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Q&A: With Gov't, Academic Pole Positions, Maryland DBED Nominee Revs Up for Race to Top

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johansson_2.jpgOver the next several weeks, Maryland is expected to announce a pair of key initiatives aimed at boosting a life-science cluster that has seen almost as many challenges as successes in recent years.

Gov. Martin O'Malley's 15-member Life Science Advisory Board will release its strategic plan for catapulting the state's biocluster into the stratosphere occupied by a handful of states that include California, Massachusetts, and North Carolina.

One key strategic plank has already been made public: Consultant Battelle Memorial Foundation recommended that Maryland focus on five technology platforms: biopharmaceuticals, contract bioscience research services, molecular diagnostics and personalized medicine, biodefense and emerging infectious diseases, and "bio-based" products such as biofuels [BRN, Nov. 3, 2008].

The anchor initiative of that plan will be the planned Maryland Biotechnology Center, a one-stop shop for life-sci companies seeking to relocate to or expand within the state, which would operate on $91.5 million over the next decade, according to O'Malley's $1.3 billion, 10-year BIO 2020 initiative, announced last summer [BRN, Sept. 15, 2008; June 23, 2008].

Both the strategic plan and the biotech center, like the other BIO 2020 proposals, are designed to address a paradox that has long vexed Maryland's life-science and broader economic-development leaders: The Old Line State is home to several key federal agencies involved in life sciences, notably the National Institutes of Health and the US Food and Drug Administration.

Maryland has also built a cluster of more than 300 life-sci employers that includes private businesses, research centers, and top-tier universities such as Johns Hopkins University and the University of Maryland Baltimore.

Both universities in recent years have sought to grow Maryland's biocluster, not to mention their tech-transfer revenues, by building their own life-science campuses on opposite ends of the city.

And the state has tried to contain its business costs, from energy to taxes, the latter rising as O'Malley has struggled with the same spiral of declining receipts and recessionary economy facing most US governors.

Yet the state's multiplicity of local and regional governments, nearly all of which maintain separate economic-development efforts, has flummoxed life-sci CEOs considering to relocate to or expand in the state.

"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," Steven Burrill, CEO of Burrill and Co., the San Francisco-based life-science investment firm and industry tracker, told BRN last June, soon after O'Malley announced his BIO 2020 effort. "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."

Worse for Maryland, the state lost a key supporter of its life-sci cluster when David Edgerley stepped down as secretary of the state's Department of Business and Economic Development on Jan. 30.

To succeed Edgerley — who took a private-sector job as executive vice president of HarVest Bank of Maryland — O'Malley has nominated Christian Johansson, the former president and CEO of the Economic Alliance of Greater Baltimore, a public-private partnership that markets Central Maryland for new investment. More recently, Johansson was managing director with Continental Equity, a private equity firm in Baltimore [BRN, Feb. 2].

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The nomination is subject to state Senate approval.

BioRegion News recently spoke with Johansson about his vision for DBED and the broader challenge of elevating Maryland's life sciences effort. Following is an edited transcript of that interview:

What brought you to DBED?

The governor asked me to do it (Laughs). In all honesty, in my family, public service is something that has always been looked upon as a privilege and an honor. It's something that I had an interest in for a long time. Given what's happening in the economy, especially now, the mission of DBED is more important than ever. And so for me, it was sort of a lot of dots coming together at the same time, and to have the opportunity and privilege to work for Gov. O'Malley was another reason for my decision.

Was that family history of public service in Maryland or elsewhere?

It was just the way we were raised, that it was something that was important. I spent my first 13 years in Sweden. My mom's from North Carolina, my father's from Sweden. My first 13 years were in Sweden before we moved to the US. It was something that was important when I grew up.

Part of your career was spent at the Economic Alliance of Greater Baltimore, where you would have seen DBED activity a lot closer than many other people who have headed the agency. What do you consider to be DBED's strengths, and what do you consider to be its greatest challenges?

If you take a look at DBED, the biggest strength, honestly, is the fact that we have a great product, the state of Maryland. The state of Maryland has some of the strongest natural assets of any state in this country for a lot of the core knowledge-based industries that are driving US growth, frankly. So if you take life sciences, it's the FDA, it's the NIH, [Johns] Hopkins, the University of Maryland, the I-270 corridor — the confluence of key government institutions with the best research institutions in the world, with a number of entrepreneurial companies. That combination is very difficult to replicate. I think that's been one of the biggest strengths this agency has had.

I think one of the challenges that we've had is being shy sometimes about communicating how strong we are. And frankly, one of the things you're going to see here is an increased focus on making sure that we communicate those strengths, that we articulate them, that we make the case for why this is the right environment, this is the right state to invest in.

What form will that additional communication take?

