biodefense Analysis and Countermeasures Center at Fort Detrick in Frederick, Md. [BRN, Oct. 27]. The $143 million, 160,000-square-foot facility is scheduled to open in March.

Despite that dedication and the impending opening, Battelle’s recommendation of a biodefense platform was met with questions. One was from Lawrence Mahan, senior strategic advisor for biotechnology with DBED, who said during the meeting that the plan offered at best a limited opportunity for developing startups given the sector’s dependence on federal spending.

“If this was changed to be ‘infectious disease’ then it correlates with the strengths that you pointed out. And as a subset, there are the biodefense markets, [and] there are certain emerging disease markets,” Mahan said. “Georgia is targeting it, but we already have it. … What next step can we do to capitalize on the fact we have so much infrastructure that’s in infectious disease research? What will be the next step?”

Horowitz replied that biopharma offered the greatest opportunity for generating companies, followed by molecular diagnostics, but stressed that competition is intense for both: Maryland’s biopharma effort would likely face intense competition from top-tier academic medical centers like those built around Harvard and Duke universities, while in molecular diagnostics the state would battle up-and-comers like Arizona — like Maryland, a Battelle client — and Florida, both of which have attracted nationally known research institutions.

“While [Arizona and Florida] don’t, on a pound for pound basis, look as good as your institutions, they’re leapfrogging, and they’re really institutionally focused on personalized medicine,” Horowitz said.

How Large a Workforce?

According to Horowitz, Maryland’s private-sector life-sciences industry employs around 25,000 people, and that number more than doubles when including public-sector employees like those at federal research labs, he said. As a whole, the state employs 2.6 million nonfarm workers.

The combined private- and public-sector payrolls would be consistent with figures O’Malley cited last year in a press release, namely that Maryland has more than 57,000 people working for more than 350 life-sci companies.

Horowitz noted that in a 1991 study of Maryland’s life-sci industry, state officials of that era focused heavily on stoking more commercialization activity, and thus like the current report only examined the state’s private biotech sector.

That study, prepared by a DBED predecessor agency, recommended that Maryland grow more life-sciences businesses by developing an incubator, staging more venture capital fairs, awarding state funds to smaller biotechs in ways that also draw for them more private capital, and attracting “a major pharmaceutical company” to relocate to the state.

“We’ve got lots of good things going, but boy, we could be so much more.”font>
The 29-page report from 1991, which is based on data from the North Carolina Biotechnology Center and is available here, listed Maryland as being home to 53 bio companies employing a combined 3,627 people. But NC Biotech’s definition was so strict that it excluded biotech supplier firms, as well as firms providing “biotech-related” services to the industry, but whose primary business was not biotechnology itself.

A comprehensive life-sci workforce number accounting for federal as well as private and academic employees is almost impossible to determine, Horowitz argued, saying precise figures for the numbers of employees involved in life-sci-related work at the National Institutes of Health and the US Army’s Fort Detrick are all but impossible to obtain.

At the Oct. 29 meeting, David Edgerley, secretary of Maryland’s Department of Business and Economic Development, questioned that argument and pressed for a benchmarking of the state’s life-sci assets that would also account for the state’s federal facilities and their workforces.

“We can get information about Detrick, and NIH,” Edgerley said.

According to a statement posted earlier this year on the web site of the Fort Detrick Business Development Office, which links contractors with business opportunities at the Army outpost: “Fort Detrick and the nearly 40 agencies behind its fences are, collectively, the county’s largest employer, with roughly 8,000 employees.”

NIH’s web site says the agency has more than 18,000 people at all its locations, of which 4,000 are researchers and health professionals with doctoral degrees.

In Maryland, NIH employs 17,941 people, of which 3,235 are researchers and health professionals with doctoral degrees, a spokeswoman told BRN last week. In addition to its Bethesda headquarters campus, which encompasses 75 buildings over more than 300 acres, NIH maintains facilities in Baltimore and Frederick, Md.

“Every group I’ve ever seen [examine the state’s life-sci industry] wrestles with, ‘What do we do with the federal presence?’” Edgerley said. “It ought to be put into the report, and not in an also-ran position. When we talk about it as [a report detailing], where we are, and then we have this, I’m disappointed.

“This is the opportunity we have to say that we have a region, a state, and parts of our state that are second to no place in the world in terms of the infrastructure we have. And those employees in the federal lab are an asset base that contributes to public sector and private sector jobs,” Edgerley added. “I think we ought to set a new standard for benchmarking. Let the rest of the world catch up with us. That’s what my dream for this report is.”

