Arizona’s developing bioscience industry is growing rapidly in leveraging federal grants, creating jobs, and stimulating new innovations and companies. But more work is needed to attract greater private capital to position the state as a major national competitor.
That’s the nutshell message of a comprehensive review of Arizona’s progress after four years of a decade-long plan to build a competitive bioscience base, known as Arizona’s Bioscience Roadmap. Battelle, the Roadmap author, assessed progress in key areas plus reviewed Arizona’s core competencies—the scientific niches on which the state is focusing its resources and collaborative efforts.
“Arizona is well on its way to achieving the 2007 midpoint goals set back in 2002, when the Roadmap was published,” said Walter H. Plosila, Ph.D., vice president of Battelle Technology Partnership Practice, who will present the findings Dec. 5-7 in Tucson, Phoenix, and Flagstaff. “In fact, one of the most important goals—surpassing the leading states in the growth rate of NIH grants—was achieved in 2005.
“The prognosis is excellent, though Arizona has its work cut out for it over the next six years,” he continued. “Considerable work remains in generating investment in early-stage companies, building commercial wet-lab space, and creating a critical mass of bioscience firms while continuing to grow the bioscience R&D base in an environment of increased competition and limited federal funding growth.”
The year 2006—the fourth year of Roadmap implementation since its release in December 2002—was highlighted by the creation of Science Foundation Arizona by the business community, the establishment of the Arizona 21st Century Fund by the Legislature, and a $50 million investment by the Virginia G. Piper Charitable Trust to recruit world leaders in personalized medicine.
Arizona showed consistent growth on key performance measures. Among them are:
Federal Grants: Arizona research grants from the National Institutes of Health, the “gold standard” of scientific research grants, grew 30 percent between 2002-05, compared to 21 percent by the nation’s top-10 states in this category. In 2005, the state’s total NIH funding grew by 10 percent, compared to the U.S. average of 3 percent. The state’s performance has also been impressive in bioscience-related awards from the National Science Foundation and U.S. Department of Agriculture.
Jobs: From 2001-05, Arizona added 10,700 jobs in bioscience-related fields, an increase of 16 percent. In non-hospital biosciences, the job growth of nearly 17 percent overshadowed national growth of less than 4 percent. Leading all sub-sector job growth during this period was research, testing, and medical labs with a 32 percent increase.
Wages: During 2001-05, bioscience wages increased by 13 percent (inflation adjusted). Bioscience professionals in Arizona earn an average of $45,182 compared to the private-sector average of $37,709.
Start-up firms: In 2002, the year the Roadmap was launched, only two new bioscience-related companies were spun out of the state’s universities. Since then, there have been a cumulative total of 33 additional bioscience-related firms created.
Venture capital: The Roadmap called for $100 million in bioscience-related venture capital to be achieved in Arizona-based firms for the three-year period from 2003-05; the actual figure exceeded $118 million. Through the first three quarters of 2006, bioscience VC couldn’t keep pace with 2005’s stellar performance ($73 million), though at $33 million still bested year-end totals for both 2004 and 2003. Regardless, the state needs further improvement as it receives less than 1 percent of total VC nationally.
Regarding venture capital, Plosila said there is a need to galvanize private, civic, and public leadership around the risk-capital gap for bioscience startups. “This is essential if Arizona is going to build a critical mass of firms and take full advantage of the benefits of a stronger research base,” he said.
Martin L. Shultz, vice president of Pinnacle West Capital Corp. who chairs the 75-member steering committee that oversees Roadmap implementation, said: “Beyond the data and technical details of this study, there is a growing acknowledgement that the biosciences are taking root in Arizona. And with it comes a better quality of life for Arizonans—a more diversified 21st-century economy that can weather the inevitable dry spells, plus local access to the latest innovations in healthcare.”
Next key steps on the Roadmap, according to Plosila, are to implement the Southern Arizona Bioscience Roadmap that focuses on the Tucson area’s key strengths and needs (released in mid-November by the Southern Arizona Leadership Council); develop in 2007 a Northern Arizona Bioscience Roadmap that does the same for Flagstaff and northern areas of the state; continue implementing recommendations to form a leading statewide model of translational research (through the leadership of the Arizona Biomedical Research Commission); and advance efforts to establish a “seed fund” for early-stage bioscience firms.
Battelle is the world’s largest private, nonprofit organization recognized for technology development, headquartered in Columbus, Ohio. Battelle’s Technology Partnership Practice provides research and facilitation for the Roadmap project.
The Flinn Foundation is a Phoenix-based, private, nonprofit philanthropic endowment. In addition to commissioning the Roadmap project, the Foundation staffs its committees and workgroups.
“Bioscience push paying off,” Arizona Republic, 12/20/2006
“Bioscience lacks venture capital,” East Valley Tribune, 12/20/2006
“Area’s bioscience roadmap making good progress,” Arizona Daily Sun, 12/12/2006
“State’s biotech industry progressing, but needs more capital,” Business Journal, 12/08/2006
“Arizona biotech industry ahead of 10-year schedule,” Inside Tucson Business, 12/08/2006