More economic incentives for out-of-state research institutes and companies locating operations here. |
Sticker Shock?
Florida's march to a brave new biotech industry is not proceeding without some bumps in the road.
The march began in 2003 as the state and Palm Beach County committed more than $500 million to create a Florida campus of the California-based Scripps Research Institute. After initial friction over a site for Scripps, the biotech bandwagon began to pick up steam.
An uncomfortable interlude came in August, however, when the head of a second California research institute went before Palm Beach County commissioners looking for financial aid.
Richard Houghten, founder of Torrey Pines Institute for Molecular Studies, didn't exactly get the key to the county after he asked for $94 million to locate in Boca Raton.
Commissioner Burt Aaronson told Houghten, according to an account in the Palm Beach Post, that "We all understand you're trying to make it, but not on the back of the taxpayers of Palm Beach County." Chimed in Commissioner Mary McCarty: "Being 357th in (federal research) funding doesn't exactly make you a 200-pound gorilla." She added, "I wouldn't call you an anchor to the biotech cluster. It's more like a bobber."
The meeting alone didn't lose Torrey Pines for Boca Raton. But after it, Houghten committed to the far more welcoming St. Lucie County, which offered nearly $100 million, including at least $32 million from the state.
 HIGH-PRICED: Scripps labs are performing research in Florida, but the cost of luring the institute to the state totals $650 million. Throw in Torrey Pines, Burnham and SRI, and the state and local incentives tab hits $1 billion. |
St. Lucie economic boosters were ecstatic, but the enthusiasm only went so far. In November, 63% of county voters rejected a plan championed by hometown state Sen. Ken Pruitt, R-Port St. Lucie, the Senate president, to tax real estate transactions to raise $5 million for incentives and to establish a research authority.
The rejection doesn't impact the Torrey Pines deal, and it probably says more about voter sentiment toward taxes than biotech. For their part, Palm Beach commissioners are still a bit raw after the bruising battle to find a site for Scripps' campus.
But both events show a heightened sensitivity to the size of the bill Florida is running up as it buys itself a landmark biotech sector. In the course of purchasing three non-profit research centers -- Scripps Florida, Torrey Pines and the Burnham Institute for Medical Research in Orlando -- state and local governments already have promised nearly $1 billion. The state also is ramping up spending on homegrown development, especially at the state's universities.
 MORE INCENTIVES: The Legislature last year allotted $200 million to draw large-scale business and research projects to the state. |
And economic recruiters say the state will need to spend even more to land more biotech. Consider the competition. Other states are spending billions to lure researchers and companies, fund university expansions and underwrite biotech investments and the commercialization of new technology, according to Cleveland-based consultant Battelle Technology Partnership Practice.
California voters have approved spending $3 billion for a regenerative medicine institute, for example. The state of Washington will spend $350 million ($35 million annually) to fund bioscience research with economic development potential. Pennsylvania proposes a $500-million fund to pay for life sciences faculty recruitment and new facilities. Alabama is spending $130 million in public and private money for a biotech institute.
But do those investments pay off? Biotech advocates in Florida believe the Scripps deal already is yielding dividends. For one, Scripps has opened the door to private funding for Florida companies, says Chuck Soponis, chairman and CEO of Nanotherapeutics, a Gainesville startup. Before Scripps, Soponis says, venture capitalists were reluctant to invest in Florida companies because of the time it took to travel here to meet with management and fellow board members. Now, Scripps is creating a cluster that draws them. "Money is becoming more available in Florida," Soponis says. "What this is going to do is allow the industry to grow."
Because of Scripps, seven of the top 10 prospects that Palm Beach County's economic development group, the Business Development Board, is dealing with are "significant life sciences companies," says BDB President Kelly Smallridge.
Four-office BioCatalyst International, a company of Genzyme founder Sheridan "Sherry" Snyder that specializes in guiding researchers from startups into commercial ventures, announced in November it will open a 10-employee West Palm Beach office. "That's very significant that Sherry Snyder should pick Palm Beach County as a site for BioCatalyst," Smallridge says.
