Three years into a 10-year plan to make Arizona a major force in the bioscience industry, the initial investments are starting to show results, according to supporters.
They cite the results as evidence that more public funds should be invested in bioscience research, hopefully producing cures for serious diseases, creating new companies to commercialize research discoveries and creating more high-paying jobs.
But critics say if the industry is making progress, the private sector should assume responsibility for bioscience investments without the need for taxpayer aid.
Finding the right mixture of public and private support for biotechnology has again become an issue as the Arizona Legislature considers a $150 million bill to fund more biotech facilities and programs. The money in the Arizona 21st Century Competitive Initiative Fund would be funneled to the newly created Science Foundation Arizona to be use for lab construction, seed funding of startup companies, attraction of top bioscientists to the state or other projects the foundation decides are needed.
The public funds would match $100 million pledged by the Stardust Charitable Group and $50 million by the Virginia G. Piper Charitable Trust for bioscience programs in Arizona.
For the legion of enthusiastic supporters, the attraction of biotechnology is obvious. To them, it’s an investment in Arizona’s future. “This is an economic engine like housing or tourism,” said Don Budinger, board member of the Science Foundation Arizona. “But it is more sustainable than housing and tourism.”
“Arizona is uniquely poised to be a major player in the knowledge economy if we make this investment,” said Marty Schultz, chairman of the Arizona Bioscience Roadmap Steering Committee established by the Phoenixbased Flinn Foundation.
“This is a very legitimate industry that will pay off for the state,” adds Tom Browning, president of the Greater Phoenix Leadership, a business group that is helping to organize the science foundation.
Although Arizona is far behind other localities in developing a broad-based biotech sector, the state does have strengths in some research fields such as autism, Parkinson’s disease and Alzheimer’s disease treatments that can be built on, supporters say. They also note that the field has inspired an unusual degree of cooperation and joint ventures. Even Arizona State University and the University of Arizona are cooperating in establishing a new medical campus in downtown Phoenix.
So far, the voters and politicians in Arizona have been largely supportive. In 2000, voters approved Proposition 301, which will provide $1 billion in sales tax revenues over 20 years to the state’s universities for science and technology projects. Much of that is expected to go to bioscience research, and the Biodesign Institute at Arizona State University is one of the highprofile organizations that has already benefited.
In 2004, voters in Maricopa County approved $100 million to go for bioscience and health care training at the Maricopa Community Colleges.
The legislature also has contributed by providing tax credits for angel investment in startup high-tech companies and supporting construction of $440 million in research facilities at the state universities.
A 10-year plan for the development of the bioscience industry in Arizona was laid out in 2002 in the Arizona Bioscience Roadmap written by the Ohio-based Battelle Memorial Institute, a hightech consultant.
Schultz said the state’s progress has been so rapid that Arizona has already reached many of the goals that were set for 2007. But he said more is needed.
“We’re off to a good start, but that’s not good enough,” he said. “We’re in competition with the world, and this is the basis of the future economy.”
According to the Flinn Foundation, the public and private investments in the biosciences have already produced major returns. Among its findings:
• Grants to researchers in Arizona from the National Institutes of Health grew 30 percent between 2001 and 2004, putting the state’s growth rate in the top 10 nationally;
• The number of jobs in the bioscience sector, including hospitals and labs, is up nearly 12 percent from 2000 to 2004;
• Wages in biotech rose 27 percent during the same period with bioscience workers earning an annual salary of $43,359 compared with a state average of $34,043;
• Arizona startup companies received nearly $20 million in biotech and pharmaceutical venture capital in 2004, the best year ever; and
• The number of universitygenerated startup firms, patents issued, and licenses and options granted all increased between 2002 and 2004.
In East Valley developments, InNexus Biotechnology, a Canadian drug development firm, set up its U.S. headquarters in Scottsdale while Covance, another drug developer, is planning a testing center in Chandler. Aventis Pharmaceuticals, an affiliate of Sanofi-Aventis of France, has opened a regional office in Scottsdale. Also the Mayo Clinic has completed a Collaborative Research Building in Scottsdale with one floor devoted to T-Gen operations.
Despite those accomplishments, Noah Clarke, an economist for the Goldwater Institute, said it should be the role of entrepreneurs and private investors to promote the industry, not the government.
He added that biotech employment still accounts for only 3 percent of employment in Arizona, a percentage that hasn’t grown since 2000 despite all of the interest in the industry.
“I would be against any subsidy, whether it be biotech or stadiums, that people say will generate economic growth,” he said. “Private investors have a much better sense of what consumers want, and they will invest accordingly.”
Even the possibility of leveraging $150 million in foundation grants isn’t enough to convince Clarke that public money is needed.
“Public-private partnership are buzz words at the moment, but that has always made me nervous because they’re going to use taxpayer money to get things the private sector wants. Why won’t they (private-sector investors) do it all on their own?”
In answering his own question, Clarke said the private sector may not see the returns as high enough to warrant the risk.
Bringing in the public sector is a way to spread the risk, but “they haven’t asked the taxpayers if we want to accept that risk or not.”
But Clarke admitted his is probably the minority view.
“I think everyone (who is promoting bioscience investments) is well intentioned. It sounds good, it looks good, and you can talk about economic growth. It’s a saleable initiative. . . It’s tough to make the contrary argument.”
Clarke expects to see more proposals for public funding of biotechnology in the future because the industry is likely to “become addicted to public money. They don’t have to be as competitive as privately supported ventures. It becomes difficult to stand back and remove that money.”