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| A Bio·IT World special section

By Bob Violino

June 15, 2003 

Special Issue 
· State of the States for Biotech
· Northeast Region
· Mid-Atlantic/Southeast Region
· Midwest/South Region
· Northwest Region
· Southwest Region
Making a Federal Case for Biotechnology 

Maryland has 292 bioscience companies, according to the Maryland Department of Business and Economic Development. The department says it's difficult to pin down the number of biotech employees working in the industry because the federal Standard Industry Codes that track the number of workers don't count federal employees. This would include people working in the biosciences at federal facilities such as the National Institutes of Health, and nonprofit research hospitals such as the University of Maryland Medical Center and the Johns Hopkins medical institutions. MdBio, a private, nonprofit corporation that offers programs to advance the development of bioscience in the state, estimates that biotech companies employ about 16,000 people, with an average size of 62 employees.

· 292 bioscience companies
· Two state-run venture funds
· $8.6 billion annual federal R&D funding
Maryland ranks second in the United States in federal funding for research. Because the state is home to the NIH, USDA Agricultural Research Center, and the FDA, Maryland businesses have ready access to federal government staff, facilities, and technology. Universities, federal labs, and private companies receive more than $8.6 billion annually in federal R&D funding.

Maryland invests directly in technology through two state-run venture funds, the Challenge Investment Program and the Enterprise Investment Fund. The state government also provides technical assistance, workforce training, and trade and export resources. Workforce development programs offer matching grants to increase workers' skills and improve productivity.

Puerto Rico
Isle of Incentives

Infrastructure and resources: The U.S. commonwealth of Puerto Rico offers strategic location, outstanding benefits, and competitive costs, as well as a full range of materials, services, and professionals. All major multinationals have facilities in Puerto Rico, and the local industry represents 7.6 percent of U.S. pharmaceutical manufacturing employment and 25 percent of the total value of U.S. pharmaceutical shipments. Thirty years of experience in pharmaceutical industries, and 16 out of the top 20 best- selling drugs in the U.S. manufactured on the island, make Puerto Rico a world hub for biotechnology. An expert workforce includes everyone from plant operators to Ph.D. research scientists, and from GMP and validation specialists to venture capitalists.

Financial incentives: Puerto Rico is a U.S. jurisdiction offering foreign tax benefits under a Controlled Foreign Corporation (CFC) structure. Profits from sales to the U.S. mainland are free from U.S. taxation, and goods enter the U.S. market duty-free. Additional incentives include a 7 percent maximum corporate income tax rate, with some qualified companies paying as little as 2 percent; a 2 percent to 0 percent special corporate tax rate for "pioneer industries"; and a 200 percent super-deduction for R&D and job training costs. Also, the Special Fund for Economic Development provides for economic development in specific scientific and technical research, risk-sharing programs for new small businesses, and managing tax-exempt businesses.

Key academic and research organizations: University of Puerto Rico at RÌo Piedras; RCMI Clinical Research Center; Epscor Puerto Rico (experimental program to stimulate competitive research); Center for Molecular, Developmental and Behavioral Neuroscience; Center for Research in Protein Structure, Function, and Dynamics; BRIN (Puerto Rico Biomedical Research Infrastructure Network); Medical Sciences Campus of UPR; Ponce School of Medicine; Institute of Neurobiology, UPR-Medical Sciences Campus; The Laboratory of Clinical Microbiology, UPR-Medical Sciences Campus; Puerto Rico Cancer Center.

Area bio/pharma organizations: Abbott Laboratories; Amgen; Baxter International; Bristol-Myers Squibb; Eli Lilly; Johnson & Johnson; Merck; Pfizer; Pharmacia (Upjohn/Searle); Procter & Gamble; Schering-Plough; Wyeth; Aventis; GlaxoSmithKline; Novartis; Serono.

Information provided by the commonwealth.

The state's biggest industry lobby, the Bioscience Alliance/Technology Council of Maryland, supports local bioscience through legislative and policy advocacy, as well as offering workforce development services.

Planting Needed Seed Capital 

There are about 180 biotechnology and pharmaceuticals companies located in Virginia. Most are clustered around the university towns in Richmond, Charlottesville, and Blacksburg, says Mark Herzog, executive director of the Virginia Biotechnology Association. The industry represents more than $2.5 billion annually of the state's economy, and employs more than 10,800 people, according to the Virginia Economic Development Partnership.

