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REPORT
The U.S. Midwest Biotechnology Industry
March 2003
JETRO
Economic Research and Analysis Dept.
Map : The Midwest Region of the United States
Table of Contents
Chapter 1 Biotech and the Midwest, an Overview ・・・・・・・・ 1
Chapter 2 Michigan ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 9
Chapter 3 Indiana ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 20
Chapter 4 Ohio ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 27
Chapter 5 Missouri ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 32
Chapter 6 Wisconsin ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 36
Chapter 7 Illinois ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 39
1
Chapter 1
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Biotech and the Midwest, an Overview
With the bursting of the dot com bubble and the decline in growth in the IT sector, much has been
made of the biotechnology industry and its opportunities for growth. The U.S. biotechnology industry
is growing, for sure, and many observers have noted that in this new phase of growth, the industry is
developing cores of activity outside of the traditional biotech “clusters” in California and the Northeast.
Many of these new clusters are located in the Midwest. Urban centers such as Chicago, St. Louis,
Cleveland, and Detroit, as well as university towns like Madison, WI and Columbus, OH, provide the
industrial and intellectual resources that led the number of biotechnology-specific companies in the
Midwest to climb to 63 in 2001, as compared to 56 in the Pacific Northwest and 51 in the
Pennsylvania/Delaware Valley, two well-recognized biotech clusters.
This industry already employ 88,990 people in the Midwestern states as medical scientists, laboratory
technicians, biological technicians, biological scientists, agricultural and food scientists, and other life
scientists.
The biotechnology clusters in the Midwest are diverse and growing, but there is room for significant
growth beyond this point, as all of the critical ingredients for the industry to flourish are present.
Building Blocks
Agriculture
The Midwest has long been the agricultural “heartland” of the United States. To this day, the
majority of grains produced in the U.S. is harvested within a 500 mile radius of St. Louis, one the major,
centrally located cities in the region. This fact has helped the Midwest, and St. Louis in particular, to
become one of the leading areas for plant science and the development of plant science technology.
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The Monsanto Corporation, located in St. Louis, is one the largest producers of agricultural products
in the world. Monsanto is the maker of the world’s best selling herbicide, Roundup, and many leading
seed brands.
The Donald Danforth Plant Science Center in St. Louis is another example of research excellence born
out of the Midwest’s agricultural heritage. Established by the Danforth Foundation and harnessing the
research power of several Midwestern research universities and corporations, the center is home to some
200 scientists conducting research in all areas of plant biology.
Washington University in St. Louis, Purdue University in Indiana, and the University of Illinois in
Urbana-Champagne are home to three of the oldest and most respected agricultural research programs in
the U.S. All three are also partners in the running of the Danforth Center.
Graph 1:
Biological Scientists in the Workforce, yr 2000
4570
7740
4220
134308990
10530
15620
899014800
Kansas Illinois IndianaIowa Michigan MissouriMinnesota Ohio Wisconsin
3
Medicine
The Midwest is home to many of the U.S.’s leading healthcare facilities and medical research centers,
including 1 of the top 5 medical schools and 2 of the top 5 hospitals.
The Washington University School of Medicine is ranked third in the country, and its affiliated
hospital, Barnes Jewish Hospital, is ranked ninth in the country, both according US News and World
Report. This highly respected institution received $289 million in research funding from the NIH
(National Institutes of Health) in 2001. Also notable at Washington University is its Genome
Sequencing Center, which is one of the five main centers across the world conducting the human
genome project.
Kansas City’s Stowers Institute for Medical Research focuses its $1.6 billion endowment on
researching the genes and proteins that govern early development in order to understand the diseases
caused by the malfunction of these genes and proteins later in life.
The University of Chicago has a life science research budget of over $250 million per year.
Important discoveries to come out of the University of Chicago include the first sustained nuclear
reaction, the isolation of erythropoietin and proinsulin, and the mathematical foundations of genetic
evolution.
Northwestern University’s research budget, at $210 million, rivals that of the University of Chicago,
and Northwestern has recently launched two new institutes focusing on bioengineering and nanoscience.
Northwestern’s Kellogg School of Management offers the only MBA focusing on biotechnology in the
U.S.
The University of Michigan is another top-ranking medical school in the region. Its Life Science
Initiative is focusing university wide efforts on making advancements in genomics, cognitive
neuroscience, bioinformatics, and biotechnology.
The Mayo Clinic in Minnesota, and the Cleveland Clinic Foundation in Ohio are the nation’s second
and third ranked hospitals, respectively. In addition to this the Cleveland Clinic Heart Center was
ranked number one in the country for the sixth straight year.
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Another notable Midwestern institution is the University of Wisconsin at Madison. A top-level
research university, UW Madison has been a U.S. pioneer in the area of technology transfer since 1925
with its Wisconsin Alumni Research Foundation (WARF). This group helps UW-affiliated
investigators turn the products of their research into widely applicable science.
These are just some of the outstanding examples of Midwest medical institutions that make up a web
of excellence that supports a vibrant biotechnology industry. Other notable educational institutions in
the region include Case Western Reserve University, the University of Indiana and the University of
Kansas.
Table 1:
University Life Sciences R&D Expenditures (in millions)
$140
$595
$234
$239
$535
$431
$231
$481
$348
$0 $100 $200 $300 $400 $500 $600 $700千
Stat
e
R& D Expenditure
Wisconsin
Ohio
Minnesota
Missouri
Michigan
Iowa
Indiana
Illinois
Kansas
5
Table 2:
NIH Support to Institutions
$53,196
$473,149
$141,214$136,315
$389,888
$366,950
$281,517
$444,004
$253,205
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
$500,000
States
Tota
l $
Kansas Illinois Indiana Iowa Michigan
Missouri Minnesota Ohio Wisconsin
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Other Support
The pharmaceutical industry is well represented in the Midwest, with four of the largest companies in
the U.S. headquartered there. Baxter, Pharmacia, and Abbot in the Chicago area, along with Eli Lilly in
Indianapolis, are all involved in the commercialization of biotechnology innovation developed within the
region and around the world. Their research and commercialization capabilities have been an
indispensable asset to the development of the regional biotech sector.
The Midwest is also home to a variety of technology incubators that facilitate the formation of start-up
companies. An example of these is the Nidus Center for Scientific Enterprise on the Monsanto
Corporate Campus in Missouri. The Nidus Center offers successful applicants wet lab and office space,
as well as business development services to help them grow. Incubators like this are springing up all
across the region, located mainly around major research universities.
Government Initiatives
Local governments around the world are recognizing the potential for growth and development in
biotechnology, and are courting the industry aggressively. The Midwest is leading the pack in this area
in many ways, with several states and municipalities in the region in advanced stages of ambitious
biotech promotion programs.
The state of Michigan is a national standout with its commitment to developing its biotechnology
industry through its impressive “life science corridor” program that seeks to create a chain of biotech
development from the urban center of Detroit in the east to the university town of Grand Rapids in the
west. Michigan has used its portion of the tobacco company legal settlements to create a plan that
commits to the appropriation of $50 million annually for 20 years to the development of the biotech
industry. With a commitment totaling $1 billion, this is the largest such state-sponsored program in the
U.S.
The state of Missouri has designated itself as the “BioBelt,” and has created programs to support the
biotech industry. Likewise, Ohio has committed to nurturing its central region as a biotech cluster to
complement its medical research centers in Cleveland. The state of Wisconsin has earmarked $65
million of its public pension funds for investment in biotech start-up companies. The determination of
several governments in the Midwest to create biotech clusters offers members of the life science
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community every advantage in building out their industry.
Why the Midwest?
Ripe for Commercialization
In the past, venture capitalists have tended to view the Midwest as “flyover country,” focusing their
investment efforts on better-known biotech clusters such as California, New Jersey, and Massachusetts.