You're seeing a couple of different things here. We're obviously in a recession nationwide. And the silver lining has been that even in this recession, Maryland continues to significantly outperform the rest of the United States, Our unemployment rate is not that far off the US unemployment rate when the recession started. We're over 20 percent lower than the rest of the US. And we're still adding jobs in many core areas. And the areas would be government, education, and healthcare. And government here is very high-tech. It's not usually what people think of as post offices. It's master degrees and PhDs. It's Fort Detrick. It's the NIH. It's the National Security Agency.

The message — what we're trying to do right now is, we're pivoting back a little bit to Maryland, and we're putting an increased focus on Maryland companies that are already here. We want them to be fully aware of how well Maryland has continued to do, even in challenging times. In the recession, you're seeing a lot more companies hunkering down. For us to focus our PR messages as much as we did on the outside world doesn't make sense. We're focusing our messages and some of those resources on companies that already exist in the state. They generate two thirds of the jobs, and in the recession, they're probably generating closer to 98 percent of the jobs.

To what degree is this a response to local challenges, such as the state wrestling with having to increase taxes and fees, chilling the climate for business investment?

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What number of states is going to see budget deficits this year? It's a very big number. I guarantee you it's more than half, and it's probably close to 75 percent. Maryland reacted quicker than other states in adjusting to what was going to happen. Our environment, in terms of what the governor did to shore up investments in education and other things, we did that very early. So even in this environment where we're still suffering a budget deficit, ours is much smaller compared to many other states that are out there in the union.

When we talk about Maryland, people talk in terms of the cost of doing business here. When people break it down, it usually doesn't amount to being that much more. And if you look at our priorities as a state for investing – the governor's priority for spending has been put into education, and it has served the state well. We're ranked number one in public education [Education Week has given the state its top ranking in a state-by-state survey that measured student performance, state education policies, state accountability and standards, school readiness, high school reform, and preparation for college and the workplace —Ed.] That's one of the reasons why Maryland is holding so strong.

You cited the tough budget climate in Maryland and most of the country. How much of a hurdle is that going to be for DBED?

The tough budget climate is affecting everybody. But I think the good news for us is that – there's budget climate, and then there's economic climate. The tough economic climate seems to be affecting Maryland disproportionately less than many other states. We have an unemployment rate 20 percent below the national average. We're still adding growth. We're still adding jobs in three core sectors that are very substantial for this state. The question we ask ourselves is, What's the ability for our local companies and businesses to be successful and to do business? It's still pretty high here.

When you served at the Economic Alliance, it issued a report two years ago calling for greater state support for the life-sciences industry. The report even talked about fractiousness among local and regional economic-development efforts that the CEOs perceived in a survey. How well, in your view, has the state tackled those issues?

The governor actually listened to a number of those recommendations, and this is where the genesis of the Life Science Advisory Board came from, partially. What the governor's really doing with the Life Science Advisory Board is putting together what we like to call a 'One Maryland' strategy. That's really a much more state-focused strategy for how we tie all these different pieces together.

What [the advisory board] tried to do was to take a lot of the recommendations and ideas and suggestions and opportunities for improvement, and they've invested about a year and a half getting input, engaging a national consultancy [Battelle Memorial Foundation] to help draft a plan to address a lot of those issues.

I think people are going to be very pleasantly surprised as we release this report, and one of the first things that goes directly to what you're talking about, in terms of being able to aggregate resources and information in a one-stop shop, is going to be the Maryland Biocenter. And what you're going to see is that as we launch those centers, we're going to release the report. We want to release them together.

When is that report scheduled to be released?

We're targeting somewhere between the next 30 to 45 days. What's really driving the release date is the center. Since the [Maryland Bio]center is the first deliverable, we want to have that be done at the exact same time as the release of the report.

You mentioned the strength in life sciences of both Maryland's government sector and its cluster of businesses. How well has Maryland capitalized on that?

On the strengths here in terms of government? It's interesting, because there are ways in which things happen through serendipity. If you take a look at the NIH, and you take a look at the 270 corridor, there was a focus by Montgomery County to really nurture that industry. Obviously it's something that has paid off over time. What you're seeing and what you've seen in Baltimore, especially of the two bioparks on either side of the city, is an effort to try to harness that same ability from our institutions into commercialization here in Baltimore.

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Traditionally, Baltimore and Montgomery County have been viewed as totally two different markets. Well, get this: If you're in Boston, and you drive out to Route 128, which on a bad day will take 45 minutes, it will take me the same time to get [from Baltimore] to Montgomery County. And yet everybody views [Boston and Route 128] as one market. Part of what you're seeing here with the governor's focus on One Maryland and this life science advisory board is to really transcend some of those … artificial boundaries, and to look at how we leverage the assets of the state as a whole to maximize the opportunities to create the next generation of therapeutics and economic opportunity here.

Is the one-market perception of Boston-to-Route 128 a result of Massachusetts not having county government the way it exists in Maryland?

I don't know. Part of the reason is because Baltimore, which was the big city in Maryland, and Washington, DC, which is not in Maryland, helped shape Montgomery County in a way that was slightly different. Washington and Baltimore are very different from a cultural perspective. Obviously, Washington is the seat of power for the United States, and it has had a very different disposition than Baltimore. Neither one is right or wrong. There has been a clear political and cultural separation between those two cities. And Washington, DC, has a tendency sometimes to influence Montgomery County a lot more than Baltimore would.

