MACKINAC ISLAND, MI--(Marketwire - June 03, 2010) - During a press conference this morning at the Detroit Regional Chamber’s Mackinac Policy Conference, Stephen Rapundalo, PhD, president and chief executive officer of MichBio, the statewide biosciences industry association, spoke to the strength and development of Michigan’s biosciences industry relative to a recent national and state-by-state bio-industry analysis and in-state life sciences survey. The analysis was part of the Battelle/BIO State Biosciences Initiatives 2010 Report that was released in early May.(1)
The study examined the strength of the bioscience industry in all 50 states and Puerto Rico, and looked at employment and growth trends through 2008, the first year of the economic downturn. Mr. Pete Pellerito, senior policy consultant, Biotechnology Industry Organization (BIO), and co-lead on the Battelle/BIO Report, joined Dr. Rapundalo in discussing the Michigan assessment.
There were some encouraging signs in the Battelle/BIO data for Michigan’s bio-industry. The report showed a rise in both total bioscience employment for Michigan to 37,180 (a 9.8% increase from 33,832 in 2008) and in the number of establishments to 1,118 (a 7.6% increase from 1,039 in 2008).(2) For the 2001-2008 period, Michigan witnessed an overall growth in bioscience employment of 5.6% and a 13.2% growth in establishments, easily outpacing the otherwise decline in Michigan’s total private sector of -0.4% in establishments and -9.7% in employment. (The report counts companies that are not included by state officials, such as manufacturing suppliers.(3) MichBio puts the number at about 550 bioscience companies and institutions statewide.)
However, the new report noted that Michigan has made real headway in only one of four biotech sectors historically tracked by the report. A sizeable boost in establishments and employment was observed in the Research, Testing, and Medical Laboratories sector, and grew faster than the national average. This growth is due mostly to the increased numbers of entrepreneurial R&D start-ups as a consequence of downsizing in the pharmaceutical and medical device sectors, and the greater need for diagnostic and medical testing to support the state’s healthcare systems.
Employment in agricultural feedstock and chemicals saw growth above the national average too, but the overall numbers were low. Michigan’s share of total U.S. employment in all four bioscience sectors was considered to be small (i.e., 1-2.9%). Michigan’s location quotients (LQs) for the various bioscience sectors consistently listed below 1.0, an indicator that the state is not heavily concentrated in the industry relative to the nation.
The Battelle/BIO report highlighted some additional noteworthy facts for Michigan. Kalamazoo is one of only fifteen metro areas in the nation with “specialization” in three out of the four areas -- drugs and pharmaceuticals, medical devices and equipment, and research and testing. Detroit ranked 10th in the nation for those MSAs with the overall largest employment levels (size) in research, testing and medical laboratories and those with the highest LQs (concentration) among their respective size categories. Ann Arbor, Holland-Grand Haven, Nieles-Benton Harbor, Jackson, Monroe and Saginaw-Saginaw Township North were identified as having the highest LQs in various bioscience sectors for their respective MSA sizes.
Generally, the Battelle/BIO study ranked Michigan as being in the second or third tiers depending on the performance metric. Michigan did not appear in any top ten rankings except for academic R&D expenditures, FY2008 (#10), and number of higher education degrees in bioscience fields, AY2008 (#8). Most importantly, it failed to register in the upper echelons of states for performance areas related to commercialization.
Dr. Rapundalo commented that “while Michigan has a good foundation in bioscience academic research and some favorable improvements in certain performance areas, it has failed to develop a more robust sector that can truly reposition the state as a biosciences industry leader. We must identify, leverage and promote our sector strengths if Michigan is to realize a robust bio-industry.”
The Battelle/BIO report also recognized that Michigan was in the upper tier of states in terms of number of clinical trials initiated in 2009; its ranking had improved to #17 for the number of bioscience and related patents issued over the last five years (up from #21 in 2008), and most significantly, venture capital investment in the biosciences improved its ranking to #18 (from #21 in 2008). However, its position dropped somewhat for the amount of employment in bioscience-related occupations (a barometer for talent recruitment and retention).