That is all changing, however, as increasing competition and expense in the coastal clusters have led
investors to look inland in search of technology for co-licensing, co-marketing, and proof-of-concept
investment.
“We didn’t like the atmosphere there [the West Coast],” said Mr. A of Fujisawa Pharmaceuticals, the
Kansai company that has set up the F.I.T.E. venture fund in Chicago and is already funneling money into
one Madison, WI company.
This kind of enthusiasm is mirrored by U.S. venture capitalists as well. A Vice President of the
Battelle Memorial Institute, interviewed by the New York Times at last year’s Biotechnology Industry
Organization annual meeting in Toronto, said “This used to be a bicoastal phenomenon…but clearly
you’re seeing bioscience as a much bigger focus across places people wouldn’t think about.”
A report published in 2002 by the Brookings Institution provided a detailed survey of the 51 most
populous cities in the U.S. and analyzed each for the current development and potential for growth in the
life science industry. It determined that nine metropolitan areas were fully functioning and fulfilling
their potential as biotechnology clusters. It then labeled four other metropolitan areas as “research
centers” where research activity far outpaced the national average. These four cities, according to the
report, had all the makings of major life science centers, but have not yet reached their full potential
because commercialization activity has not caught up to research. Three of these four cities, Chicago,
Detroit, and St. Louis, help make up the core of the Midwest biotechnology community.
This fact is telling and highlights well the reason behind all of the excitement currently surrounding
biotech in the Midwest. On the East and West coasts, the research is there, but so are all of the
well-established investment firms, creating a competitive environment difficult to break into for those
new to the U.S. market. In the Midwest, the research and technology are there, the top scientists and
institutions are there, the support industries and institutions, such as agriculture and start-up incubators,
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are there, and the willingness and financial support of the local governments are there. All of these
factors, coupled with the less competitive commercialization market, make the current moment one of
unparalleled opportunity for those wishing to enter the biotechnology industry in the Midwest.
Subsequent chapters of this report detail, state by state, the participating companies and institutions of
the Midwest biotechnology industry, as well as analysis of their specialties and relative strengths across
the region.
9
Chapter 2
---
Michigan
Traditionally known for its automotive industry, in recent years Michigan has come to focus on
joining the prestigious ranks of such biotech industry leaders as California and Massachusetts.
Strengths Michigan has 15 public universities, 51 private universities and colleges, as well as 29 community
colleges, all of which contribute to over $400 million in life science research and development
expenditures. The private sector boasts over 300 established biotech firms, such as Pfizer and
Pharmacia, as well as a total of 750 biotech-associated companies. These firms spend over $1.2 billion
on research and development each year. In fact, Michigan is second only to California in R&D
expenditures. Ranked fifth in the nation for medical research technology patents and licenses,
Michigan is well established in the biotech field.
Michigan’s government is committed to seeing the area’s biotech industry grow and has started a
number of initiatives to further that goal. The state has a high quality of life, with affordable housing,
four seasons, and stable power and water sources, compared to coastal competitors.
There are over 20,000 life science workers and, among that number, 13,430 biological scientists in
Michigan. The workforce will continue to grow, as there were 2,377 biotech degrees granted in 2001 and
79% of Michigan’s high-tech college graduates stay in Michigan for their first job. The state is home
to at least 300 established biotech firms and over 750 biotech-associated firms.
Weaknesses As noted above, Michigan is mainly thought of as a manufacturing state and has much to overcome in
its industry image to attract new biotech firms and personnel. Furthermore, the state lacks a strong
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entrepreneurial spirit in its biotechnology sector, and networking within the state’s research institutions
is not strong historically. Appropriate lab space and incubator support have also been hard to come by
in the past.
In 1999, Michigan was ranked 9th in the United States for University Life Sciences R&D expenses,
and that fact, coupled with the above problems, led the Michigan Economic Development Corporation
(MEDC) to make a strong push for funding and support of the biotech industry by the state government.
Luckily, their timing was right and the face of the Michigan life science sector began to transform.
Michigan Life Sciences Corridor In November 1998, the tobacco industry settled with the State of Michigan in the amount of $310
million immediately, with another $8.3 billion to follow, as compensation for medical aid provided by
the state to ailing smokers. The only stipulation of the funds was that it must be used for health-related
purposes and the biotech market was a natural choice. The state awarded $1 billion of the funds to the
Michigan Life Sciences Corridor, a twenty-year initiative designed to “develop Michigan as one of the
world’s premiere life sciences research and commercial centers.” The Corridor is administered by the
MEDC and overseen by a governor-appointed Steering Committee. Of the annual $50 million, 40
percent will be allotted for basic research, 50 percent will be used to fund collaborative university and
industry research and 10 percent will be used for commercialization and product marketing activities.
As budget becomes more of a problem in Michigan, the original $50 million a year has already been cut
to $45 million under Governor Jennifer Granholm’s administration, but the difference will be made up
later.
Core Technology Alliance
One of the most important underlying objectives of the Michigan Life Sciences Corridor program is to
foster partnerships between the State's life science companies and its leading research institutions. To
this end, 40 percent of the funds will be used to fund a network of five labs at universities and research
facilities across the state: the Van Andel Research Institute in Grand Rapids, Michigan State University
in East Lansing, the University of Michigan in Ann Arbor (2), and Wayne State University in Detroit.
These laboratories form the Core Technology Alliance and provide research and services to Michigan
researchers affiliated with universities, private research institutes, and biotechnology or pharmaceutical
firms for a minimal fee. The labs, which were initially funded through a grant worth $39 million, are still
in their early stages and waiting for more equipment to be set up.
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SmartZones
In April 2001, to supplement the Michigan Life Sciences Corridor’s success, Governor John Engler
enabled the MEDC to establish 11 clusters called “SmartZones” around the state. These “Zones” were
created to further stimulate the growth of technology-based businesses and jobs by aiding in the creation
of recognized clusters of new and emerging businesses, those primarily focused on commercializing
ideas, patents, and other opportunities surrounding university or private research institute R&D efforts.
At least five of the SmartZones have a specific emphasis on nurturing biotechnology and life sciences:
Woodward Technology Corridor SmartZone (Wayne County)
Lansing Regional SmartZone (Ingham County)
Kalamazoo SmartZone (Kalamazoo County)
Grand Rapids SmartZone (Kent County)
Ann Arbor/Ypsilanti SmartZone (Washtenaw County)
Most of the above SmartZones are located adjacent to the universities or research institutions in the
Core Alliance. Thus far, the SmartZone clusters have been extremely successful in establishing
Michigan’s life science industry, with six incubators and over 19 companies having relocated to the
SmartZones since 2001.
Michigan Venture Capital Firms
Life science companies account for the majority of major investments in Michigan, with information
technology a close second. Below is a list of a few major venture capital firms in the state:
Arbor Partners, LLC (Ann Arbor)
Arboretum Ventures (Ann Arbor)
Arch Development Partners, LLC (Based in Chicago, focuses on Michigan firms)
Avalon Investments
EDF Ventures (Ann Arbor)
Essex Worldwide
North Coast Ventures
Questor Partners
Seaflower Associates
Sloan Ventures (Birmingham, MI)
White Pines Ventures, LLC (Ann Arbor)
Wind Point Partners
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Clusters
Ann Arbor Cluster
The University of Michigan
For the last eight years, The University of Michigan has been the #1 public university in the nation for
research, spending over $591 million in 2001. The amount of research done in Ann Arbor annually is
what has sparked the largest of all the Michigan biotech clusters—with 437 biotech-associated firms
within 50 miles of the city.