Given that separation, both within Maryland and with Washington, what role can DBED play in helping knit these areas into a more cohesive region?

We have a plan, and it starts with this focus and approach of 'One Maryland.' What the governor's really doing with the Life Science Advisory Board is putting together what we like to call a 'One Maryland' strategy. That's really a much more state-focused strategy for how we tie all these different pieces together.

When I list the assets, the strengths that make this a great place to invest in life sciences, guess what? I may be talking about the federal facilities, the NIH and the FDA being in Montgomery County. But I'm also going to be talking about the great research institutions at Johns Hopkins University and the University of Maryland. And I'll be talking about the companies that are not only in Montgomery County, but also in Frederick and Howard County, and all the way up to Howard County and Battelle.

This is a fairly small geography. The geographical boundaries are as much in our minds as anything else, and part of our charge here is to make sure we articulate the business case, and we use and leverage all the different assets that are here. And we're going to do that, and I think you're going to see that as we roll out this plan.

Is there a sense in Maryland, as there is in Massachusetts, that the life-sci industry ought to expand beyond a hub — in Maryland's case, beyond Montgomery County?

We already have. I'm sitting here looking at a press release for a company that's looking at moving into the biopark at Johns Hopkins. Four years ago, that wouldn't even have been an option, because there was no space. The sense that innovation and commercialization has somehow been relegated to a small part of our state is not true, is not accurate. Part of what we're trying to do in terms of how we communicate, and the need to really increase our level of communication, is frankly telling that story, because the data is there to support it. It's getting back to this philosophy, again, of 'One Maryland,' and forget about geographic boundaries. Make the business case, and support it with the data.

You mentioned Johns Hopkins. Do you see Baltimore in a sense emerging as large a player in the state's life-sciences sector?

I see Baltimore and Montgomery County as absolute synergies. Baltimore traditionally has had a much higher strength in research and in innovation. Montgomery County has had a much higher track record in commercialization. If you look at where the NIH dollars are allocated, not all of it but a substantial chunk of it goes through Baltimore. How that will, over time, translate to where all the companies are located, I don't think anybody can predict that.

I can tell you that the trend, and we're already seeing it, is that you will have increased investment around those centers of knowledge. If you look at venture capital investment, whether it's Alba Therapeutics, or some other company, the fact is that what you're seeing is investments that wouldn't have taken place 10 years ago, because there wasn't necessarily that great mechanism for commercialization. The infrastructure wasn't there. They're happening today.

Fifteen to 20 years ago, the NIH was the place where a lot of those things seemed to happen. Today, I think what you're seeing is that Hopkins and Maryland are emerging as centers where you're going to see those types of innovations happen, not only today but tomorrow.

Any examples of that happening now?

Camgen [a tenant at the East Baltimore campus] is interesting because that actually moved from Montgomery County to Baltimore. You have another company from Montgomery County that decided to move into Baltimore. It was Jim Campbell, the venture capitalist, who funded this business, and I can't remember for the life of me what the name of it is now. That company was founded and funded at Hopkins, started out there, then moved to Montgomery County, What you see is that the concept that there's not a zero sum game here. It's a benefit for an entire state. Once again, it's one Maryland. You're not talking about huge distances. Most of these distances are in people's minds.

I believe what you're going to start seeing more and more of is this concept, what you see in Boston, where Route 128 is considered part of Boston in mindset and geography, even though the driving distances aren't always that much different.

Overall, how would you sum up what you hope to accomplish at DBED?

Right now, our main priority at DBED right now is to make sure we focus on business confidence, because frankly, Maryland has way outperformed the national economy. And unfortunately, people take their cues from TV, and that affect investment decisions. We have a great story to tell, and overall the economy is actually doing okay here. It's not to say that we're not having difficult times.

What you're seeing our focus being is really to focus on the areas where we think we have long-term competitive advantages, where our natural assets make us an ideal place in which to invest. Obviously, bio is a major priority. It's one of our biggest priorities, because we think over the long term we're going to way outperform other markets. If you look at bio, what you find is that while clustering theory doesn't always work, for bio it generally holds pretty true.

You generally don't find a lot of successful bio companies unless you have major infrastructure in terms of universities, a highly educated workforce, and a little bit of a clique of companies that are already there and that have had a successful track record. In Maryland, what you're seeing is not only that. You're seeing successful key federal institutions such as the NIH and the FDA. You're seeing the research institutions. You're seeing the educated workforce. You're seeing the entrepreneurial – and by the way, some pretty big companies that have grown up here. All of the different preconditions [that are necessary] for us to be successful in this industry are there. Our effort is really in making sure that we can continue to make those investments, and you've seen that in the governor's BIO 2020 plan, and that we over-communicate about our strengths, our assets, and our opportunities.

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