Biosciences in Michigan: A High-Tech, Multi-Sector, Growth Industry

1. Biosciences in Michigan: A High-Tech, Multi-Sector, Growth Industry Stephen Rapundalo, PhD President and CEO MichBio

2. Agricultural Feedstock & Chemicals Drugs & Pharmaceuticals Medical Devices & Equipment Research, Testing, & Medical Laboratories Hospitals • Biological research • Commercial medical research • Testing laboratories • Medical laboratories & diagnostic imaging centers • Agricultural processing • Basic organic chemicals • Ethyl alcohol mfg. • Organic fiber mfg. • Fertilizers • Pesticides and other agricultural chemicals • Medicinal & botanicals • Pharma- ceutical preparations • Diagnostic substances • Biological products • Laboratory apparatus & furniture • Surgical, medical, dental, ophthalmic & analytical instruments & equipment • Irradiation apparatus & electromedical equipment • Specialty hospitals • University medical research hospitals • Clinical research institutions Product-Oriented Service-Oriented Introducing the Biosciences

3. A High-Growth Global Industry • Biosciences has a strong performance record, even in difficult economic and political times; • outperformed Dow and NASDAQ • $85 billion in U.S. revenues • Europe = $12 billion • Asia/Pacific = $3 billion • Canada = $2 billion • Pharma remains “king” • twenty products have sales >$ 1B; >100 products total • 350 biotech drugs in late stage clinical trials • U.S.-made ag-bio products now grown on 200 million acres worldwide and growing at 20% per year; over 1 billion acres have been planted • Proven applications in healthcare (cure & prevention), food/agriculture, and industrial (chemicals, fuels & materials) U.S. BioPharma, Biotech, Devices & Diagnostics growth is assured and sustainable on a demographics basis alone.

4. Biosciences in the U.S. • Biosciences are key driver of modern economic progress • All states and regions are investing to create a business climate that supports specific needs of biosciences sector • Academic R&D expenditures = $28 billion in FY06 • VC investments in bio companies = $11.6 billion in 2007 • Total U.S. employment of 1.3 million in 2006 • Total impact (direct, indirect, induced jobs) = 7.5 million • Direct-effect employment multiplier = 5.8 FierceBiotech 2009 Top Regions Targeting Biotechnology MN, MA, NY, ON, CO

5. Biosciences in Michigan • > 550 bioscience companies • 40,086 direct jobs • 33,873 private sector jobs • 6,213 jobs in academia • 58,721 spinoff jobs • direct+spinoff earnings = $6.6 B • private sector payroll = $2.5B • private sector tax revenues = $0.5 B • $9.3 B to state’s GRP • $73,930 avg. bio salary • $11.1 B in sales for MI companies w/ HQs • four Fortune 500 bioscience companies (Dow, Delphi, Kellogg, Stryker) Biosciences is “big” business in Michigan

6. Global Bio-Industry Leaders in MI • Abbott – owns Abbott Nutrition (formerly Ross Labs) in Sturgis • Amway – nutraceuticals in Grand Rapids • Bayer– owns Bayer Crop Science facility in Muskegon • Beckman-Coulter– owns Lumigen in Southfield • Becton Dickinson – own facility in Detroit • Bristol-Myers Squibb – owns Mead Johnson Nutrition in Zeeland • Dow – bio-based technologies and chemicals in Midland • Johnson & Johnson – owns Healthmedia in Ann Arbor • Kellogg – Battle Creek • Nestlé Company – owns Gerber Products in Fremont • Perrigo – world’s #1 OTC manufacturer in Allegan • Pfizer – largest global manufacturing facility in Portage; Animal Health R&D HQ in Kalamazoo • Stryker – Portage; Kalamazoo • Terumo – owns Terumo CVS and Terumo Heart in Ann Arbor

7. Prototype Development Center School of Engineering & Technology MI’s Bio-Industry – A Full Spectrum

8. Entrepreneurship in MI’s Biosciences

9. $323 million in state bio investment from 1999-2008 (MLLC, 21st CJF) $46 million in state VC investment • Kalamazoo is one of only 14 regions specialized in 3 out four bio sub-sectors • Pharma • Kalamazoo =#1 mMSA in employment conc. and #10 in size • Medical devices – conc. • Kalamazoo = #2 mMSA • Saginaw = #9 mMSA • Ann Arbor = #12 mMSA • Benton Harbor = #7 sMSA • Jackson = #9 sMSA • Research, Med/Lab Testing • Detroit = #10 size MSA • Ann Arbor = #6 conc. mMSA • Bay City = #9 conc. mMSA • #10 in academic bio R&D • FY06 = $910 million • #8 in bioscience degrees • AY 2006 = 4,782 • #13 in bioscience-related employment • #21 in VC bio investments • 2002-2007 = $269 million; $74 million FY 2007 • #21 in bioscience patents • 2002-2007 = 2,225 MI’s Biosciences Stats & Rankings

10. MSA’s with 10,000+ Employees

11. Ingredients for building a critical mass in the biosciences in states and regions include: • Engaged universities with active leadership • Building entrepreneurial cultures with intensive networking across sectors and with industry • Available capital covering all stages of business cycle • Discretionary federal or other R&D funding • Workforce and talent pool • Access to specialized facilities and equipment • Supportive business, tax and regulatory policies • Patience and a long-term perspective Factors for Success

12. An Action Plan for MI’s Biosciences Opportunities for Michigan • Formal strategy for development of the biosciences sector • State legislative committee and/or caucus focused on biosciences • Program or initiative to support bioscience research infrastructure projects Funding to attract “star” executive/management and faculty to state • Enhance pre-seed funding and other investment sourcing for companies • Entrepreneurial support program focused on biosciences • Program or initiative to finance fit-out costs for bioscience incubators • Novel approaches to address bioscience talent needs • Tax incentives specific to bioscience companies and sector strengths • Favorable regulatory policies  