Core Technology Alliance
The only cluster to host two laboratories in the Core Technology Alliance, Ann Arbor’s labs provide
two very distinct services to small firms that cannot afford the research on their own. The first lab is
Michigan Center for Biological Information (University of Michigan), which provides computer analysis
of biological data for fledgling firms. The second, Michigan Proteome Consortium (University of
Michigan) specializes in identifying and separating proteins.
Life Science Initiative
Launched in 1999, the University of Michigan’s Life Science Initiative is one of its most progressive
programs, with $700 million committed to furthering the study and expansion of life sciences to date.
The areas of most concentrated research in the Initiative are:
Cellular signaling
Genomics and complex genetics
Chemical and structural biology
Neuroscience
The Initiative has three main parts: research, values and education. The “research” aspect of the
initiative focuses on providing facilities across U of M’s campus including a $100 million laboratory
facility, to serve as a hub for cross-disciplinary research and teaching in the life sciences. The institute’s
faculty will be 20 to 30 world-class researchers from a variety of disciplines who are new to Michigan.
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The Medical School is also augmenting its research facilities with a 470,000 square foot building that
will be complete in 2005. The “values” section of the initiative centers on the Values and Society
program, in which the University feels it is essential to constantly examine the implications that
profound life sciences insights will have on human society and the biosphere. This unique program asks
difficult questions about the advancing science and enables informed public discourse. Finally, the
“education” portion of the initiative hinges on the creation of new undergraduate and interdisciplinary
graduate degrees in the life sciences.
University of Michigan Tech Transfer
In addition to the Life Sciences Initiative, the University hosts an Office of Technology Transfer
(OTT) that provides a resource for transferring University technologies to investors in the market. The
main services of the office include:
Disclosure facilitation
Patenting and other protection
Start-up assistance
Licensing
Legal Support
Decision Support
Over the last five years OTT has facilitated 914 disclosures, 267 license agreements, 590 patent
applications, 34 start-up companies, and $19.9 million in licensing revenue.
The Office of Technology Transfer and Corporate Research (OTTR-Medical) is the area of the office
that deals specifically with biotech and pharmaceutical transfers.
Ann Arbor Biotechnology Business Incubator
One of the aforementioned incubators (that were created as a result of the SmartZone program) is the
Ann Arbor Biotechnology Business Incubator (Aabbi). This multi-occupant incubator will provide
space for biotech start-up firms. An established biotech firm will anchor the facility and inhabit 2/3 of
the space. The first 25,000 square foot phase of the Aabbi will be available in the spring of 2003. A
second 25,000 square foot pod, connected to the initial facility by glass walkway, is planned to be ready
for occupancy near the end of 2003.
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Living in Ann Arbor
The cost of living in Ann Arbor is higher than that of the other clusters, with the median sales price
for existing homes in 2001 at $187,000. However, Ann Arbor is consistently ranked as one of the 20
best places to live and work in the US (US Employment Review Magazine), one of the best places to
raise children in the US, and one of the safest places in the US.
Lansing Cluster
Michigan State University
MSU spends more than $100 million annually on life science research and often generates more
patents that Massachusetts Institute of Technology, Stanford or Harvard, including over 77 in the last
three years. The Lansing area boasts 70 biotech firms, with the majority centered around MSU and
East Lansing.
Core Technology Alliance
Michigan State’s contribution to surrounding biotech firms is its Michigan Center for Structural
Biology (Michigan State University, East Lansing). The laboratory develops instruments to examine
the molecular structure and function of proteins.
Technology Transfer
The Michigan State Office of Intellectual Property (OIP) facilitates the commercial development and
public use of technology developed by MSU researchers. The office obtains patents and licenses them to
private industry in return for royalties, which are shared with inventors and their academic units under
University policy. OIP’s technology transfer program, as measured by royalty income, is eleventh in the
country, with royalties of more than $30 million per year. MSU licensees include large and small
companies worldwide, and a growing number of entrepreneurial ventures in Michigan and elsewhere.
Incubators
Started to exclusively meet the needs of biotech start-ups, MBI International is adjacent to the campus
of MSU. MBI has over 10,000 square feet of incubator space with tenant space ranging from 300 to
1050 square feet. In addition to providing space, MBI offers technical, business and administrative
support to their tenants. MBI's emphasis is on near-term opportunities, those that can move through
15
technology and business development in five years or less. As part of the Lansing Regional SmartZone,
MBI is given special attention by the MEDC.
MSU Biotechnology
MSU is one of the top agriculture schools in the nation, and its biotechnology department reflects this.
MSU’s biotechnology department includes researchers from a number of departments including:
Chemical, Agricultural, Civil and Environmental, and Mechanical Engineering, Food Science and
Human Nutrition, Horticulture, Crop and Soil Sciences, Chemistry, Biochemistry, and Microbiology.
Using a combination of these resources MSU’s biotech study focuses on (among others):
Food Engineering
Protein Structure
Drug Design
Metabolic Engineering
Biorheology (Flow behavior of biological materials)
Laser Spectroscopy (raman, infrared, uv-visible and fluorescence)
Wayne State Cluster
Wayne State University
Wayne State University in Detroit houses the nation’s 4th largest medical school, attracts more than
$80 million annually in research funding, and is responsible for the drugs t-PA, a clot-buster, as well as
AZT and dCyd for the treatment of AIDS.
Core Technology Alliance
The Michigan Center for Genomic Technologies (Wayne State University) provides area life scientists
with state-of-the-art DNA sequencing, high-volume DNA genotyping information, and provides an
outlet for the Michigan Microarray Network. The network works to create an infrastructure that will
nurture the development of translational genomics. Funding for this center was awarded by the MEDC
at $6 million, and will be led by Wayne State researcher Dr. Mark Hughes.
Research
In addition to the work done at the Michigan Center for Genomic Techonologies, Wayne State has
received funding for 5 other university projects by the Michigan Life Sciences Corridor for a total of
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$4.8 million. The research centers around DNA and cancer research for the most part, because of the
strength of Wayne State’s Barbara Ann Karmanos Cancer Institute. Researchers include: Hiranmoy
Bhattacharjee, Peng George Wang, John Santa Lucia, June Kan-Mitchell, Roy Baynes, and Fred
Reinhart.
Tech Transfer
Wayne State University’s Technology Transfer Office (TTO) is responsible for the identification,
protection, marketing and licensing of intellectual property (e.g., patents, unique biological or other
materials, and copyrights) developed by WSU faculty. In addition, TTO reviews and negotiates material
transfer, non-disclosure and sponsored research agreements when they relate directly to WSU inventions.
The office also has staff dedicated to the transfer of bioengineering information.
Incubator
Wayne State’s Research and Technology Park was designed to help facilitate technological interaction
between industry, government, and academe, while assisting in the growth of high-tech business
ventures. As part of the Woodward Technology Corridor SmartZone, the main focuses of the park are life
sciences, advanced manufacturing/engineering, and information technology. Phase I, a 40,000 square
foot facility, is slated for occupancy in early 2003.
Grand Rapids Cluster
Rich with research facilities, the Grand Rapids area boats over 115 biotech-associated firms and is
continuing to grow rapidly as a result of its connection with the Michigan Life Sciences Corridor.
The Van Andel Research Institute (VARI)
The Van Andel Research Institute (VARI) is an independent research organization focused on
molecular cancer research. Since VARI's opening in May 2000, more than 70 scientists have been
recruited from top universities and research institutions worldwide, with the eventual goal being to house
more than 200 scientific and administrative staff.
Biotech research at VARI centers around seven state-of-the-art laboratories specializing in:
Cytogenetics & Genotyping
Monoclonal Antibody
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Microarray Technology
Imaging & Microscopy
Germline Modification
Mass Spectrometry and Proteomics
Bioinformatics
Leading the research is VARI Director George Vander Woude, PhD. Arthur Alberts, PhD, Brian Cao,
MD and others contribute to research as well.
