Keynote Speech: CSBA Biotechnology Industry Overview
By Linda Barney, Barney and Associates

The OBA Conference afternoon Keynote speaker was Patrick Kelly from the Council of State Bioscience Associations. In his speech, Kelly described the state of the biotechnology industry nationally, key issues affecting industry development, and how we can promote opportunities in Oregon. Kelly’s speech was based on a Battelle Report titled, Battelle/BIO State Bioscience Initiatives 2010 .

By definition, the biosciences are a unique industry cluster and are constantly changing to incorporate the latest research and scientific discoveries. The biosciences industry sector is defined as including the following four sub-sectors: Agricultural Feedstock & Chemicals, Drugs & Pharmaceuticals, Medical Devices & Equipment and Research, and Testing & Medical Laboratories.

Bioscience employment and wages

Bioscience employment growth, led by research, testing and medical labs, greatly outpaced national employment growth from 2001–2008. Bioscience industry employment continued to grow, even during the first year of the recession. Between 2007 and 2008:

• Research, testing, and medical labs added 11,670 jobs or 2.1%

• Medical devices and equipment added 10,140 jobs or 2.4%

• Agricultural feedstock and chemicals added 5,021 jobs or 4.6%

• Only drugs and pharmaceuticals shed jobs, with a decrease of 7,445 jobs or 2.3%

The full impact of the biosciences goes beyond the direct level of employment and earnings presented in the report. By applying national and state employment multipliers, we are able to quantify the broad “ripple effect” of adding bioscience jobs on the greater economy. On a national basis, 5.8 additional jobs are created for every 1 new bioscience job. The industry continued to add employment during the first year of the recession and the financial performance of public bioscience companies through 2009 was positive.

The overall bioscience sector paid average annual wages of $77,595 in 2008; $32,366 more than the average annual wage of the total U.S. private sector. Real earning for bioscience industry workers have increased by 10.1% since 2001, compared with 3.2% for the U.S. private sector.

---

Funding and R & D

Academic bioscience R & D increased steadily from FY 2004 to FY 2008 but the rate of increase has slowed. Twenty-five states passed laws or are investing state resources to address early-stage funding programs including tax credits to angel investors, early stage VC investments or direct state investment in VC funds, funds of funds and bioscience companies.

---

Without economic stimulus funding, NIH funding declined 7.5% from 2008 to 2009. What happens after the stimulus funding runs out is a matter of concern – and a warning sign. A key warning sign is that venture capital to bioscience companies fell 36.7% between ‘08-’09. California and Massachusetts accounted for 38% and 14%, respectively, of all bioscience venture capital invested during the 2004 to 2009 period.

Continued bioscience development is not guaranteed. States face difficult fiscal times and federal fiscal woes threaten NIH funding. The recession has negatively impacted the availability of venture capital for bioscience firms. K-12 math and science education remains a significant concern. State and national policymakers have a key role to play in ensuring that these challenges are addressed in order to allow the U.S. to continue to be a world leader in the biosciences.

How does Oregon compare to other states?

Oregon has a significant concentration of jobs in the medical devices and equipment sub-sector but is not widely represented in the other biotechnology segments. Eight states—Minnesota, Indiana, Iowa, Florida, Oregon, North Carolina, Arizona, and Colorado—and Puerto Rico have added more than 1,000 jobs since 2001 in the medical device and equipment sector. Oregon ranks 12^th in R &D funding and 24^th in biotechnology employment in the U.S. Kelly reports that there have also been increased clinical trials in the state.

---

Healthcare Reform Act

Kelly indicated that the Healthcare Reform Act might impact bioscience in the areas of: follow-on biologics/biosimilars, excise tax on drug manufacturers, Medicare “Donut Hole” coverage, expansion of 340B program, comparative effectiveness research, Medicaid rebate increase, physician “Sunshine” provisions and the Therapeutic Discovery Project Tax Credit.

The Therapeutic Discovery Project Tax Credit could aid Oregon companies. The Healthcare Reform law contains a $1 billion tax credit for human therapeutic R & D:

• Eligibility: “Small” companies with fewer than 250 employees

• Qualified R & D: Costs of developing human therapeutics for FDA review

• Value of Credit: 50% tax credit on qualified R & D expenditures incurred in 2009 and/or 2010 (not to exceed $5 million/company)

Companies that qualify may apply to U.S. Treasury Dept. for a grant in the amount of the credit.

Patent reform and state capital formation priorities

The CSBA supports elements of legislation that would ensure timely issuance of high-quality patents, remove subjective and unpredictable elements from patent law and promote greater uniformity of patentability standards internationally. Additionally, the CSBA supports research and development tax credits, NOL carry-forwards, tax credit transferability, sales and use tax exemptions, creation of capital access funds, state pension fund investment, developing incubator/shared R & D facilities and investment tax credits.

Working with the CSBA

The Council of State Bioscience Associations (CSBA) is a confederation of state-based, non-profit trade organizations each governed by its own board of directors. The common mission of the members of the CSBA is to promote public understanding, and to advocate for public policies that support the responsible development of the bioscience industry. Kelly states, “The OBA is a CSBA member and can work with members in Oregon to advocate for the biotechnology industry in Oregon. We encourage you to let the OBA know your needs to grow the biotechnology industry in Oregon.”

---

---

Linda Barney is the founder and owner of Barney and Associates, a technical / marketing writing, training and web design firm in Beaverton, Oregon that provides writing and web content for the high tech, government, biotechnology, medical, sustainability and scientific communities. Linda writes articles for the Software Association of Oregon, the Oregon Bioscience Association, the Clean Technology Alliance, and the Supercomputing Conference. Contact Linda at linda@barneyassoc.com.