MACKINAC ISLAND, MI, Jun 03 (MARKET WIRE) —
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
srapundalo@michbio.org

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