Core Technology Alliance
The western arm of the Core Technology Alliance, the Michigan Animal Models Consortium (Van
Andel Research Institute, Grand Rapids) analyzes and develops transgenic mice. The mice are used to
determine the actions of particular genes, to create models for the study of human diseases and for other
studies. Animal pathology, cytogenetics, cryopreservation and animal repositories are also components
of this effort led by the Van Andel Research Institute.
Other Grand Rapids Institutions:
Grand Valley State University's $60 million Center for Health Professions, which will include
30,000 square feet of wet lab and incubator space for emerging life sciences firms (under
construction)
Grand Rapids Community College's $30 million Calkins Science Center
Calvin College life sciences building: a research center involved in research on the effects of
nutrition and certain drugs on fracture healing, as well as the possible development of artificial
tear solutions.
The Grand Rapids Medical Education & Research Center: medical training, continuing
education, and acts as a clearinghouse for local clinical trials, including trials in neuroscience,
trauma and critical care, infectious and digestive diseases, and cardiovascular studies.
The Wege Institute for Mind, Body & Spirit: holistic health care combined with traditional
medicine
Incubator
The Grand Rapids SmartZone Incubator is a joint initiative between the City of Grand Rapids, VARI,
The Right Place Program, Grand Rapids Community College and Grand Valley State University. The
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incubator will be housed in Grand Valley’s new Center for Health Professions and will be approximately
10,000 square feet. The objective of the incubator is to foster start-up and developing technology-based
businesses.
Kalamazoo Cluster
Centered around Western Michigan University, the southwestern cluster has grown significantly
thanks to the Michigan Life Sciences Corridor and local economic initiatives.
Western Michigan University
WMU was the first university in the nation to approve a Master of Science degree in molecular
biotechnology in 2001. The degree combines the disciplines of chemistry, biological sciences and
statistics to train students in high throughput screening techniques. The head of the degree and all
biological research is Dr. Brian C. Tripp.
Economic Development
Southwest Michigan First, the chief economic development agency in Kalamazoo County, began its
quest in 2001 to attract biotech companies and venture capitalists to the region. Because of Southwest
Michigan First’s urging, Arch Partners LLC, a venture capital firm based in Chicago, now invests solely
in Western Michigan biotech firms. Along with funds from the Kalamazoo SmartZone initiative,
Southwest Michigan First funded the first biotech incubator in the Southwest Michigan region.
Incubator
Started by Southwest Michigan First and the MEDC, the $12 million Southwest Michigan Innovations
Center biotech incubator at Western Michigan University’s Business, Technology and Research Park has
already made Kalamazoo an attractive draw for early-stage companies. At 58,000 feet, the incubator is
ideal for companies in the areas of biomedical, pharmaceutical, medical device, bioinformatics, and
toxicology. Already occupied by 5 companies, the Innovations Center looks forward to continued growth
in years to come.
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Conclusions
Investment
Michigan is already seeing a large growth in their investments, in 1999 alone saw a 50% increase in
the number of investment deals from the previous year. Venture capital under management nears the $2
billion mark in Michigan, and the SmartZones alone have captured over $80 million in company
investment. Michigan is the #1 state in industrial research and development intensity (National Science
Foundation) so investment should continue to increase.
Growth
In 2001, at least 22 new life science companies were formed in Michigan. The Life Sciences
Corridor is increasing lab space, financial support structures, and networking opportunities for scientists
in an effort to continue their success. While Michigan has a lot to overcome, both in image and
capability, the state is making great strides in the right direction.
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Chapter 3
----
Indiana
The health and life sciences industry in Indiana, consisting of the biotech, pharmaceutical, medical
device, and health information technology fields, is one characterized by growth and constant
development in recent years. New partnerships between universities, the government and successful
pharmaceutical giants in the private sector are truly advancing the state’s life science industry. In
addition, small start-ups, often run by former employees of established life science corporations, have
the potential to develop into innovative firms.
Strengths According to the Indiana Health Industry Forum, the state’s more than 82,000 life science employees
create over $13.6 billion in economic output each year. The most concentrated area of life science
activity is centered in Indianapolis, mainly because it plays host to Eli Lilly’s world headquarters.
Bloomington and West Lafayette, homes of Indiana University and Purdue University respectively, are
also research and development hotbeds, though there are smaller pockets of life science activity in all
areas of the state.
While Indiana’s universities, large pharmaceutical corporations, and the partnerships that have arisen
between them are indeed its largest strengths, there are a number of other reasons companies choose
Indiana for their home. In recent years, the state has begun to see a large increase in the number of
venture funds, state funds and initiatives specifically targeting the health and life science industries.
Central Indiana has large concentrations of key life sciences workers (i.e. Chemical Technicians, 78%
greater than the national average) and the universities produce large numbers of life science graduates
each year—11,000 in 2000 alone. A number of technology transfers have also been established to
facilitate collaboration and innovation at the state’s major universities. Also crucial to the growth of the
industry in the state, the forming of informal social networks, such as the Indiana Health Industry Forum,
has enhanced the cohesive atmosphere between the state’s life science intellectuals. Indiana has a high
21
quality of life and as a whole the state’s management is well respected and often sought after.
Weaknesses While Indiana is seeing a large increase in all of the above-mentioned areas, the state still lags behind
much of the country in its rate of economic growth and expansion. Unlike the surrounding states of
Michigan, Illinois and Ohio, Indiana has failed to remain in the top 20 of per capita income in the last
few decades. Indiana firms often have trouble attracting and retaining labor, with technical and skilled
employees as the most difficult to find. Despite recent increases, according to studies done in 2000,
insufficient funds, undeveloped networks and inadequate publicity remain a problem for many life
science firms.
The main weakness within the state appears to be the relative youth of the industry and, as with most
Midwestern states, an image problem with those unfamiliar with the potential of the state’s resources.
Central Indiana brings up the average numbers of the state, but all problems are intensified outside the
Indianapolis corridor (from Bloomington to West Lafayette). While it is assuredly on the right path,
Indiana will need time to develop a stronger network of dedicated and interested persons, firms and
funds.
Statewide Initiatives/Partnerships
Local and life science industry giants such as Lilly, its affiliated service companies, and major state
universities formed the Indiana Health Industry Forum (IHIF) in 1994 as an advocate organization for
the health industry. The forming of the IHIF was Indiana’s first step in strengthening its life science
industry.
As the hub of life science activity in the state, the Central Indiana region was a natural choice for a
statewide non-profit initiative. Formed on February 13, 2002 by Indiana University, the City of
Indianapolis, the Central Indiana Corporate Partnership (CICP), Purdue University and the IFIH, the
Central Indiana Life Sciences Initiative hopes to attract further investments and federal dollars to the
corridor stretching from Bloomington to Indianapolis to West Lafayette. Nearly $1.5 billion has already
been invested and committed to projects through 2005.
Announced in 2002, the Indiana Proteomics Consortium was established to create a mechanism for
scientists from Eli Lilly, Indiana University and Purdue University to work together on projects that
22
leveraged the Universities' expertise in analytical chemistry and instrumentation with Lilly's long history
of experience with protein therapeutics and protein drug targets.
