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Signs of Life The Growth of Biotechnology Centers in the U.S. Joseph Cortright Heike Mayer. The Brookings Institution Center on Urban and Metropolitan Policy  June 2002. Roadmap. Introduction to Biotech Industry Key Findings Detailed Results Lessons. Trends in Economic Development.

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Signs of life the growth of biotechnology centers in the u s l.jpg

Signs of LifeThe Growth of Biotechnology Centers in the U.S.

Joseph Cortright

Heike Mayer

The Brookings Institution Center on Urban and Metropolitan Policy  June 2002

Roadmap l.jpg

  • Introduction to Biotech Industry

  • Key Findings

  • Detailed Results

  • Lessons

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Trends in Economic Development

  • The Next Silicon Valley

  • Battle for the Dot.Coms

  • Biotech: NBT (The Next Big Thing)

    • 83% of local development agenciesplace bio among their top two priorities

    • 41 States have biotech programs

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Definitions & Methods

  • Biotechnology

    • Firms using genetic and cellular techniques

    • Biomedicine: diagnostic/therapeutic

    • Industry-developed definitions & data

  • Top 51 Metropolitan Areas

    • Census-defined CMSA/PMSA list

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Industry Segmentation


  • Very large, global firms

    • Top ten average $15 billion sales

  • Assets are products, distribution, manufacturing expertise

  • Very Profitable


  • Small, mostly single establishment firms

    • Top ten average $700 million sales

  • Principal assets are people, research and future potential

  • Lose Money

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Biotech Basics

  • 25,000 NIH-funded research projects

  • 5,000 biomedical patents

  • 400-500 drugs in development

  • 100 drugs on or near market

  • 10 products account for nearly all sales

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Nine Metros Dominate



New York


San Francisco

Pharmaceutical Centers

Biotech Leaders

Biotech Challengers

Why these nine?

Special Cases


Los Angeles

Research Triangle Park

San Diego

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NIH Grants


Venture Capital

R&D Partnerships

Startup Firms

Established Firms

Two Pillars of Biotech Development



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Leaders vs. the Pack

Average Levels of Activity

Top 9 Bottom

Metric Centers 42

NIH$ (millions) 812 104

Patents 2,641 263

Venture Capital 957 27

R&D Alliances 1,089 11

New Firms 35 2.3

Large Firms 24 1.5


Biotech VC Firms 47 4

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Research Dispersing

Top 9 Centers Share

1980s 1990s

NIH$ 63% 59%

Patents 71% 68%

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Commercialization Concentrating

Top 9 Centers Share

1980s 1990s

Venture Capital* 81% 86%

R&D Alliances* 89% 96%

New Firms 61% 77%

*Base data from early to mid-1990s

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NIH Funding

Research Grants, 2000 (Millions)


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Biotech Related Patents

Patents Awarded, 1990-1999


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Venture Capital

Investment, 1995-2001 (Millions)


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R&D Alliances

Value of R&D Alliances, 1996-2001 (Millions)


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Biotech Startups

New Biotech Firms Started Since 1990


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Established Biotech Companies

Firms with 100 or more employees


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Washington/Baltimore Cluster

  • Research Assets

    • Johns Hopkins, National Institutes of Health

  • Cadre of Biotech Firms

    • Human Genome Sciences, Celera, Med-Immune, Alpharma, Genvec, Neurologic, Macrogenics

    • Dozens of others in biotech & related fields

  • BIO: National Industry Association

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Washington/Baltimore Report Card

  • Clearly among the top 9

  • Very strong in research

    • High levels of NIH funding

    • High volume of patents

  • Not as strong in commercialization

    • $85 million in venture capital

    • $17 million in R&D alliances with big Pharma

    • Heavily concentrated in Rockville-Gaithersburg

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Four Lessons

  • Biotech tends to cluster

  • Leaders have an edge

  • Entrepreneurship & venture capital are key

  • Outlook for biotech-led economic development

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Biotech Tends to Cluster

  • Talent is drawn to where firms are; firms form where talent is

  • Powerful business advantages from agglomerations

  • A case of QWERTYnomics

    • Lock-in to particular arrangements

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Leaders have an Edge

  • Falling (further) behind the Leaders

  • Biotech is concentrated and growing moreso

  • Leaders are:

    • 5 to 10x bigger than followers in research and

    • 30 to 100x bigger than followers in commercialization

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Entrepreneurship is Key

  • Research base is necessary but not sufficient

  • Commercialization Assets

    • Entrepreneurial researchers

    • Industry-relevant talent

      • Technical

      • Managerial

    • Venture capital--surprisingly localized

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Outlook for the “Bottom 42”

  • Biotech strategies are

    • Expensive

    • Risky

    • Time-consuming

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Modest payoffs, so far

  • No biotech firm is among 25 largest private employers in a metro

  • Biotech averages about 3.5% of manufacturing employment in 9 leading centers

  • Most biotech firms stay small; successful firms sell or license to big Pharma

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A flawed analogy?

  • Is biotech the next big thing?

  • Real breakthroughs and benefits, but:

    • No “Moore’s Law” for biotech

    • Not progressively less expensive than preceding generations of projects

  • More like nuclear power?

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  • Place still matters, even in a quintessential knowledge industry

  • Not just research, but the ability to turn ideas into businesses

  • The power of clustering provides decisive business advantages