Meanwhile, Florida has cracked Ernst & Young's top 10 list for number of biotech companies -- although at 10th, Florida has fewer than 50 public and private biotech companies compared to California's more than 350, according to Ernst & Young's 2006 Global Biotechnology Report.
Whatever the state of hand-wringing over the price tag, the push for more biotech in Florida is unlikely to slow. Former Gov. Jeb Bush saw recruiting Scripps and building a biotech industry as a way to diversify the state's economy and push it into the knowledge-worker age. Last year, he persuaded the Legislature to fund a $200-million plan to attract large-scale business and research projects to the state. Gov. Charlie Crist says he plans to continue to push for biotech.
Florida is doing the right things, says Boston-based Richard Ramko of Ernst & Young's Global Biotechnology Center. "The investment the state has made is just incredible, and it's gotten the attention of other states," he says. "Just be patient. It takes time for these companies to develop. Florida is well-positioned to be a strong player in the biotech sector."
Expect the industry to seek more public money. Smallridge says that life sciences require a spectrum of players -- research institutes, universities with doctoral-level bioscience, research hospitals and venture capital. She says the task for economic developers and state leaders now is to educate the public and elected officials on the need to spend to fill the gaps.
"There's no doubt scientists attract other scientists and science attracts science," Smallridge says. "We have bought some assets to jump-start our transition to a knowledge-based economy, and we're probably going to have to buy some more."
Houghten, the Torrey Pines founder, says too much was made of his August encounter with the Palm Beach commissioners. "It is part of the process," he says. "I didn't take it quite as seriously as it was portrayed."
He agrees with Smallridge that the state needs to invest more -- and be patient.
"There was a misconception that if A happened, the rest of the alphabet would happen in months or weeks," he says. "It's something that's going to happen. It's a decades-long process. And that's why state funds are so important. It's going to transform Florida. No question."
Companies to Watch
AxoGen
Gainesville
AxoGen specializes in repairing peripheral nerve damage from injuries or a surgery side effect, such as the interference in erectile function caused by prostate surgery.
Marketing and sales Vice President Karen Zaderej says the company will launch its first product this year. It raised $7.75 million in February and expects to have 22 employees by year's end, up from 13 in December.
AxoGen's founders include Jamie Grooms, a co-founder and former CEO of Regeneration Technologies.
Nanotherapeutics
Gainesville
Nanotherapeutics this year will launch its first product, a reformulated bone paste for orthopedics. So far funded by pharmaceutical companies and defense and security grants, the 12-employee company could have 25 employees by the end of 2007, says Chairman and CEO Chuck Soponis. It's also working on an antibiotic gel to treat diabetic ulcers.
Florida's Place in Biotech
According to biotech watcher Battelle Technology Partnership Practice's 2006 report, Florida is a major employer in the biotech specialties of agricultural feedstock and chemicals and medical device manufacturing.
It's a second-tier state in research, testing and medical lab employment behind top-tier California, Pennsylvania, New York, Massachusetts and New Jersey. Florida didn't place in the first or second tier for employment in any other specialty.
The Newcomers
Scripps Research Institute
Scripps will break ground at Florida Atlantic University's Jupiter campus this year. Three buildings are scheduled to open in 2009. By the end of this year, 247 to 267 will be working in Scripps' temporary facilities at FAU, says Harry Orf, Scripps Florida vice president of scientific service operations.
State and local investment: $650 million
Burnham Institute for Medical Research
LaJolla, Calif.-based Burnham will take up temporary quarters at Florida's Blood Centers in Orlando and hire 30 scientists and technicians. Burnham expects to break ground on its Lake Nona site this year.
State and local investment: $310 million
Torrey Pines Institute for Molecular Studies
Torrey Pines founder Richard Houghten says he expects to have 15 to 20 people at temporary facilities at Harbor Branch Oceanographic Institution in Fort Pierce by the end of the year and 25 to 30 by the end of 2008. He wants to break ground in March on a new headquarters.
State and local investment: About $100 million
SRI International
This month, Silicon Valley-based SRI International opens its new marine technology research facility in St. Petersburg, staffed by 40 researchers from USF's Center for Ocean Technology. A permanent research facility will come on line in 18 months.
State and local investment: $47.5 million