Other pertinent organizations and initiatives include:
Access to Technology Across Indiana (ATTAIN)
Advanced Research and Technology Institute (ARTI)
Indiana Business Modernization and Technology Corporation
Medical Device Manufacturers Council
Venture Funds
Though not one of Indiana’s greatest strengths, venture capital firms are beginning to take interest in
the life sciences. Here are the most influential in Indiana:
Central Indiana Life Sciences Initiative Capital Formation Committee
The Venture Club of Indiana
e.Lilly
Lilly BioVentures
Indiana 21st Century Research and Technology Fund
Central Indiana Corridor Cluster
Indianapolis
Unlike most strong life science areas, Indianapolis does not have a university that is historically strong
in biotech and the life sciences. Instead, two Fortune 500 companies in the life science field,
pharmaceutical giant Eli Lilly and Company and its medical division spin-off Guidant Corporation,
along with four other firms in the area employ well over 15,000 people in Central Indiana. The four
other large firms in the area are:
Elanco Animal Health
Roche Diagnostics
Cook Group
Dow AgroSciences
In addition to the work done by these firms, Indiana University, Purdue University Indianapolis
(IUPUI) and its associated Medical Schools supply a number of research, labor, development facilities
23
and receive grants supporting the life science complex.
Indiana University
Housing the second largest medical school in the United States, Indiana University is the hub of
medical research in Central Indiana. The School of Chemistry is ranked third in the country in analytical
chemistry, a crucial focus in genomics and proteomics, and IU is strong in both areas.
Indiana Genomics Initiative
Thanks to a Lilly Endowment grant of $105 million, the School of Medicine is leading the way in
genomics research through its leadership of the Indiana Genomics Initiative (INGEN). There are six
components to INGEN:
Bioethics
Bioinformation
Education
Genomics
Medical Informatics
Training
The research focuses on animal research, cell and protein expression, genotyping and gene expression,
human expression, microscopy, in viro imaging, proteomics, and technology transfer.
Technology Transfer
IU’s answer to the tech transfer problem faced by many university researchers is the previously
mentioned Advanced Research and Technology Institute (ARTI), with offices in Bloomington and
Indianapolis. ARTI is a not-for-profit agency that facilitates industry-Indiana University research and
technology collaborations. As a technology transfer center, ARTI works to help businesses develop and
commercialize new technologies. In addition, a strategic focus for ARTI is to create new companies and
provide support services for those companies. ARTI has helped form five new companies from
university research and offers more than 100 technologies for licensing, benefiting from groundbreaking
work by the Indiana Genomics Initiative and the Indiana Proteomics Consortium.
Incubator
A life sciences and technology business incubator managed by IU's Advanced Research and
Technology Institute, Indiana University's Emerging Technologies Center houses both the IHIF and the
24
Indiana Proteomics Consortium. Only open since late 2002, the incubator has much room to grow in
its current location in downtown Indianapolis.
Purdue University In 2001 alone, 109 patents were filed and ten new companies formed based on Purdue University
research. More than 15% of the university’s funding comes from industry sources putting it in the top 10
in the nation in that category.
Research
Building on its core strengths of agriculture, engineering and the sciences, areas of Purdue’s research
strengths useful for a life science cluster include:
Analytical chemistry (ranked first in the country)
Genomics
Biomedical Engineering (the fastest growing engineering program at PU)
Pharmacy
Veterinary medicine
Molecular structural biology
Food science
Purdue also boats one of only two nationally designated Cancer Centers not associated with an
academic medical center.
Agricultural Genomics Initiative
In December 1998, Purdue established an Agricultural Genomics Initiative in order to become more
competitive while contending for new funds for agricultural genomics research. The Initiative has
already raised funds for The Agricultural Genomics Core Facility. This facility is housed in 1,500 sq. ft.
of laboratory space, which presently includes two DNA sequencing machines capable of sequencing
over 200,000 samples per year, automated plasmid DNA preparation equipment to streamline daily
operations, and has the capacity to construct and read microarrays for gene expression profiling studies.
Discovery Park
With help of a $26 million grant from Lilly, in 2001 Purdue announced it would build a $100 million
Discovery Park. Purdue will leverage the grant and state funding with existing university funds, private
donations and federal research support to create the $100 million park. Initial plans for the 40-acre site
25
on the west edge of campus call for centers to house research in nanotechnology, bioscience/engineering
and e-enterprises. The park also will include an entrepreneurship center to help transfer research findings
into products and services.
The first building being built for the park is the Birck Nanotechnology Center. This $56 million
facility is among the first in the nation designed specifically for nanotechnology research rather than
conventional semiconductor processing.
Technology Transfer/Incubators
Purdue has a number of different venues for licensing and supporting the technology produced by its
research facilities.
Purdue Research Park
Purdue Gateways Program
Purdue Office of Technology Commercialization
Smaller Clusters
Warsaw
A Northern Indiana town of only 12,000, Warsaw has made quite a name for itself in the medical
device field. Medical orthopedic device companies like Biomet Inc., DePuy Inc. and Zimmer Inc.
control over 30% of the global market in orthopedic joint replacement.
South Bend
In 2001, Notre Dame University’s sponsored research amounted $34.1 million, and included study in
orthopedic implant materials and the development of a micro fluids-based blood monitoring system.
The university also collaborates with companies like Bayer and Zimmer on implants, adhesives and
blood diagnostics.
Southern Indiana
The southern third of Indiana is also home to a number of large life science firms. GFI Research, a
division of West Pharmaceutical Services, is located in Evansville. The world’s leading manufacturer of
patient care systems and leading provider of specialized rental therapy products, Hill-Rom is based in
Batesville. In Columbus, Blairex produces over-the-counter drugs.
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Conclusions
It is evident from this glimpse at the Indiana biotech network that the industry is heavily reliant on
funds from large, established firms like Eli Lilly and Company. Other venture funds are starting to
arise, but outside of the state of Indiana very few are taking notice of the progress being made within the
state lines. Indiana has much to overcome, but image and networking with those outside the state look
to be the most important to continue the pattern of growth.
In addition to capital issues, Indiana must consider providing more research facilities and incubators
for small start-ups. These facilities now exist primarily at the universities.
Because of the presence of Indiana and Purdue Universities, Indiana’s workforce is beginning to
become a more highly skilled labor base, and this too will help progress life science firms and increase
the likelihood of retaining graduates.
Indiana is on the way to being competitive with the coasts in terms of its life science potential, but it
will require strategic planning and growth in order for others to know about its promising future.
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Chapter 4
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Ohio
According to Omeris, Ohio’s state-funded and BIO-affiliated life science organization, the over 1,000
bioscience-affiliated firms in the State of Ohio employ over 31,000 people. Of these almost 50% are
biological scientists. These numbers exceed national averages and the state government has committed
significant funding, including, as in Michigan, part of the funding it received in the Tobacco Master
Settlement Agreement, to the enhancement of the life science industry.
Strengths First among Ohio’s strengths are its broad-based, advanced research institutions. The Cleveland
Clinic, Case Western Reserve University, The Ohio State University, the University of Cincinnati, and
Children’s Hospital in Cincinnati are nationally prominent institutions involved in biotechnology
research, and they are complemented by institutions such as Wright State University in Dayton and the
Ohio University in Athens.
There are also a multitude of prominent life science corporations involved in the development and
funding of biotechnology research, such as Procter and Gamble pharmaceuticals, the Battelle Memorial
Institute, Cardinal Health and Abbott Labs.
Statewide initiatives, such as the “3rd Frontier” program instituted by Governor Taft, and local
leadership undertakings, such as the Columbus Technology Leadership Council, are focusing their
efforts on high technology industry organization, including the life sciences.
There is a strong entrepreneurial culture in the state, although this culture has not traditionally been
focused on the life sciences. Ohio also boasts a surplus of workers with technical degrees—a study by
Battelle showed that while Ohio universities graduated 4,177 engineers and 3478 scientists in 2000,
there were only 1,800 and 540 jobs in those areas, respectively. So, in terms of local talent to staff the
28
increasing number of start-up companies, Ohio has plenty of room to grow.