Although Rapundalo emphasized the positive trends in Michigan’s bio-industry, he cautioned that the continued growth is not guaranteed, mostly because of a lack of a coordinated strategic plan for developing the state’s bio-industry, an insufficient amount of venture capital available, and an absence in commitment and consistency in providing adequate industry-specific resources. However, he concluded that state policymakers have the ability and means to ensure that these challenges are addressed in order to improve Michigan’s competitiveness in the national and global biosciences economies.
Rapundalo was quick to point out that “the Battelle/BIO numbers shouldn’t be too surprising... it’s like the old adage, ‘you only get out of something what you put into it’ -- we reap a certain return based on the investment we’ve made. We need enhanced tax credits for angel and early-stage investors, grants for bioscience capital infrastructure expansion, higher state matching for SBIR/STTR grants, improved R&D tax credits, and favorable and simple corporate tax policies. MichBio would like to see a roundtable or expert panel made up of bioscience CEOs that can advise the state on initiatives and programs needed to grow the bio-industry.”
Dr. Rapundalo went on to call for establishing a strategic partnership in economic development between the bio-industry and the state; one that is rooted in a thorough understanding of the industry’s capabilities and assets, and a concerted effort that brings MichBio’s expert knowledge of the industry with the state’s economy-building efforts. “Michigan needs bold and unwavering support through both good and challenging times that can lead to real expansion and economic growth of a powerful biosciences industry. We can’t simply watch other states, especially those in the Midwest eclipse our strength in the biosciences, simply because they’ve figured out a game plan and are a following a clear path to meaningful long-term outcomes and successes.”
“MichBio will give further careful review of the Battelle/BIO report to glean strategic insights for the industry in Michigan,” said Rapundalo. “We know that 2008-09 have been difficult years for our industry, with significant contraction for our larger firms and scarcity of capital for our emerging companies. MichBio looks forward to working with our membership, our state and federal elected officials, and other key stakeholders to ensure that Michigan continues to grow new bioscience companies and jobs, while retaining and strengthening current bio-economy enterprises, and thereby insure our economic recovery and growth.”
The Battelle/BIO 2010 report findings were further borne out via a life sciences survey conducted in the last two weeks by MichBio in collaboration with Crain’s and Honigman. Industry respondents indicated overwhelmingly (78%) that the state doesn’t “have sufficient and appropriate policies, resources and programs in place that allow biotech companies to be established and grow.” Specifically, over 87% of respondents rated the lack of venture capital for the bio-industry as fair (47.6%) to poor (39.5%). They also noted that the state should place greater emphasis on growing the diagnostics/research products and bio-based technologies sectors. The majority (72.8%) rated the availability of skilled talent for the bio-industry as either good or excellent. A multitude of descriptive comments were collected too, many of which focused on improving the business climate for bioscience companies, enhanced promotion of the state’s bio-industry’s assets and capabilities, and above all, a visible and consistent commitment to growing the industry.
About MichBio
MichBio is the association for Michigan’s biosciences industry. It is committed to driving industry growth by fostering the collective impact of its members and by providing them with education, information, connections and services. MichBio represents more than 240 biosciences companies, academic and research institutions, biosciences service providers, and related organizations throughout Michigan.
About BIO
BIO represents more than 1,200 biotechnology companies, academic institutions, state biotechnology centers and related organizations across the United States and in more than 30 other nations. BIO members are involved in the research and development of innovative healthcare, agricultural, industrial and environmental biotechnology products. BIO also produces the BIO International Convention, the world’s largest gathering of the biotechnology industry, along with industry-leading investor and partnering meetings held around the world.
(1) Battelle/BIO State Biosciences Initiatives 2010. Battelle Technology Partnership Practice, May 2010. (See http://www.bio.org/local/battelle2010 for full and individual state reports).
(2) Battelle/BIO State Biosciences Initiatives 2008, Battelle Technology Partnership Practice, June 2008. (See http://bio.org/local/battelle2008 for full and individual state reports).
(3) Establishments are counted for component industries as identified by NAICS codes reported by companies including code changes implemented in 2007 that now distinguish R&D activities in “biotechnology.”
Contact:
Stephen Rapundalo
734.527.9144
734.476.0648
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