· 180 biotechs and pharmas
· Life science generates $2.5 billion annually
· Corporate income tax credits for creating jobs
The Old Dominion State has structured its corporate taxes to minimize levies on manufacturing and R&D operations, and the state offers a variety of financial incentives that apply to many biotech companies. For example, qualified companies locating or expanding in Virginia receive a $1,000 corporate income tax credit for each new full-time job created over a threshold of 100 jobs.

A recent report on the biotech industry issued by an advisory board to the governor noted that little early-stage capital for biotech is available in Virginia, and that the state will have to take steps to make such capital available. This includes establishing a program to invest state funds in one or more private venture capital funds of at least $4 million to $5 million each, targeted at biotech. The board also recommended tax credits as an important source of financing for new bioscience companies.

The Virginia Center for Innovative Technology (CIT) operates a financial awards program that supports the expansion of technology infrastructure and promotes collaborative R&D efforts that result in the creation of innovative technology and bring federal and private investment dollars to the state. The advisory report to the governor noted that Virginia must eliminate barriers for technology transfer, providing incentives to form Virginia-based companies. It recommended that the state create a Virginia Biotechnology Commercialization Loan Fund that can be used selectively by university technology transfer offices for costs associated with evaluating commercial potential, assessment of patentability, and other technology transfer issues.

North Carolina
Triangulating Biotech Resources 

North Carolina has about 155 biotechnology companies, 47 of which are publicly traded and 108 privately held, according to the North Carolina Biotechnology Center (NCBC). That includes pharmaceutical manufacturing and research companies. Biotech employment is about 18,500 people. In addition, the Tar Heel State hosts 75 contract research organizations (CROs). Testing companies employ about 15,000 people. Biotechs, CROs, and testing companies generate a combined revenue of more than $2 billion, according to the NCBC.

North Carolina
· 155 biotechs, 47 publicly traded,108 privately held
· 75 CROs
· Biotechs, CROs, and testing companies generate more than $2 billion in revenue
The highest concentration of R&D resources for biotech is in the Research Triangle Park area, which features the Research Triangle Institute (a nonprofit contract research organization sponsored by Duke University, the University of North Carolina at Chapel Hill, and North Carolina State University).

The Commerce Finance Center, part of the North Carolina Department of Commerce, coordinates financial incentives that apply to biotech and other industries. These include the governor's industrial recruitment fund, tax credits for job creation under the William Lee Act, and free customized workforce training at community colleges. The recruitment fund helps companies that are creating jobs and investing in new machinery and equipment. Grants range from $50,000 to $1 million, according to Stewart Dickinson, director of the finance center. He says $15 million went into the fund in fiscal year 2001. Under the William Lee tax credit program, credits can apply to biotech companies if they have manufacturing operations.

The Biotechnology Center has invested more than $20 million to stimulate the formation and growth of new biotech companies. This includes $12 million invested in 12 North Carolina venture capital funds that finance young biotechnology companies, and $8 million in loans to 62 startup companies for R&D of new products.

Shining Resources on Small Biotech Sector 

The biotechnology industry is growing in Florida, but it's difficult to get a handle on how many companies comprise the state's biotech sector because many of them are very small, says Paul Hassie, president of BioFlorida, an organization that promotes local biotechnology and related science. Hassie estimates there are about 35 companies involved in biotech research and development. These range from businesses that employ only four or five people, to those with hundreds of employees. There are, however, also 72 pharmaceutical companies in the state with about 4,000 employees total.

· 107 biotechs and pharmas
· 11 state universities
· Development program supports biotech startups
· Grants to expand facilities
State government makes available specialized incentives and tax credits for biotech and pharma companies, according to Enterprise Florida Inc., a partnership between Florida's business and government leaders. Among these is a Capital Investment Tax Credit, an annual credit against state corporate income tax liability. Another program, High Impact Performance Incentive, is a negotiated grant used to attract and expand facilities. To qualify, a company must create at least 100 new full-time jobs in Florida over a three-year period and make a cumulative investment of at least $100 million. For research facilities, the qualifications are 75 full-time jobs and a cumulative investment of $75 million.

Florida's major universities are involved in sponsored biotech research, and are closely linked to technology transfer centers and research parks throughout the state, providing contract research, laboratories, student workers, faculty, libraries, and scientific databases to local companies. For example, the Sid Martin Biotechnology Development Institute, a division of the biotech program at the University of Florida, is a business incubator designed to support biotech startup companies and facilitate technology transfer from the State University System to the private sector.

> Midwest/South Region 

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