Weaknesses Like in many Midwestern states, the main barrier to fulfillment of the potential for growth in Ohio’s
biotechnology sector is a lack of venture capital and angel investors.
Clusters
Cincinnati
Cincinnati has a small but growing biotechnology cluster that has been able to make strides in the
development and commercialization of technology through partnerships involving strong academic,
medical and private sector institutions. Local leadership is also seeking to break through barriers by
letting the cluster develop across state lines to take advantage of the research strength of the University
of Kentucky in Lexington and the University of Louisville and Jewish Hospital in Louisville .
University of Cincinnati
As the largest single employer in the city of Cincinnati, the impact of UC on the local economy and on
the local research community can not be overestimated. Along with the Children’s Hospital Research
Foundation, UC received over $150 million dollars in research funding in 2002. Within the university
lie the Genomics Research Institute, a major collaborator in the Human Genome Project, the
Cardiovascular Research Building and the Vontz Center of Molecular Research. According to Bio/Start,
the regional biotech business incubator, areas of particular research strength at UC are cardiovascular,
cancer, neuroscience, and environmental health research, and the university accounts for $4 billion
annually in biomedical technology licensing revenues.
Procter and Gamble
A global marketer of over 250 consumer brands to over 140 countries, P&G is headquartered in
Cincinnati and is an area leader in pharmaceutical and bioscience research and licensing. P&G
currently has an annual R&D budget of over $2 billion, and along with fellow pillar organization,
Ethicon Endo-Surgery, forms the backbone of the corporate side of Cincinnati’s life science cluster.
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Cleveland
With The Cleveland Clinic at its core, the Cleveland cluster boasts world-class hospitals, research
institutions, and incubators, and counts as its primary strength biomedical research and technology.
The Cleveland Clinic Foundation
The Cleveland Clinic was ranked as the number one cardiovascular hospital in the U.S., and the number
three hospital overall, according to U.S. News and World Report. The Clinic’s Urological Institute and
Digestive Disease Center are counted among the best in the nation, and it ranks in the top ten in nine other
medical specialties. The Clinic is home to the Lerner Research Institute (LRI), which receives over $150
million in funding annually, and is the third largest research institute in the U.S.
Case Western Reserve University
CWRU, along with the Cleveland Clinic, is a core institution in this region’s life science sector, and
partners with the Clinic in a variety of ventures. But CWRU has a significant impact on the region in
its own right. For example, in 2001 the CWRU School of Medicine ranked 15th in the country with
$179.3 million in National Institutes of Health (NIH) funding, the so-called “gold standard” in
evaluating funding clout. This number represented a 9.5% increase from 2000.
BioEnterprise
BioEnterprise is a business formation, incubation and “acceleration” company formed by equal
co-partners, The Cleveland Clinic, CWRU, and University Hospitals Health System. A
well-established Cleveland-based institution, BioEnterprise provides biotechnology start-up companies
with access to venture capital and other sources of funding, access to materials and lab space, as well as
instruction in obtaining top managers with experience in the field. BioEnterprise clients include
companies such as Athersys, Inc. and NextMED Systems.
Columbus
As the home to Ohio’s largest university, it’s state-sponsored bioscience “accelerator” in Omeris, and
the world’s largest contract research organization in Battelle, Columbus has a growing biotech sector
with huge potential for further growth.
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The Ohio State University
There is extraordinary breadth to the research strengths at OSU, and the Columbus cluster is trying to
take advantage of this multi-faceted university which stands in contrast to a cluster like Cleveland,
which is focused so heavily on the biomedical field. According to U.S. News and World Report,
OSU’s Medical School, Pharmacy School, Department of Veterinary Medicine, Chemistry Department,
and Agricultural research areas ranked 40th, 7th, 6th, 20th, and 14th in the country, respectively. OSU is
also outpacing peer institutions in terms of growth with research expenditures increasing from $125
million to $146 million from 1995 to 1998, which, at a rate of 23%, was almost double the national
average (Battelle, 2001). Affiliated with OSU is the Science and Technology Campus Corporation,
which provides lab space and facilitates technology transfer for OSU spin-off companies.
The Children’s Research Institute
CRI is a Columbus area children’s hospital research center which ranks among the top ten in the U.S.
of such institutions. Among CRI’s specialties are molecular oncology, infant pulmonary mechanics,
pediatric injury prevention, gene therapy, and vaccine development.
Battelle
The Battelle Corporation is a major pillar institution in Central Ohio and the Midwest. It develops
technology and commercializes products in a variety of industries, including pharmaceuticals,
agro-chemicals, health care, environmental technology, and national security. It has designated
biotechnology as one of its core areas for future development, and has placed an emphasis on technology
commercialization. Examples of the establishment of Battelle Pulmonary Therapeutics and Battelle’s
relationship with iMEDD, an OSU spinoff company.
Cardinal Health
A producer of pharmaceutical and other healthcare products, this Dublin, OH pillar company posted
2002 sales in excess of $44 billion. Cardinal manufactures and distributes patient care, surgical, and
drug delivery products and employs more than 49,000 people worldwide.
Conclusions
With their diversity of research, corporate and medical assets, Ohio’s three primary biotechnology
sector’s have all the ingredients for continuing growth and expansion in the life sciences. The progress
31
of state-wide and local industry development projects, still young when compared to other states in the
region, will be a determining factor in the success that Ohio has in fulfilling its biotech potential. Of
course, another factor in this will be the state’s ability to increase the national profile of its life science
clusters in order to attract still-lacking investment capital.
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Chapter 5
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Missouri
The state of Missouri has drawn on one of its traditional strong points—agriculture—to place itself as
one of the national leaders in plant and agricultural sciences as it makes its way into the 21st century.
The state’s place in the world of agriculture is well established: 15% of Missourians still work in
agriculture-related industries, the state ranks in the top 10 nationally in the production of hay, grain, rice,
soybeans, corn, cotton and watermelons, and it is in the 10 ten in production in almost all livestock areas.
Building on this traditional strength, state leaders in government, academia, industry, and foundations
have committed to the expansion of the life science sector in Missouri through programs such as the
BioBelt, which envisions a multi-state swath with St. Louis at its center, devoted to the promotion of the
plant and life sciences.
Strengths With it’s agricultural history and commitment to the plant sciences, Missouri has made a very focused
effort to position itself as a leader in a specific life science area, using most of its resources to this end.
Corporate and private foundation funding is present, and the state government is committed to the life
sciences. As recently as May of 2003, the State Legislature passed a bill allocating $700 million from
the state’s tobacco settlement to the development of the life science over the period from 2007 to 2025.
The state is home to major research such as Washington University and the University of Missouri,
which are coordinating on the project of developing the plant and life sciences.
Weaknesses
Missouri has already made considerable headway in establishing as an effective life science cluster.
In the areas of further developing an entrepreneurial culture and expanding the cluster further outside of
its focus in St. Louis, however, there is room for improvement.
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Clusters
St. Louis
St. Louis represents Missouri’s primary life science cluster. According to the Battelle Institute, 290
regional life science-affiliated firms employ 22,000 people and have an annual economic impact of
$10.5 billion. The four major universities in St. Louis spent $377 million on R&D in the year 2000,
and they graduate approximately 2,800 life science degree-holders annually. These impressive
statistics and the integration with which industry, researchers, and government act in fostering economic
growth in the life sciences have made the area a benchmark example in studies examining U.S. regional
industry development.
Monsanto
Monsanto is a the world leader in the development, production and marketing of crop protection
technologies, and its St. Louis research facility employs 960 plant scientists. The company
manufactures Roundup, the top-selling herbicide in the world, as well as the seed products DEKALB®
and Asgrow, and posted 2002 sales totaling $4.6 billion.