The advisory panel will meet its principal goal — to submit to Gov. O’Malley by Dec. 15 a set of recommendations intended to boost the state’s life sciences industry, advisory board Chairman H. Thomas Watkins told BioRegion News.

According to Watkins, who is the president and CEO of HGS, the advisory panel had yet to decide how soon before the Dec. 15 deadline it will be able to complete its report and submit it to Gov. O’Malley. The governor is a Democrat who unseated his Republican predecessor in 2006 in part on the promise of stepping up funding for the state’s life-sciences sector.

Gov. O’Malley has sought to fulfill that promise, most extensively last June when he announced the $1.1 billion, 10-year BIO 2020 package of economic subsidies and other tax incentives designed to grow the state’s life sciences industry. [BRN, June 23].

The anchor of BIO 2020 is a planned new $91.5 million Maryland Biotechnology Center that would serve as a single agency for life-sciences companies seeking to relocate to Maryland or expand within the state. Mahan told BRN in September the center would be launched early in 2009, but would not discuss details of its operations before release of the advisory board’s report [BRN, Sept. 15].

But even with BIO 2020, the state has not spared its life-sci effort from a wave of spending cuts intended to eliminate budget shortfalls blamed on the wobbly economy. Last month, as part of a $300 million package of budget cuts toward plugging a $433 million hole, O’Malley and Maryland’s Board of Public Works cut $1 million from the $19 million budget of the state stem cell-research program on which he and legislative leaders agreed earlier this year [BRN, Oct. 20].

That budget, covering the fiscal year that started July 1, marked the second spending reduction in Maryland’s stem-cell program. Maryland’s legislature — its House of Delegates and state Senate — considered more drastic cuts from the $23 million set aside for the stem-cell effort in the fiscal year that ended June 30 [BRN, April 14].

Speaking to BRN after the advisory board meeting, Watkins acknowledged that Maryland lawmakers are likely to remain reluctant to ratchet up spending on biotech, which would in turn shape the state response to the life-sci panel’s forthcoming recommendations.

“The objective should be, and the governor has certainly shown this, to lay out a bold vision. And I’m certain that we’re all going to be living in difficult economic times, but that’s why a 12-year focus and a long-term vision are so important,” Watkins said.

“While any one-year or two-year period might cause some resources to be diverted as they need to be, it’s important to be looking at this in the context of what we can do with the state over the long term,” Watkins added. “We certainly hope that investments get made to an aggressive degree in the short term, but we understand this is a long-term focus

Within BIO 2020’s 12-year period, Watkins said, the panel is considering slowing down the implementation of some programs envisioned under O’Malley’s initiative, and speeding it up for other programs.

“I think what you’re likely to see is changes in areas of emphasis that would go from now to 2020. We may have some thoughts about areas that should receive more emphasis in the shorter term, and some in the longer term. But our focus is over the entire 12-year period,” Watkins said.

Like BIO 2020, the advisory report is designed to reverse a longstanding perception among Maryland life-sci leaders that the state has failed to capitalize on several assets for the industry — from top-flight research universities like Johns Hopkins, to the presence within the state of the National Institutes of Health; of labs like those maintained by the US Department of Agriculture; and US Food and Drug Administration labs; to a business base that includes the 350 companies described in the state’s press release from last year.

That perception was reinforced twice in recent years:
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.
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.
More recently, six Maryland companies attracted a total nearly $12.6 million in venture capital during the third quarter, according to the quarterly MoneyTree Report released by PricewaterhouseCoopers and the National Venture Capital Association, using data from Thomson Reuters. But the report placed Maryland behind North Carolina, where three companies racked up just over $28 million; and well behind number-one state California, where 35 companies collected a total $614.3 million in VC financing.

Also in recent months, Maryland has continued to win recognition for its life-sci effort. The Milken Institute in June rated Maryland second only to Massachusetts in its hospitability to life sciences and other technologies – a finding O’Malley trumpeted at several events during a June 19 visit to the Biotechnology Industry Organization’s 2008 International Convention, held in San Diego.

And in September, Johns Hopkins was recorded by the National Science Foundation as spending the most on research of any US university for the 29th straight year, with $1.55 billion in expenses during the fiscal year ending June 30, 2007. The University of Maryland’s College Park campus scored 11th highest among academic institutions without a medical school, racking up $360 million.

“My sense is, the sky is not falling. But I still am concerned about whether we’ll ever make the inflection point” that would enable Maryland’s life-sci cluster to reach the heights of a Boston/Cambridge, Mass., or a San Francisco Bay Area, let alone another California biocluster, Horowitz said.

“The difference between us and San Diego is that San Diego kind of leaped over – they didn’t have this continual inflection point,” Horowitz said. “It was really a question of a few companies really making it.”

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