States pursuing the mirage of biotech?The Houston Business Journal has an interesting web-only article on how states and cities are desperate to be the next big biotech cluster.
Like a contagious virus, biotech fever is sweeping across America, leading states and municipalities to spend millions of dollars courting an industry that has never been profitable and is highly concentrated in just a few areas of the country.
Officials infected with the fever often see visions of high-paying jobs and dramatic impact on economic development - not to mention revolutionary advances in health care and agriculture. And the cure may come only after sufferers have wasted years and millions in taxpayer dollars chasing after the mirage.
That's the skeptic's view of the economic development community's current obsession with biotechnology. Four years ago, just 14 states had targeted biotech as a way to grow their economies. Today, 41 states are chasing the business.
"That says a lot more about the herd instinct of people who do economic development in this country than the economics of biotechnology," says Joseph Cortright, a Portland, Ore.-based economist who co-authored a 2002 Brookings Institute study on biotech.
A decade ago, every region wanted to be the next Silicon Valley, Cortright says. A few years later, dot-coms were all the rage.
"Biotechnology is the latest 'It Girl,' '' says Rob DeRocker, executive vice president of Development Counsellors International, a New York City-based firm that works with economic development organizations around the world.
Areas that don't have an existing biotech infrastructure won't be able to compete on cost alone. Instead, DeRocker says, they need "the political will and financial wherewithal" to spend decades beefing up their medical research institutions and commercialization capacity.
Many places now chasing biotech won't have that kind of patience, he predicts. "Some of these locations," he says, "will wake up and smell the coffee."
"Quite frankly," DeVol says, "most of them aren't going to be successful in the bigger scheme of things."
The good news is that we all get to benefit from these new biotech therapies being generously subsidized by local governments.
All this focus is in spite of the fact that biotech companies tend to have few employees, a small payroll, are rarely profitable, and usually don't expand much as they outsource production, sales, and other support services to big pharma - which they cover in a sidebar article. Their conclusion:
Houston already has an incredible research base in the Texas Medical Center, the largest in the world, and has been trying to increase commercialization via the non-profit BioHouston organization, with some mild success, inc. attracting some local biotech VC. There also seems to be a developing niche for Houston around the intersection of bio and nanotech, with Rice pushing aggressively in that direction and building a collaborative research center with the TMC at Main and University. Then there's Governor Perry's Emerging Technology Fund. So, to some extent, we're as guilty as the rest of them, although I think we might a bit more conservative: fewer subsidies (relatively), less obsessive focus, a more "real" chance of making it work.
Economic developers' fascination with biotech also could lead them to neglect other strategies that could pay off better for their communities.
DeRocker says the "blocking and tackling" of economic development - things like work force retraining and helping existing businesses grow - "could be lost for the sake of trying to reach the end zone with one pass" via biotech.
Cortright advises economic developers against looking for "magic bullets."
"Everybody assumes there's one next big thing," he says. "There really are lots and lots of little next things. The hard part is figuring out what are the little next things that you can have a big piece of."