The Donald Danforth Plant Science Center
This center is a $75-million, 170,000-square-foot research center founded by the Danforth Foundation,
a major St. Louis area philanthropic organization, and operated with the support of the State of Missouri
and in partnership with the Missouri Botanical Garden, Monsanto Company, Purdue University, the
University of Illinois at Urbana-Champaign, the University of Missouri-Columbia, and Washington
University in St. Louis. The Danforth Center’s 15 laboratory suites and 14 greenhouse host teams of
scientists from all over the world conducting basic and applied research in the plant and agricultural
sciences.
Washington University in St. Louis
Washington Universities is one of the U.S.’s premier research institutions and is involved in a variety
of research endeavors. In addition to conducting much of the region’s plant science research, the
university’s School of Medicine is among the top ten in the U.S. annually, has been host to 17 Nobel
Laureates, and conducts groundbreaking biomedical research in conjunction with top-ranked regional
34
hospitals, such as Barnes Jewish Hospital. Washington University’s Human Genome Sequencing
Center is one of three major U.S. centers participating in the Human Genome Project. The university
boasted $303 million dollars in NIH funding in 2001, which was 5th among U.S. universities.
Nidus Center for Scientific Enterprise
The Nidus Center is a life science incubator located on Monsanto’s corporate campus. After passing
through a rigorous selection process, nascent biotechnology companies can take up residence at the
center and are granted access to state of the art wet and dry lab facilities, management consulting, and
networking opportunities.
Center for Emerging Technologies
The CET is another area incubator that provides start-up companies with laboratory space, business
management assistance, and help in securing investment capital. A not-for-profit, public-private
partnership, it is sponsored by the State of Missouri, St. Louis University, Washington University, and
the University of Missouri, St. Louis.
University of Missouri
The University of Missouri, Columbia is located in the center of the state and is the main campus for
the University of Missouri system. Its Health Sciences Center conducts medical and clinical research.
The university is also the state’s participant, along with the University of Illinois, Urbana-Champagne, in
the Illinois-Missouri Alliance for Biotechnology, a cooperative program that has attracted U.S. Federal
funding to Missouri’s life science industry.
Kansas City The Kansas City area is another small but growing life science cluster in the state of Missouri.
Straddling the two states of Missouri and Kansas, the cluster is home to two major universities and
research institutes.
Kansas City Life Science Foundation
The KCLSF and its member organizations are trying to foster cross-state collaboration in the areas of
aging and related diseases, neuro-degenerative and cardiovascular diseases, cancer and infectious
diseases, and in the process increase the region’s ability to attract funding.
35
Stowers Institute for Medical Research
Founded in 1994, the Stowers Institute is dedicated to research in disease prevention, which it
conducts at its $300 million, 600,000 square-foot facility in Kansas City. The Institute plans to
eventually house 45 independent teams of 10-12 scientists each, and by 2002 it had already attracted 12
such teams.
Higuchi Biosciences Center
Just across the state line at the University of Kansas, the Higuchi Biosciences Center (named after
Takeru Higuchi, the former chair of the Department of Pharmaceutical Chemistry) is the major
pharmaceutical research facility in the Kansas City area. There are three semi-autonomous research
centers within the HBC: the Center for Bioanalytical Research, the Center for Drug Delivery Research
and the Center for Neurobiology and Immunology Research. The Kansas Innovation Corporation
(KIC) handles the HBC’s technology transfer and licensing functions.
Conclusions
By building on its strengths, maintaining focus in industrial development, and integrating
public-private cooperative efforts, even across state lines, Missouri has been able to achieve what many
sub-regions in the Midwest are trying to do—create a viable, job-producing biotechnology cluster. The
presence of Washington University has also allowed the state, already strong in plant science, to
diversify its presence in the life science world, adding to its stature and recognition, which in turn has
made it easier to bring outside investment capital into the state.
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Chapter 6
----
Wisconsin
Biotechnology activity in the state of Wisconsin is focused around its primary cluster in Madison.
The University of Wisconsin’s main campus is located in Madison, and the University’s research
activities are the engine that drives Madison’s budding biotech cluster. Research strengths are
complemented by support institutions and have led the Madison cluster to make strides in gaining
national prominence, and many see it as lying on the cusp of becoming a large cluster on par with those
on the East and West Coasts if it builds out a few key aspects necessary for growth.
Strengths
Wisconsin’s primary biotech strength is the world class research done at its universities and research
institutes. The state also has experienced and long-standing technology transfer organizations that
license its technology to companies in Wisconsin and around the world. As Wisconsin has been able to
take advantage of its research innovations through technology licensing, the state has become home to
growing number of spin-off and start-up companies that add to biotech industrial community.
Weaknesses As is the refrain in many Midwestern states, the major problem in Wisconsin is a lack of venture
capital. According to a study by the Brookings Institute, there are three main types of biotechnology
research marketed for medical use: life science research, diagnostics, and therapeutics. Wisconsin is
very strong in life science research—life science research requires less funding but the market is small in
potential income when compared to the other two types. Thus, Wisconsin has some world-class
research being done there, but, by necessity it is mostly of the sort that requires relatively lower capital
investment. Therefore, on the back end, there is less income being generated to roll over into new
technology development. By contrast, clusters such as San Diego and Boston excel diagnostics and
therapeutics, create huge amounts of income which fund further research and create new jobs and so on.
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Madison
As was stated above, Madison is the biotechnology cluster in the state of Wisconsin, and is the state
center for research, business incubation and technology licensing.
University of Wisconsin, Madison
In the field of biotechnology, the University of Wisconsin is perhaps best known for its innovative
stem cell research. While this remains a focus, it should be noted that the UW is one of the broadest
and well-funded research institutions in the US, with particular emphasis on the biological sciences.
Approximately 800 faculty members and 2,000 graduate students belong to the 60 departments and
research centers at UW involved in the biological sciences. Of these, the departments of biochemistry,
molecular biology, molecular and general genetics, computer science and biostatistics were all ranked in
the top ten nationally by the National Research Council. UW ranks 3rd in the country in research
expenditures at over $500 million annually, and over half of that amount goes to the biological sciences.
UW researchers in the biological sciences received outside funding in excess of $200 million in 1998-99,
with $57 million going to genetics and genomics alone. The early 1990s saw the advent of the BioStar
initiative, a public-private partnership that dedicated $317 million to the construction of new biological
science related buildings on campus. So far, this program has resulted in the construction of the UW
Biotechnology Center, as well as a variety of other buildings.
University Research Park
URP is a research park founded in 1984 using land formerly used for agricultural research. The park
is a self-sustaining private entity that houses an incubator to help nurture UW spin-off companies.
Once companies have outgrown the incubator, they have the option of buying a parcel of land from URP
and building their own facilities. Including the incubator, there are now 34 buildings on the URP
campus. The URP turns a profit every year and pumps that money back into UW research programs,
helping to fuel the cycle of discovery, development, and commercialization. The URP serves another
important function by keeping many of UW’s talent and technology in the area to build the cycle of
research and reinvestment in Madison, not in one of the clusters on the East or West Coasts.
Wisconsin Alumni Research Foundation (WARF)
Founded in 1925, WARF is truly a global pioneer in the area of technology transfer. Along with URP,
it is one of the driving forces that takes UW-developed technology out of the University and converts it
into funding for additional research. WARF ranks 11th out of 143 U.S. universities in terms of revenue
38
generated through royalties and the licensing of UW technology.
Conclusions
The biotechnology industry in Wisconsin is very good at doing what it does: creating technology and
developing businesses to market it. It’s major entities work well with each other through organizations
such as the Wisconsin Biotechnology Association, and they enjoy the support of the state and local
governments. To increase in stature, however, the state will have to parlay its strengths into ventures
that get the attention of outside venture capital.
