Biotech Boom On Third Coast Proves Everything's Bigger In Texas

Published: Oct 03, 2014

Biotech Boom On Third Coast Proves Everything's Bigger In Texas

October 1, 2014

By Riley McDermid, Breaking News Sr. Editor

It’s never been hotter to do biotech business in Texas. Boasting 3,600 firms engaged in biotechnology research and development and manufacturing, the state has seen itself become the “Third Coast” of biotech as companies flock to do deals in the tax-friendly climate and pro-business environment.

Not to mention the money. From 2008 to 2013, venture capitalists invested $1.3 billion in 161 biotech and medical device deals. They had a lot to spend it on as well, with almost 120 pharmaceutical firms and over 750 medical device manufacturers located all over the Lonestar State. Biotech employers have over 10,000 workers in the sector, making Texas one of the top 10 states for pharmaceutical manufacturing workers nationwide.

It’s also in the top 10 for medical device employment, with 750 medical device firms employing 15,500 skilled workers. Dozens of Fortune 500 medical device giants have manufacturing or major corporate operations in the state, including Abbott Laboratories , Agilent Technologies, Inc. , General Electric , Johnson & Johnson , Medtronic , St. Jude Medical , Stryker and Thermo Fisher Scientific .

Many large firms have decided to put satellite offices, particularly research facilities, in Texas because of its business-friendly environment. For instance, clinical research provider Myriad RBM, Inc. , a wholly owned subsidiary of Myriad Genetics , decided to locate their biomarker testing laboratory in Austin, even though the company’s headquarters are in Salt Lake City. Smaller biotechs, like Base Pair Biotechnologies, a privately held company located in the Med Center of Houston, have found that the company’s ample resources have been a boon to new business efforts.

Luminex Research Redux
Texas is a research powerhouse as well for the biotech industry. The state boasts the world’s highest concentration of medical professionals and experts in the world at Texas Medical Center (TMC), a facility that conducts $3.4 billion in research annually. With more than 49,000 students and 106,000 employees housed on over 1,300 acres, the TMC houses 54 member institutions, including 26 private nonprofit health-related institutions and 14 hospitals.

Across the state, public universities and health-related institutions have doubled down on biotech R&D and intellectual property generation. Five Texas medical schools were ranked in the nation’s top 100 in 2014 by U.S. News & World Report. From 2009 to 2013, Texas public universities awarded over 66,000 biotechnology-related degrees, with the top 10 institutions for biomedical R&D investing $2.5 billion in research and development.

"As our regional biotechnology industry develops, it will drive growth in many other economic sectors: law, finance, design, construction, consulting and housing, among others," said John Mendelsohn, a medical doctor who served as president of The University of Texas MD Anderson Cancer Center from 1996 to 2011.

Education Is The Key
The results of having all these academics in one place have paid off. In April 2014, the National Institutes of Health ranked Texas second in the nation for number of clinical trials, with more than 16,900 studies underway.

Many of the world’s leading clinical trial and contract research firms have operations across Texas, including PPD , Covance , Quintiles , INC Research, inVentiv Health Clinical and Radiant Research. The state has raised $145 million in biomedicine and pharmaceutical projects through the Texas Emerging Technology Fund (TETF).

Private research facilities have flourished as well. Texas is home to over 990 private scientific R&D firms in biotech and other related areas that combined employ more than 20,000 workers. Southwest Research Institute and its sister institution, the Texas Biomedical Research Institute in San Antonio, are among the largest private biotechnology R&D firms in the world.

“Texas companies and universities continue to be on the forefront of biotechnology innovation, providing groundbreaking research and therapies to improve the quality of life for individuals across our state and nation and around the world,” Rick Perry, governor of Texas, said at the time. “I’m proud that Texas has received this recognition, and am committed to ensuring we continue to foster an economic climate that encourages innovation, collaboration and job creation in biotechnology.”

Many companies that do business in Texas said that they found that the availability of skilled biotech workers, substantial ongoing academic research and the growth-oriented business climate in Texas are conducive to success. Much of that skilled workforce is due to the state’s commitment to investing heavily in biotech education.
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Going Global
Global pharmaceutical firms have taken notice at Texas's unique biotech offerings. In addition to home-grown Alcon (which produced ophthalmics and is now part of Novartis) and wound care innovator Healthpoint Biotherapeutics (now part of Smith & Nephew), California-based Allergan , Pennsylvania-based Mylan and Switzerland’s Lonza have all set up offices in Texas.

“The growth in biotechnology-based innovation in Texas has been impressive in recent years, but the opportunities for the future are even more exciting,” Patrick J Balthrop, president and chief executive officer of Austin-based Luminex told BioSpace. “Building on the base of strong companies, with significant strategic investments such as the new University of Texas Medical School and teaching hospital in Austin, will surely spur future innovation and even more investment. Combining these factors with the attractiveness of Central Texas as a center of innovation excellence, bodes very well for strong growth in this extremely important sector of the economy.”

Future Full Of Growth
New facilities for biotech are popping up all over. Alcon spokesperson Elizabeth Harness Murphy said the business elected to build their new Fort Worth data center after completing a study comparing potential locations. The study's findings, alongside the data center tax incentives, made the state a prime location for the company's new computing facility.

"Novartis is pleased to have the city of Fort Worth become one of its two primary global data centers, dedicated to serve its operations in the Americas," Murphy said in a statement. "This move further reinforces Novartis's commitment to the community where Alcon is headquartered."

The future for the Texas Hotbed only looks brighter. The state is currently building two new medical schools, the University of Texas Rio Grande Valley medical school, which is scheduled for completion in 2018; and UT at Austin broke ground on the campus for the Dell Medical School. UT will then be partnering with Seton Healthcare, a major Central Texas healthcare services system, on a new teaching hospital on a new medical campus, scheduled to open in 2017.

"In the past 100 years, the [Texas] economy has repeatedly reinvented itself to answer the needs of one emerging industry after another: cotton, oil, energy and medicine are examples," said Mendelsohn. "These transitions have not been easy, but each new industry has generated tremendous economic development in Houston. The biotech revolution will do the same, and I look forward to helping accelerate its growth."

To stay on top of current events and industry news in Texas, check out the Lone Star Bio community. For the first time, BioSpace is recognizing Texas as an official biopharma hotbed. Learn more about how to get your company featured on this regional map.

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