39
Chapter 7
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Illinois
There are many types of industries in Illinois. However one industry that has experienced
tremendous growth in the last several years is the biotech industry. This is because Illinois offers
biotech firms great opportunities for research with its state of the art technology and infrastructure.
Source: A New Economy Growth Strategy For Chicagoland.
40
Source: Chicago Technology Today (CTT)
41
Strengths The health care industry has a bright future in the Illinois economy. According to the State of
Illinois Business and Data Center those who are 85 and older increased approximately 35% between the
year 1990 and 2000. This means the demand for health related products will continue to increase in the
future. The industry already has a strong presence in Illinois. For example, clinics and offices of
medical doctors is the seventh largest industry totaling 61,711 employees in the Chicago Primary
Metropolitan Statistical Area (PMSA). Jewel/Osco, which sells food as well as pharmaceutical
products, is the third largest employer in the Chicago PMSA with 35,800. It takes time for small
businesses to take advantage of economies of scale because of relatively low demand. However,
companies such as Jewel/Osco help them expand because they create demand for their products.
Advocate Health Care ranks eighth with 22,600 and Abbott Laboratories ranks twelfth with 16,000.
This large concentration promotes spillover effects and opportunities for urbanization economies.
Urbanization economies occur when firms in similar industries benefit by clustering. These benefits
include access to human capital and economies of scale.
Weaknesses The Illinois bio-cluster’s inherent weakness is overcapacity in the industry. Large companies like
Baxter Healthcare, Pharmacia Corporation, and Abbott Labs employed thousands of scientists and
dominated the Chicago life science sector for decades. The financial structure in Illinois supported large
pharmaceutical companies, not small and medium size enterprises (SME). No financial institution in
the state would lend money to a biotech start-up during the early 1990s.
However, in later years, Chicago’s large pharmaceutical companies restructured and some of their
talented business executives and scientists were given financial compensation and permanently laid off.
These talented ex-pharmaceutical executives and researchers utilized their networks in business and
science and formed their own biotechnology companies in San Diego.
In San Diego, Chicago life science executives went for the necessary finance and support
infrastructures to develop their companies. There is a frequent quote used by the President of the
University of Illinois, ‘the biotechnology businesses in California were built on the brains from The
University of Illinois.” To some extent this is true as many talented university researchers and former
Illinois pharmaceutical executives left the state to set up their biotechnology companies in places like
42
San Diego and San Francisco. The main obstacle for the state is to prevent the leakage of human
capital such as its top life science researchers. It must also encourage those who left to return to the
Chicago area to build-out their companies. Unfortunately, the Illinois policymakers have not come up
with any solution.
The second problem is the sheer size of Chicago’s life science community, which prevents
communication among the players. There is minimal communication and interaction between Chicago’s
life science research institutes [Argonne Laboratory] key universities [Northwestern University, The
University of Chicago and the University of Illinois] large pharmaceutical companies [Baxter
Healthcare] and the emerging biotechnology company sector. This has also led to the lack of
collaboration in joint research and commercialization of innovation that exists in areas such as Boston
and San Diego.
Universities
In the U.S universities’ R&D has strong links to the private sector. Illinois Institute of Technology
(IIT) specializes in science, engineering and psychology. The university and its contract research
affiliate ITT Research Institute’s annual research volume is about $130 million. The ITT Research
Institute provides safety assessment testing and advisement to pharmaceutical companies. University
of Illinois at Chicago allocates $108 million in life/health sciences research and $4.5 million in clinical
research annually. The College of Pharmacy at the university is the third oldest in the U.S. The
Biotechnology Center at the University of Illinois at Urbana-Champaign boasts 150 faculty and service
facilities for DNA, protein and flow cytometry. Northwestern University in Evanston, Illinois has a
research budget of $210 million and has several prominent research centers such as the Office of Clinical
Trial and Training, which performs clinical trials for Alzheimer’s disease, depression, diabetes and
Parkinson’s disease. The Biotechnology Laboratory focuses on DNA sequencing and isolation. The
University of Chicago has a life science research budget of over $250 million per year and its hospital
has consistently been selected as one of the best in the nation by the U.S news and world report. The
Division of Biological Sciences’ specialties at the University of Chicago includes pediatrics, family
medicine and psychiatry.
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Research Parks
There are also three major research parks in Illinois. The Northwestern University Evanston
Research Park for example includes R&D center for Evanston Northwestern Healthcare. Its purpose is
to promote strong relationships between the University and fast-growing businesses. University of
Illinois Research Park is an early-stage incubator program that provides new synergy for
technology-based economic development in Illinois. The Chicago Technology Park (CTP) Research
Center is home to 22 major companies’ R&D and has plans for further expansion. The CTP has a lot to
offer to Japanese biotech companies. Currently it has fully equipped wet-labs, university resources and
custom lab space. It also receives $20 million in federal small business research grants and state
challenge grants. In the future it will offer start-up companies assistance in grant writing and
knowledge to apply for state and federal funding for their research.
Venture Capital Firms
One of the major strengths of the U.S economy is the existence of SMEs, which help diversify the
economy. Venture capital firms assist them by providing capital. There are several major venture
capital firms that have strong relationships with pharmaceutical companies in Illinois. Gaebler
Ventures LLC is a business incubator and holding company that develops and nurtures companies that
are shaping the future. With an emphasis on seed-stage and early-stage investments, the Chicago-based
partnership has invested in companies since 1999 and has established numerous innovative and
market-leading enterprises. Adams Street Partners has $10.4 billion worth of capital and its portfolio
includes four biopharmaceutical companies. These are CombinatoRx Inc., Galieo Pharmaceuticals Inc.,
Myogen, Inc. and Eligix. GTCR Golder Rauner LLC has $4.5 billion in capital and its portfolio
includes Morton Grove and Ovation Pharmaceuticals. ARCH Venture Capital has invested in 90
companies nationwide and specializes in life and physical sciences. It currently manages five funds
worth more than $700 million.
Private Sector
There are three major pharmaceutical companies in Illinois. Batelle develops new technologies,
commercializes products, and provides solutions for industry and government. Its innovations range
from medical products and pharmaceuticals to products for the automotive, chemical, and agrochemical
industries. It has 16,000 scientists and allocates $2.7 billion annually for R&D. Baxter specializes in
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medication delivery, kidney disease and blood therapies. In 1999, the company invested $332 million
in R&D. Abbott Laboratories specializes in pharmaceutical products and invests $1 billion annually in
R&D.
State Government Initiatives
Small Business Assistance (SBA) provides one-on-one business counseling and management
assistance. It also assists with financial analysis and planning, and provides access to business
education and training opportunities. Technology Development Bridge has been the state’s most active
and successful seed-stage venture investment fund. The fund, which rates in the top quartile of all seed
funds nationally, has invested in 29 companies statewide, leveraged over $12 million in private
investment and created over 250 new jobs. SCORE a non-profit organization in Peoria, Illinois offers
consulting services to small businesses. It counsels more than 250,000 individuals annually and has
presence nationwide.
National Laboratories
One of many prominent national laboratories in Illinois is Argonne National Laboratory, operated
jointly by the U.S. Department of Energy and the University of Chicago. The laboratory has more than
4,000 employees, including about 1,400 scientists and engineers, of whom about 700 hold doctorate
degrees. Argonne's annual operating budget of more than $475 million supports 200 research projects.
Since 1990, Argonne has worked with more than 600 companies and numerous federal agencies and
other organizations.
Conclusions
There is already a recognizable cluster of biotech companies in Illinois and this will continue in the
future. All the necessary ingredients for start-up companies exist in that there are research parks,
university R&D and venture capital firms.
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